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THE STATE OF DIGITAL ADVERTISING FOR PUBLISHERS

2016

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Table of Contents Introduction

10 Digital Advertising Trends for Publishers

1. Video is king

2. Programmatic has evolved from publisher foe to publisher friend

3. Mobile is still a challenge, but for new reasons

4. Publishers rely on Facebook more than ever, but it’s a double-edged sword

5. Cable doubles down on video, while local broadcasters cast a wider net

6. Local publishers value operational simplicity over custom ad products

7. National publishers value custom ad products over operational simplicity

8. More vendors mean less meaningful insights

9. Corporate and field sales teams view attribution differently

10. Ad blocking is a threat, but publishers are unsure of what to do

Conclusion

About the Data

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What keeps America’s top publishers up at night? As Facebook replaces the homepage, audiences fragment more than ever, and video and mobile drive demand and challenge supply, it’s a wonder publishers get any sleep at all. Never mind ad blocking, ad taxes, ad fraud, and a slew of other threats to digital revenue. From the outside looking in, publishers seem to be under attack. But if our time is difficult and perplexing, it is also filled with opportunity.

In April of 2016, Mixpo surveyed over 250 digital advertising professionals employed by U.S. publishers, and conducted personal interviews with 30 digital advertising executives from eight of America’s leading media companies. We included managers from various functions of the digital workflow to get a holistic perspective on the publisher’s digital reality, and to better understand the needs, challenges, and priorities of their businesses. What follows are the top ten trends that emerged from our research.

Introduction

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When asked to name the biggest trend in digital, publishers responded with one word: video.

Digital video advertising will drive nearly $10 billion in ad spend this year. This is a remarkable 28% increase over 20151, making video digital’s fastest-growing ad format. It remains the gold standard for many brand advertisers that have relied on television for years. As audiences and devices digitize, the demand for video—on all screens—is quickly multiplying.

1VIDEO IS KING

1 Mobile Spearheads Digital Video Advertising’s Growth. eMarketer, 22 Feb. 2016. Web. 13 June 2016. <http://www.emarketer.com/Article/Mobile-Spearheads-Digital-Video-Advertisings-Growth/1013611>

For publishers, this presents challenges and opportunities. The gap between advertiser demand for video ads and publisher supply of video inventory is notable. This seller’s market has made video a valuable ad product for publishers, but it has also created pressure to find new ways to deliver video and take full advantage of 2016’s video boom.

The biggest trend in digital advertising is video. As a TV company we produce a ton of premium video and the industry just doesn’t have enough of it, which positions us well as we look to new product offerings.

Lindsey Lawson, Digital Sales Manager, WESH Television

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Video = ValueWhen asked to rank ad formats on perceived ROI, publishers consistently gave video the highest marks.

Survey Question:

In your experience, what digital ad formats have a high ROI or drive the most revenue? Please rank on a scale of 1 - 5, with 1 representing High ROI / Revenue and 5 representing Low ROI / Revenue.

Video (Pre-Roll) Interactive Video (Pre-Roll)

Rich Media with video (In-Banner Video)

Rich Media without video

Display (Flat Banner Ads)

Social

1 2 3 4 5High ROI / Revenue Low ROI / Revenue

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Video > Pre-RollDigital video’s value is no longer relegated to pre-roll. For many publishers, in-banner video and outstream ads have become part of a larger strategy to fill the supply gap by delivering video to audiences in traditionally non-video formats.

Mobile Video is ProliferatingVideo’s rise to dominance is being driven by mobile, which will grow by 47% year-over-year2 as marketing dollars follow consumers to the small screen.

Facebook Dominates50% of those surveyed have run video campaigns on Facebook, compared to only 31% on YouTube. As social networking has taken over the web, publishers have responded by distributing their content with both paid and earned posts on the social network.

Key Findings

Video Grows Beyond O&OsIn the past year, 61% of publishers have sold video ads as a part of their audience extension packages.

2 Mobile Spearheads Digital Video Advertising’s Growth. eMarketer, 22 Feb. 2016. Web. 13 June 2016. http://www.emarketer.com/Article/Mobile-Spearheads-Digital-Video-Advertisings-Growth/1013611

Facebook Instagram LinkedIn Google+ Pinterest Vine Snapchat TumblrTwitterYouTube

50.2%

31.1%

17.0%13.2%

5.5% 4.7% 2.6% 2.1% 1.7% 0.9%

61%

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TakeawayIn 2016, creative and impression quality are experiencing a resurgence. Targeting matters, but concerns over viewability and audience accuracy have advertisers looking to stand out on more reliable inventory. In other words: premium video placements on premium content. Today’s digital publisher can turn a single video into a scalable marketing asset that serves across TV and various owned and unowned digital channels. This confluence of video advertising, premium content, and audience targeting has put publishers (particularly broadcasters) in familiar territory.

Looking AheadSuccessful publishers will create video ad opportunities everywhere they deliver content. This means making video an option within every ad format, from interactive VPAID and VPAID 2.0 ads to in-banner video executions. As the lines between digital and TV advertising blur, those who develop a “video everywhere” approach will be better positioned to win.

“Today’s digital publisher can turn a single video into a scalable marketing asset that serves across TV and various owned and unowned digital channels.”

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If the first years of programmatic buying threatened the direct sales businesses of publishers, then 2016 represents the final stages of programmatic’s evolution to an important sales tool. Publishers are fueling programmatic’s 40% year-over-year growth from both sides of the transaction. From the supply side, they offer the quality inventory over which

2 PROGRAMMATIC HAS EVOLVED FROM PUBLISHER FOE TO PUBLISHER FRIEND

3 More Than Two-Thirds of US Digital Display Ad Spending Is Programmatic. eMarketer, 5 April 2016. Web. 14 June 2016. http://www.emarketer.com/Article/More-Than-Two-Thirds-of-US-Digital-Display-Ad-Spending-Programmatic/1013789#sthash.GZ8Zwu2D.dpuf

demand sources compete; from the demand side, they sell exchange-powered audience extension campaigns. By both feeding and benefiting from programmatic buying, publishers have helped US programmatic display ad spending grow into a $22 billion business, or 67% of total display ad spending.3

“By both feeding and benefiting from programmatic buying, publishers have helped US programmatic display ad spending grow into a $22 billion business...”

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Programmatic is no longer just about “remnant” inventory.As programmatic buys increase in efficiency and transparency, CPMs are increasing. As a result, some publishers are allowing programmatic buys to compete with direct buys for all available inventory, and not just remnant inventory.

Mobile is driving programmatic.Similar to video, mobile is driving the growth of programmatic ad spending. This year, mobile programmatic buys will reach $15 billion in the US.

of publishers surveyed currently leverage programmatic to power audience extension.

of publishers surveyed do not currently leverage programmatic to power audience extension, but plan to in 2017.

Key Findings

Programmatic is an opportunity, not a threat.For the majority of publishers we interviewed, programmatically-powered audience extension is their fastest growing revenue source.

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TakeawaySavvy publishers are using programmatic buying to increase the yield of both their unsold and directly-sold inventory. Most programmatic is currently audience-based, but demand for impression quality has increased the value of content-based buys. As a result, premium publishers are becoming a prized inventory source for exchanges.

Looking AheadWinning with programmatic comes down to execution. Today, most publishers still work with ad networks, and give up a significant cut of their CPMs to do so. Publishers who create their own private marketplaces—often comprised of an assortment of inventory within a larger publisher portfolio—will benefit the most from the increase in demand for quality inventory. This requires investments in buying infrastructure and data management, but allows publishers to work directly with buyers to ensure that pricing reflects the value of access to their inventory.

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For the publishers we interviewed, well over 50% of their digital traffic is mobile. The storied consumer shift to the small screen was once a pain point for publishers, many of whom had poor mobile web experiences and no apps. Today, this has changed dramatically. Most publishers have invested in responsive websites and a variety of mobile apps. Their device-agnostic approach to content delivery has bred a device-agnostic approach to sales. In fact, none of the publishers that we interviewed package mobile separately from desktop.

Publishers have made major improvements to their mobile platforms and experiences. However, many remain at the starting line of monetizing mobile. Consider that consumers spend 25% of their time on smartphones, yet

3 MOBILE IS STILL A CHALLENGE, BUT FOR NEW REASONS

5 Meeker, Mary. Internet Trends 2016 - Code Conference. KPCB, 1 June 2016. Web. 14 June 2016. <http://www.kpcb.com/internet-trends>6 Facebook Continues to Beat Google in Sending Traffic to Top Publishers. Parse.ly, 15 Dec. 2015. Web. 14 June 2016. <http://blog.parsely.com/post/2855/facebook-continues-to-beat-google-in-sending-traffic-to-top-publishers/>

the channel grabs just 12% of ad budgets. This means that there is a $21 billion opportunity for ad revenue to catch up with media consumption.5

Closing this gap is one of the biggest challenges facing publishers —and it’s a difficult one. In 2016, most mobile traffic will come from clicks on article links within social feeds.6 As a result, publishers are often left with one article to monetize per user, per visit. Most mobile articles feature one, maybe two ads, and those ads are smaller and less dynamic than their desktop counterparts. To top it off, cookie-based audience targeting doesn’t work well on mobile devices. Combine the above and you can begin to understand the publisher’s mobile monetization challenge.

“...consumers spend 25% of their time on smartphones, yet the channel grabs just 12% of ad budgets.”

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Device fragmentation is no longer the top concern for publishersWhen asked to rate twelve potential issues by concern, device fragmentation was among the least disconcerting issues with 31% of respondents indicating they are ‘very’ or ‘extremely’ concerned.

Opportunity for better mobile productsMost of the publishers we interviewed said they are just now beginning to offer ad formats designed specifically for mobile, and nearly all are looking for new ad formats to better monetize the small screen. Granular location-based targeting and more mobile video ads were cited as important mobile-specific opportunities.

Key Findings

Devices may not be the concern, but mobile consumption patterns are.While mobile devices may not be the pain point, 48% of publishers are ‘very’ or ‘extremely’ concerned with the increase in mobile consumption itself*. Less inventory and less direct traffic can mean less revenue.

*See page 34 for a complete list of issues ranked by publisher concern level.

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“By pairing premium content with impactful mobile ad opportunities, publishers can play the supply/demand curve to their favor.”

TakeawayThe consumer shift to mobile has forced publishers to invest heavily in mobile-first experiences. These efforts have paid off, and publishers are generally confident in their mobile platforms. This has allowed sellers to include mobile in every pitch, but it has not mitigated the larger threat to revenue posed by the shift to mobile.

Looking AheadPublishers must adopt mobile-first ad formats. Consumers may be arriving at a new destination (mobile) and from a new source (Facebook), but quality content is still the great differentiator. By pairing premium content with impactful mobile ad opportunities, publishers can play the supply/demand curve to their favor. In time, as mobile targeting improves, audience tracking will combine with better mobile ads to allow publishers to follow the same formula for success that they have always relied upon: quality content + premium ad placements + a valuable audience = revenue.

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⁷ Facebook Continues to Beat Google in Sending Traffic to Top Publishers. Parse.ly, 15 Dec. 2015. Web. 14 June 2016. <http://blog.parsely.com/post/2855/facebook-continues-to-beat-google-in-sending-traffic-to-top-publishers/>8 Media Companies’ Facebook Reach Has Fallen 42% This Year. SocialFlow, 3 June 2016. Web. 30 June 2016. <http://www.socialflow.com/media-companies-facebook-reach-has-fallen-42-this-year/>

In the mobile and social age of digital media, the publishers we interviewed rely heavily on Facebook to reach their audience. In fact, Facebook has surpassed Google as the leading driver of publisher referral traffic. At the close of 2015, Facebook was responsible for 39% of publisher traffic, while Google accounted for 34%.7

Not long ago the front pages of news sites were the primary entry points to publisher content. Google disrupted this direct traffic with search, but as the means evolved, both direct and search traffic arrived primarily via desktop, and both relied on the integrity of publisher’s brand to surface content. That content lived on pages with many ad units and sponsorship opportunities, which drove meaningful revenue for publishers.

Today, Facebook’s News Feed has changed all of this. Publishers no longer have control over distribution and can’t rely on SEO to help.

4 PUBLISHERS RELY ON FACEBOOK MORE THAN EVER, BUT IT’S A DOUBLE-EDGED SWORD

Instead, opaque algorithms filter stories to the “right” audiences; the right audiences on mobile devices. This shift causes anxiety for publishers for two reasons:

1. Traffic to publisher sites can be easily disrupted. Publishers are well-aware of constant algorithm changes, which became even more evident as Facebook recently made changes to its algorithm that resulted in publisher content losing prominence, significantly reducing traffic to their sites.8

2. The new user path to content reduces opportunities for monetization. Clicks on article links from Facebook’s mobile app drives users to small screens with few ads, and when users turn back to their news feed to browse more content, they turn back to the competing headlines within Facebook rather than the publisher’s front page.

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Instant Articles may help, but publishers are skeptical.While the improved user experience of Instant Articles sounds compelling, publishers are wary of becoming dependent on third-party platforms that define how their content is monetized.

Key Findings

9 Premium Editorial Websites Drive Highest Consumer Engagement with Mobile Advertising. Teads, 20 June. 2016. Web. 14 June 2016. <http://www.prnewswire.com/news-releases/premium-editorial-websites-drive-highest-consumer-engagement-with-mobile-advertising-300287108.html>

Consumers coming from social “snack” on content, rather than dive inAs consumers increasingly adopt Facebook as the new “front page” for news, they tend to click on articles and bounce back to Facebook without diving deeper into other content.

Ads within publisher content still workRecent studies have demonstrated that users spend 24% more time watching video ads within premium publisher content on websites than they do watching video ads in social feeds.9 While Facebook is now the content entry point, ads served within premium content still deliver enormous value that publishers want to retain.

of publishers we surveyed use or plan to use Instant Articles.13.6%

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TakeawaySocial media is the second wave of a shift away from direct traffic that began with Google. Facebook is central to this shift, dramatically outpacing Twitter as the social leader in how people discover and consume publisher content. While social distribution helps publishers grow mobile traffic, and perhaps even exposes their content to new audiences, it has also left publishers vulnerable and eliminated significant money-making opportunities.

Looking AheadPublishers create high-quality content, and without it, Facebook loses value. Facebook is the most effective way to reach a large digital audience, and without this ability, publishers lose value. This is the 2016 media dynamic.

For both sides to win, publishers and Facebook must leverage their complementary strengths to develop a mutually-beneficial relationship. Right now, publishers that succeed in getting users to actively share their content will benefit most from Facebook. Looking ahead, the answer may be people-based targeting.

Cookie-based audience targeting is becoming a publisher limitation. Cookies work on desktop and provide the data behind most audience extension buys. However, cookies

“...most audience targeting is relegated to the desktop even though most traffic comes from mobile. Facebook may be able to solve this.”

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don’t track people’s digital habits on mobile devices. This is compounded as users move from device to device throughout their day, with no way to recognize the same user on different devices. As a result, most audience targeting is relegated to the desktop even though most traffic comes from mobile.

People-based targeting, through sites such as Facebook, may be able to solve this. Unlike cookies, login information is consistent across device. When someone signs into Facebook on their desktop and their smartphone, a connection exists between those devices through the single user login ID. As people-based targeting allows publishers to access this cross-device data, publishers will learn about the actual people who comprise their audience. It will help them understand the value of their traffic, develop and deliver targeted content to audience subsets, and even extend monetization into Facebook by selling re-targeted ads within the News Feed.

It’s early, but Facebook needs publishers as much as publishers need Facebook. A solution, whether it’s a new approach to encouraging “network effect” content distribution, people-based targeting, or something yet defined, must eventually balance power between Facebook and the publishers who fill its News Feed.

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Publishers exist in a cluttered digital ecosystem. Amidst the noise of display, social, search, programmatic, and native, it’s a real challenge to carve out a digital niche. Our interviews revealed a notable difference between how cable companies and local broadcasters are addressing this challenge.

5 CABLE DOUBLES DOWN ON VIDEO, WHILE LOCAL BROADCASTERS CAST A WIDER NET

Key Findings

Cable companies are focused on videoAs cable companies further digitize their programming, many are focusing their digital sales efforts almost entirely on video. On one end of the sales spectrum, this means training local TV sellers to position digital as a natural extension of each cable buy. On the other end, it means introducing new streaming ad opportunities, and blurring the lines between on-air and online viewing.

Local broadcasters are becoming local agenciesLocal broadcasters are positioning themselves in a manner similar to that of an advertising agency by becoming a one-stop shop for advertisers with products related to all types of media—including TV, display, audience targeting, social, search, and email products.

“As cable companies further digitize their programming, many are focusing their digital sales efforts almost entirely on video.”

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TakeawayThe first step in a positioning strategy is to identify the core strengths that make you unique. For cable companies, this means delivering video at scale. As a result, in-banner video and pre-roll are the core products in their digital toolkits. Impression volume, minutes watched and completion rates are more important than clicks or engagement. This approach allows cable sellers to provide the reach and exposure details that supplement on-air campaigns, and tell a consistent video story across channel. For many local broadcasters, on the other hand, positioning is about becoming the local digital expert for their advertisers. This means diversifying their offering to capture a greater share of budgets. As a result, broadcast sales teams are becoming more educated on more products. In fact, many local sellers are AdWords certified and IAB certified, as well as educated on engagement, direct response, audience extension, and a number of other digital sales tools.

Looking AheadBoth cable and broadcast sellers will have to refine how they position their offering to win in a crowded media environment. Whether it’s compounding video reach, driving direct response, or becoming a one-stop-digital-shop for local advertisers, publishers must define their core strengths to carve out a digital niche.

“...many local sellers are AdWords certified and IAB certified, as well as educated on engagement, direct response, audience extension...”

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Many of the local publishers we spoke with are actively paring down their vendor lists to reduce ad tech taxes and simplify campaign workflow. It’s common for a single ad campaign to use many creative and analytics vendors. This makes creative consistency across devices a challenge, and interpreting campaign performance difficult. During interviews, several publishers noted that they are willing to limit creative freedom and even eliminate high-impact ad formats altogether if it will help them run more seamless campaigns. In short, the days of having a different vendor for each ad type, device, and metric seem to be numbered.

6 LOCAL PUBLISHERS VALUE OPERATIONAL SIMPLICITY OVER CUSTOM AD PRODUCTS

Key Findings

Multiple vendors are the normNearly 54% of publishers surveyed work with at least four ad tech vendors, and 5% work with more than 16.

Campaign complexity is a pain point44% of publishers indicate being “very” or “extremely” concerned with the sheer complexity of digital campaign execution.

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TakeawayLocal publishers rely on third-party vendors more than ever to deliver digital ad campaigns. For years, these vendors focused on a niche purpose, such as geo-targeting or mobile ads, and they partnered directly with individual stations on one-off deals. This dynamic has created a lack of consistency across publisher properties. As digital operations mature, this disjointed structure is a problem that publishers are looking to solve.

Looking Ahead2016 will be a year of vendor consolidation for many publishers. This begins with eliminating duplication, but it also includes demanding more from the ad tech partners that remain. As a result, a new breed of technology companies that fulfill a larger array of publisher needs is emerging. These companies operate as part technology company, part consultant to help publishers increase efficiency without sacrificing capabilities.

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National publishers are better equipped to handle the operational complexities that challenge local publishers. Like their local counterparts, the national ad ops managers that we interviewed also bemoan having too many vendors. Unlike their local counterparts, however, they are willing to tolerate complicated workflows if it allows them to accommodate every RFP. Large brands and agencies demand unique, and often more complex campaigns. As a result, national publishers place a greater emphasis on custom ad formats than they do on simplicity.

7 NATIONAL PUBLISHERS VALUE CUSTOM AD PRODUCTS OVER OPERATIONAL SIMPLICITY

Key Findings

Creative freedom trumps simplicityNational publishers are unwilling to limit creative freedom and will work with many vendors to execute on a variety of high-impact ad formats.

Specs still matterEven though national publishers like to feature “custom” ad opportunities, most are beginning to formalize these unique ad products with specs and templates to make them easier to execute.

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TakeawayThe national media buying game is competitive. Big agencies make big asks when it comes to creative and performance. As a result, national publishers build long vendor lists in an effort to arm themselves with solutions for every scenario.

Looking AheadNational publishers must be innovative to be relevant—it’s a cost of doing business with big agencies and advertisers. That said, they can avoid operational complexity by standardizing their “custom” ad products. This means developing deeper relationships with one or two vendors to proactively define products, rather than reactively ask, “who can pull this off?” to a long list of potential suitors. By defining an ad product catalog with their unique identity in mind, national publishers can arm account planners with products that scale, and simplify campaign execution for sales and ad ops teams.

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A consolidated dashboard of all platform metrics is essential in today’s competitive digital space.

Elizabeth Bernberg, Digital Specialist, CBS Corporation

Publishers of all types are faced with a consistent challenge: a lack of consolidated reporting. Pulling and making sense of reports from multiple vendors is difficult. Metric definitions from partner to partner vary, and there are often discrepancies in the metrics themselves. This dynamic reduces confidence in a campaign performance, and some sellers prefer to stick with poor CTRs over confusing their advertisers (or themselves) with advanced analytics.

MORE VENDORS MEAN LESS MEANINGFUL INSIGHTS

Key Findings

In the age of rich data, publishers stick with the basicsFor the most part, publishers rely on ad server reporting exclusively, meaning they are defining campaign performance by fulfillment of impression goals and paltry click-through rates.

There is a lack of consensus on which metrics matterFor digital branding campaigns, reach and frequency hold a slim lead over engagement as the preferred metrics. For direct response campaigns, clickthrough rate and engagement rate are head-to-head as the go-to metric.

8

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Reach and Frequency

Reach and Frequency

Most important metrics when measuring a campaign

Survey question:

What metrics are most important when measuring a digital branding / direct response campaign? Please rank on a scale of 1-6, with 1 representing most important and 6 representing least important.

Engagement Rate

Engagement Rate

Clickthrough Rate

Clickthrough Rate

Cost Per Metrics (CPC, CPM, CPA)

Cost Per Metrics (CPC, CPM, CPA)

Video Completion Rate

Video Completion Rate

Total Minutes Watched/ Time Spent With The AD

Total Minutes Watched/ Time Spent With The AD

Direct Response Campaign

Branded Campaign 1 2 3 4 5 6Most Important Least Important

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TakeawayPerforming an apples to apples comparison of reports from multiple vendors has become a fundamental problem for publishers. Differences in ad formats, analytic tools, metric definitions and device capabilities creates confusion. What qualifies as an interaction with one vendor is nothing more than a mouse skimming over an ad for another vendor. In this inconsistent environment, it’s no wonder that publishers often stick to the basics. The problem with the basics, however, is that impression goals and clickthrough rates only tell a fraction of the story for most digital campaigns. Improving reporting comprehension could go a long way toward driving renewals for publishers.

Looking AheadUntil sellers and advertisers understand all of the advanced metrics available—from engagement to viewability and beyond—campaigns will continue to utilize the wrong KPIs and miss opportunities. Publishers must better educate their sales teams on digital analytics and performance measurement. They must also begin to pressure ad tech and industry groups to set standards for metric definitions. As sellers better understand performance, and learn to pair ad products with campaign goals, publishers will win.

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Attribution has been a marketing buzzword for a long time. In the digital era, where data is abundant, the pressure for publishers to prove their value in the sales chain is greater than ever. The publishers we interviewed cite this as a major concern. That said, how you view this concern is impacted by whether you sit in the corporate office or are in the field selling.

Publishers have traditionally been successful by delivering quality content to quality

9 CORPORATE AND FIELD SALES TEAMS VIEW ATTRIBUTION DIFFERENTLY

audiences at scale. Corporate managers recognize the brand lift these activities produce for advertisers, and are generally reluctant to shift their value proposition to conversions. This reluctance is practical, as most publisher ad products are designed for branding, and not direct response. Field sellers are up against products that do define value by conversions, and view their inability to compete on this level as a weakness.

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Corporate executives stop short of tying publisher value to an actual sale. Without the scale to compete with the pay-per-click direct response products such as Google AdWords, publisher executives are wary of relying on a sales conversion KPI.

Attribution is a major concern of publishers.

Sellers view their inability to report on sales attribution as a weakness. Field sales are often pressed to demonstrate ROI, and are eager to demonstrate their impact on conversions.

Key Findings

of publishers that were “very” to “extremely” concerned.

of publishers that were “not at all” to “slightly” concerned.

69% 11%

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TakeawayRegardless of which perspective is right, most publishers are working to move beyond impressions and clicks to better communicate value. This should help better define the publisher’s role in the attribution chain. It is also important that advertisers have a strategy and look to campaign insights beyond the click to define performance.

Looking AheadThe topic of attribution will remain a top concern for publishers, but that doesn’t mean they should adopt every new direct response tool to “get in the game”. Advertisers know that their display ad and digital video campaigns impact sales, but it’s digital’s access to data that raises the bar for proof. As cross-channel audience identification improves, so will attribution. In time, publishers can expect to receive more credit for their role in the customer journey. Expect TV to experience a similar shift to accountability in the near-term as on-air products digitize.

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Ad blocking is a hot topic, but despite its recent surge in coverage, the publishers we interviewed did not cite it as a top concern. Ad blocking seems to be what viewability was for publishers three years ago. It’s a big topic of conversation and a problem that they know will have to be dealt with, but for now, it’s not impacting revenue in a meaningful way. As one publisher put it, it is not “at a boil yet.” The general perspective is that publishers provide content to consumers for free because of advertising. If consumers are both unwilling to pay for content and unwilling to see ads, then publishers will have to be unwilling to provide them with content.

10AD BLOCKING IS A THREAT, BUT PUBLISHERS ARE UNSURE OF WHAT TO DO

Key Findings

Ad blocking is a threat. 46% of publishers said ad blocking is either “extremely” or “very” concerning.

On the long list of publisher concerns, ad blocking isn’t at the top.Publishers are feeling more urgency to address new(er) advances such as viewability, attribution and measurement, and ad fraud and bots, than they are ad blocking.

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TakeawayWith the many challenges that publishers are facing, ad blocking is lower on the list. Ad blocking is one of the most serious threats to the industry, but alongside ad fraud, viewability, monetizing mobile, creating more video inventory, and stabilizing operations, it just isn’t at the top of the list for most publishers yet.

Looking AheadAd blocking will evolve into a topic worth addressing sooner than later. 2017 may be that year, as new studies and industry accountability groups begin to define ad blocking’s impact on publishers. eMarketer estimates that 69.8 million Americans will use an ad blocker in 2016, a jump of 34.4% over last year. Next year, that figure will grow another 24% to 86.6 million people.10 As these realities set in, publishers will have to adopt new strategies. Some larger publishers will have the ability to introduce ad-free digital experiences for a premium subscription, but this approach will not scale across the publisher ecosystem. An alternative will be for publishers to place more emphasis on native ads and branded content as sales products. Another will be for publishers to install ad blocker detection tools to create a barrier to content until they are whitelisted by consumers.

10 US Ad Blocking to Jump by Double Digits This Year. eMarketer, 21 June. 2016. Web. 22 June 2016. <http://www.emarketer.com/Article/Ad-Blocking-Jump-by-Double-Digits-This-Year/1014111?ecid=NL1001>

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The world of digital continues to spin at a remarkable pace. The good news is that the business of digital advertising is maturing and publishers are beginning to operationalize in a much more thoughtful way than they had in past years. This means simplifying sales pitches, reducing vendor duplication, making programmatic work for them, and creating elegant video and mobile ad experiences that meet market demand.

At the same time, publishers are under attack like never before as Facebook replaces them as the daily homepage for information, and mobile consumption disrupts ad formats and inventory volume. Those who will win in 2016 and beyond will be those who produce premium content to demonstrate the quality of their audience, brand and inventory. It will be those who turn threats into opportunities by leveraging social and mobile to grow audience. It will be those who create operational clarity by consolidating vendor relationships to reduce duplication and streamline workflow. Importantly, it will be those who both develop ad product catalogs that scale with market demand and invest in educating their teams to increase their human and product value to advertisers at every point of a campaign, from pre-sales concepts to post-campaign performance translation.

Conclusion

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About the DataIn April of 2016, we surveyed over 250 advertising professionals employed by U.S. media companies to better understand their needs, challenges, and priorities guiding their advertising endeavors.

Representative of the larger industry, 63% of our respondents came from local media companies with the remaining 37% hailing from larger, national media companies. Our respondents represent a range of responsibilities, from individual contributors to executive leadership, and the majority work in sales (51%) and marketing (20%).

Of the companies represented by our respondents, 96% buy or sell digital ads and 85% buy or sell TV or traditional media sponsorships that include digital. Less than 2% are not involved in video ad formats.

To dive deeper into the insights of this nationwide survey, we then conducted personal interviews with 30 digital executives and sellers across eight well-known media companies. These qualitative insights revealed the reasoning behind the trends we saw with the survey data and informed our top 10 takeaways seen in this report.

Total Survey Respondents

263

Local media companies

Product Offerings

National media companies

Department

Sales

51% 96%

85%

63%

20%37%

Marketing

Publisher Type

Buy or sell digital ads

Buy or sell TV or traditional media sponsorships that include digital

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What keeps publishers up at night?The issues facing publishers today are vast and interrelated. When asked how concerned are you with the following, 31% - 69% said they were “extremely” or “very” concerned with every one of the twelve issues.

Extremely Concerned

Very Concerned

Moderately Concerned

Slightly Concerned

Not at All Concerned

Attribution and measurement

Ad blocking

Ad fraud and bots

Viewability

Commoditization of inventory

0% 50%25% 75% 100%

Increase in mobile consumption

Device fragmentation

Lack of quality video inventory

Lack of quality display inventory

Lack of quality mobile inventory

Complexity of digital campaign execution

Rise of social media

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About MixpoMixpo combines technology with human expertise to simplify how publishers sell, produce, and manage superior digital ad campaigns. Our technology makes it easy to create quality ads that engage audiences and deliver more value to advertisers. Our people provide the tools and expertise to streamline campaign management and boost digital sales. Please tap, click, or call us if you’d like to learn more about how we can help.

To learn more visit www.mixpo.com or request a demo: www.mixpo.com/contact/.

© 2016 Mixpo

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