Winter 2016 State of Media
Transcription
Winter 2016 State of Media
STATE OF MEDIA WINTER 2016 PLUS! Emoji Marketing Digital Influencers What’s Next for Magazines The Future of Advertising Social is the New Search Unbundling Cable Sports Update President Letter from the WINTER 2016 State of Media Contents The new year… It comes with a mixture of excitement over fresh possibilities, while also offering valuable time to reflect on the past year’s learnings. When looking back for this edition, we took a moment to recap the 2015 holiday shopping season’s top trends by pitting KSM’s fall survey predictions against the latest numbers (page 8). I think it provides a concise overview for those looking to sift through the jumble of postholiday articles. But as many of you know, 2016 is going to be a very busy year for media and marketing professionals. The presidential blitz is now in full swing, and will only continue to rev up in the coming months. With this in mind, KSM once again partnered with research firm ORC International to run a custom study, this time focusing on how political marketing influences voters (page 20). Our findings offer valuable takeaways for both political marketers and those looking to avoid the noise. Sports marketing will also be a hot topic in the coming year, with the Olympics and new U.S. league branding opportunities both in focus. And it seems we can never go a day without reading some interesting yet often contradictory headlines about the evolving media landscape. Our team boils down what you really need to know about cable, along with the newest developments in online media. On a more seasonal note, I’ve always felt there’s something special about a glaze of freshly fallen snow across the city. Hopefully wherever you are, this winter continues to bring you some beautiful scenery before the spring’s eventual, and welcome thaw. ’s M S K l a c i t i l g o n P i t ke r a M y d u t S 0 2 WHAT’S NEW Joni Williams President 312.621.9230 jwilliams@ksmmedia.com 04 l Emoji Marketing Marketers in the digital landscape have a new language to learn. Find out how emojis can be utilized to better connect with digitallysavvy audiences. 06 l AI and Advertising What do new automated capabilities mean for the future of advertising? LAST WORD 08 l Holiday Recap We revisit the 2015 holiday shopping season’s top trends. 10 l Cable Update Find out how cable providers intend to defend their future grip on the contested format. 14 l Social Search Word-of-mouth on social is now more important than ever. 16 l Digital Influencers Discover the new faces of the digital red carpet. 19 l Olympics Five elements to watch. 27 l What’s Next for Magazines? With sluggish subscription and ad revenue numbers, is a RESEARCH FOCUS Netflix-style platform the 20 l Political Marketing solution for magazines? KSM’s latest research 30 l Sports Corner Recent discussions might study explores what bring jersey advertising voters think about to the four major U.S. political advertising leagues. and its influence. State of Media l 3 i j o m E eting k r a M By Kelsey Maciejewski 4 l Winter 2016 There is no doubt that the popularity of emojis is here to stay. What started as a silly add-on to text messages has now become a universal digital language of its own. With the rise of this new mode of communication, brands and agencies are consciously making the effort to leverage emojis to connect with their consumers in ways that have not been possible in the past. Just as people use emojis to add personality and charm to their texts and social media posts, brands are following suit. With the use of an emoji, brands and consumers alike can express more complex ideas through one-character pictures. Some brands have even created rich-media campaigns around emojis. This past year, Taco Bell launched a petition on Change.org to convince Unicode Consortium (a non-profit that has a hand in identifying new emojis) to create a taco emoji. The campaign received 33,000 virtual signatures, successfully convincing Unicode to add a taco into the emoji catalog in July 2015. Taco Bell then leveraged this win by launching a creative social campaign, where the fast-food restaurant invited Twitter users to tweet a taco emoji aside any additional emoji to the @tacobell handle in order to receive an illustrated response. More than 600 variations of possible responses, some animated and others stagnant images, encouraged large volumes of tweets. For example, by typing in a taco emoji next to a lightning bolt emoji, users received a tweet from Taco Bell that included an animated video of a taco-headed Zeus throwing lightning bolts at objects to turn them into tacos. Another variation allowed users to tweet the taco emoji next to a smiley face, which generated an image of a taco emoji wearing sunglasses. Taco Bell branded the campaign with the #TacoEmojiEngine hashtag to generate buzz and awareness. A recent study by Instagram showed that brands are increasing their focus on creative engagement with audiences as more advertisers move to this platform. Creative use of branded hashtags, emojis and even emoji hashtags (where the emoji replaces text usually included next to a hashtag) have been proven to help brands pop amongst their competition. Instagram revealed that 35 percent of brands are now utilizing emojis in their posts in order to connect with audiences. While this study also shows that emojis in posts open the door for more audience engagement, advertisers now need to go the extra mile to deliver a creative message, rather than just placing an emoji at the end of a post. Millennials and post-millennials have quick thumbs, short texts and are very emoji-savvy. For brands to stand out amidst the digital clutter, it’s imperative that they stay on top of emoji messaging trends. For instance, Bud Light recreated an American flag made entirely out of three emojis: the flag, a star and a beer. The beer company then tweeted this emoji “collage” to its followers on the Fourth of July, including the trending #4thofJuly hashtag for added visibility. Although this tweet only lasted a day, it resonated well with their Twitter audience in a timely and creative way, garnering more than 145,000 retweets. Likewise, Chevy adopted the emoji tactic by issuing a press release made up entirely of emoji characters to which they explained, “Words alone can’t describe the new 2016 Chevrolet Cruz.” Chevy generated buzz around the release of their new 2016 model by challenging users to decode the message and share their results using the hashtag #ChevygoesEmoji. This campaign resonated well with Twitter users and has been applauded by digital marketers as well. Such campaigns make it clear that advertisers must accept emojis as a form of communication, and more importantly, learn to speak this new illustrative language. State of Media l 5 ARTIFICIAL INTELLIGENCE AND THE FUTURE OF ADVERTISING By Omer Fazal Professor Stephen Hawking recently warned the world that “the development of full artificial intelligence could spell the end of the human race.” While this may bring images of a Terminator-style apocalypse to the mind, it is still farfetched based on existing technology. “Full artificial intelligence” or machines that match or surpass human intelligence do not yet exist. However, artificial intelligence (AI) working in collaboration with humans is more common now and has impacted many industries, including media and advertising. It’s exciting to be able to get a sense of the future by looking at some of the ways AI has already and will continue to impact marketers and the advertising landscape. Perhaps the biggest impact AI has had on advertising is in digital media via programmatic buying and planning platforms that utilize complex algorithms to perform a variety of functions. Connecting ad buyers with sellers to serve individual users with ads at the optimal price can now be achieved with little or no human intervention. While bidding for an ad, these complex decision science systems also utilize machine learning to decide which ads should be served to which consumers. Systems like this take into account multiple factors such as how often users are online, their browsing behavior, what types of ads they respond to the most and what types of ads they ignore. To determine cost, the data informs the bid model and determines probability of success in serving an ad to the right type of consumer. The higher the probability of success, the higher the bid will be. This happens billions of times a day for thousands of advertisers, all in a fraction of a second. However, if this is what machines can do for us now, where does it go from here? In short, the answer is simply that there will be a higher volume of programmatic across all formats. Programmatic technology has the potential to encapsulate all media buying and planning across every channel, including TV, out-of-home, print and radio, but the infrastructure isn’t yet ready for this. As trade activity increases in scale, it is certain that one of the future technology giants vying for the largest volume will launch a universal planning and execution system that can merge all forms of offline and online media. Advertisers will not be able to ignore the tremendous benefits of an interface like this. What’s more, the increased cross-channel measurement and real-time insight possibilities will make ads more relevant and targeted than ever. Last year the biggest U.S. magazine publisher, Time Inc., started selling the inventory of its print magazines programmatically. The thought behind this move was that the ability to buy print programmatically might U.S. Programmatic Digital Ad Spending, by Transaction Method, 2013-2016 billions, % change and % of total programmatic digital display ad spending 2013 Real-time bidding (RTB)* —% change —% of total programmatic digital display ad spending Programmatic direct** —% change —%of total programmatic digital display ad spending 2014 2015 2016 $4.16 $9.19 $11.01 $11.84 106.6% 121.1% 19.8% 7.5% 98.0% 92.0% 74.0% 58.0% $0.08 $0.80 $3.87 $8.57 317.5% 842.0% 383.9% 121.6% 2.0% 8.0% 26.0% 42.0% Note: includes advertising that appears on desktop/laptop computers as well as mobile phones and tablets; *includes programmatic ads that are transacted in real time, at the impression level; **includes all programmatic ads that are transacted as blocks of inventory using a non-auction-based approach via an API Source: eMarketer, March 2015 help attract ad budgets to the medium. Although it is a far cry from the algorithmically targeted digital ads, since Time Inc.’s offer covers just 18 demographic or interest-based groups, it is still a groundbreaking effort that points out new opportunities for programmatic buying. Katz Radio Network, one of the biggest in the U.S., has also started to sell radio spots on its programmatic exchange. The exchange does not include real-time bidding, but is more focused on automating the buying process, which is currently extremely labor intensive. However, most of the research and development in offline programmatic is happening around TV. IPG Media Brands’ programmatic arm Cadreon, has partnered with TubeMogul to build a TV automation platform. This marks one of the first examples of a proprietary, and inventory-agnostic demand-side platform for TV. A panel of buy-side and sell-side experts at comScore’s industry summit on the future of audiences and advertising agreed that this isn’t just an isolated test; TV is indeed going programmatic. According to a recent report by IPG MediaBrands’ Magna Global, programmatic TV will reach 17 percent (or $10 billion) of global TV budgets by 2019. Reliable figures on programmatic spend for offline formats, such as magazine and radio, aren’t yet reported. However, continued growth in automated buying for those formats is inevitable and tied only to the speed at which infrastructure and systems can be upgraded. On the creative front, AI is now being tested to develop creative assets and ad copy based on real-time learning. Last year a partnership between M&C Saatchi, Clear Channel and Posterscope created “the world’s first ever artificially intelligent posted campaign,” at least according to their words. The program reads audience reactions and changes its behavior depending on that interaction. It starts with a broad set of photos and copy, and from there, 22 ads are created for each test run, with the program determining the overall success of each ad. Ads that work then move on to the next round, and those deemed unsuccessful are removed. David Cox, chief innovation officer of M&C Saatchi told the Guardian last July, “It’s a Darwinian algorithm; it’ll evolve to be more and more effective.” As of that month, 1,540 ads had been automatically served. The first set of results State of Media l 7 showed that shorter copy seems to be most popular, and images of hearts were used more frequently. If a machine is able to write copy and employ decision sciences to continuously improve ads in real-time, what implications does this have for the future of creative ad work? As it stands now, the human touch is still required to fine tune the final ad and the machine generated ads can be chosen and signed off on before they are served. In fact, human touch will be necessary for the foreseeable future, at least prior to the point where a machine surpasses human “intelligence” or intuition. Still, interesting examples of this increased automation are popping up in other sectors of the media business as well. On the editorial front, the Associated Press (AP) partnered with Automated Insights and now uses their “Wordsmith” technology to publish quarterly earnings reports written entirely by this AI platform. Before this implementation, AP estimates it was doing 300 reports each quarter. Now it generates 3,000 such reports every quarter. Obviously if this kind of technology is successful and eventually made widely available to newsrooms across the country, the industry can expect staffs to be trimmed even more down the road. Of course, continued efforts by IBM with its Watson program will eventually bring many beneficial decision science services to not only media companies, but those in practically every industry imaginable. Another big storyline that marketers will be watching in the coming months is Adobe. At Summit Europe in April 2015, Adobe announced the company acquired Tumri advertising technology to extend its programmatic advertising capabilities. The technology enables dynamic creative optimization based on website behavior, audiences and context in real-time at the last millisecond of marketing. Surely if a vendor of this size continues to make these kinds of acquisitions, it will have some wondering if Adobe might become the first big player to unite all media formats into one programmatic system. The ability of machines to analyze vast amounts of data to learn, adapt and create has the potential to unleash insights that may have been beyond the realm of human imagination and that is why tech giants like Google, Microsoft, Facebook and Adobe are investing heavily in AI. Advertising will undoubtedly be impacted by automation technology, and both media and creative agencies will be leading automation research, design and implementation. The job market will inevitably evolve too, but it will also liberate many from doing menial tasks, allowing them to spend more time focusing on innovation and strategy. Advertising professionals and brands alike will have to be progressively savvy with digital and comfortable learning about the inner-workings of programmatic technology since it will eventually become one of most important keys to creating successful ad campaigns. Prog ram! Execute! De liv er! UNBUNDLING CABLE By Elizabeth Kalmbach and Luz Lopez-Montera Linear pay TV has received a lot of bad press this year in light of continuous streaming success stories for properties like Netflix, Amazon Prime and even Hulu. Most trade publications tout the unstoppable power of online streaming, and its ever-growing ability to attract subscribers and viewers away from the world of traditional, linear TV (broadcast and cable). These discussions are usually framed in terms of declining ratings for all linear TV, as well as the overall pay TV subscription universe. “Cord nevers” and “cord shavers” are increasingly considered the norm in a more price-conscious and on-demand world. However, don’t write off the cable companies, networks and content producers yet. There are ever-growing challenges in the landscape, but cable providers still hold the keys to the kingdom, and they intend to defend their future grip on U.S. TV homes. Cable networks had a rocky 2015 as they adjusted ratings and revenue projections based on the new viewing landscape. Finding audiences through online and traditional channels, and monetizing both based on different viewing experiences has proven to be one of the greatest challenges the video world has ever faced. Demand for traditional television programming is greater than ever before, but navigating different pricing models for advertising, airing and licensing broadcast rights to multiple viewing platforms is no easy feat. The mid-year 2015 financial reports showed cable networks reporting cautious downgrades to their revenue projections and sent the entertainment market into a tailspin. Production giants like Viacom and Disney seemed to be acknowledging trouble ahead in the television marketplace. Viacom ended the year with declines over 2014, but Discovery Channel, AMC and FOX News all experienced year-over-year gains due in part to hit original programming within younger demographics and surprisingly popular live current-event shows like the Republican debates. It has been estimated that around 2 to 3 million TV homes (approximately 2 to 3 percent of all U.S. TV homes) have reduced the number of channels they receive or cut the cord completely since 2012. The overwhelming demand for cable still exists, but networks are preparing for a decline in subscriptions over the next five years. How fast that decline could 10 l Winter 2016 accelerate in the next few years is up for debate, but it’s clear that pay TV providers need to evolve with consumer demand. Approximately 85 percent of U.S. households currently subscribe to traditional pay TV services. Financial services firm SNL Kagan has estimated that by 2020 this total will be down to 82 percent if current trends continue. Though this decline might not be defined as a “mass exodus,” it’s clear that general displeasure with cable companies and their services may drive viewership down further, and competition has opened the door to alternative content sources for disgruntled consumers. The major cable multiple-system operators (MSOs) have spent the last two years aggressively addressing their weaknesses in an effort to retain their subscriber bases. According to Nielsen the average consumer receives 194 channels in their cable subscription, of which they regularly watch only 17. That number hasn’t changed despite the growing number of cable networks over the past two decades. The most popular channels have always been packaged with less popular networks, which over time has created consumer discomfort in the face of rising cable costs and “wasteful” channel lineups. Cable bills have been steadily rising to a current average of $99 a month and roughly 40 percent of that cost has been added over the last five years alone. In light of these sharply increasing costs, and the plethora of online, free (or far less expensive) viewing alternatives, consumers are looking for adjustments while cable companies are attempting to evolve in a new, more competitive world. To address cost sensitivity among consumers, cable MSOs have developed “skinny bundles,” or slightly smaller channel packages in order to maintain subscribers and appeal to unique channel preferences. Lower-cost subscription offerings from Verizon, Charter, Comcast and satellite providers hit the market in 2015 amidst lackluster reviews. Though priced lower, consumers responded with less interest than originally expected. Most packages do not offer true freedom of choice to subscribers due to standing network carriage agreements requiring cable providers to deliver contracted subscriber numbers. In fact, ESPN is currently suing Verizon for releasing arguably the most flexible skinny bundle on the market today because they say the offering directly violates Verizon’s agreement terms with the network. Verizon’s package allows customers to swap channels in and out of their bundle every month, presenting a risky proposition for a network like ESPN, which relies on consistent “ subscriber numbers to fund its extremely high-priced sports broadcasting rights. Poised to create more challenges in the linear pay TV landscape are over-thetop (OTT) facilitators who intend to capitalize on cable providers’ contractual issues and expand their services. As networks and cable providers fight it out in court, trend-setting OTT players like Apple TV, Sony PlayStation Vue and Netflix are preparing to release more well-rounded services that include subscription video-on-demand (SVOD), as well as live streaming from major stations like ABC, FOX, FX, ESPN, HBO and more. Sony PlayStation Vue has rolled out packages ranging from 50 to 85 channels and will be positioned as an alternative option to cable subscription, touting an excellent overall user experience. So how can cable providers compete in an increasingly fragmented world with the limitations created by network subscriber requirements? One way is through maximizing pay TV video-on-demand usage. Upgrading set-top box (STB) technology and the user experience through recommendation menu interfaces and more sophisticated guides help consumers find what’s airing and experience a more smooth viewing experience in a linear world. At the same time, these new menus , 33 875 VOD movie and TV programming titles [are] available to the average pay TV subscriber versus Amazon s 17 309 , ’ ” Share of Viewership Among Age Groups 56% VOD TV VOD users are younger 29% 27% 23% 19% 11% 13% 8% 9% 4% Age: K2-11 T12-17 A18-34 A35-49 A-50+ Cable operators have a wealth of STB data on every household in the U.S. and taking these viewership learnings and applying them to VOD content can enhance the overall effectiveness of pay TV advertising. offer suggestions for VOD programming, which helps keep viewers on the pay TV platform. Cable providers can flaunt an extremely deep library of content due to their access to network programming via carriage deals. Most importantly, VOD content is ad-supported, making the cable and broadcast networks happy to supply the additional viewing platform with nearly unlimited programming. Nielsen recently found that pay TV VOD is currently available in about 62 percent of U.S. households and offers far greater variety of viewing titles than Netflix, Hulu or Amazon. In fact, as of 2014, SNL Kagan reported that 33,875 VOD movie and TV programming titles were available to the average pay TV subscriber versus Amazon’s 17,309. As the deepest library in the SVOD landscape, Amazon came nowhere near pay TV VOD offerings. According to 2015 studies conducted by DigitalSmiths and Ericcson ConsumerLab, the three major issues cable providers face in the current complex video marketplace are price, customer service and over-abundance of choice. Consumers cite rising pay TV costs as the number one reason they consider thinning or cutting the pay TV cord. Depending on the study, 30 to 50 percent of those considering cutting the cord say it is primarily or secondarily due to poor response time, old technology or inconvenient calls provided by their cable service. And more choice hasn’t exactly been a good thing. Consumers still say that too many channel options within a rigid linear schedule makes for an inconvenient viewing experience. A recent study by Ericsson Consumer Lab found that about 50 percent of consumers watching linear TV say they can’t find anything to watch at least once a day. That number rises to 62 percent for consumers 25 to 34 years old. A DigitalSmiths 2015 study found similar complaints from consumers struggling to find content. Among households considering cutting the pay TV cord, 44 percent said they would consider keeping pay TV if their provider released new functionality that made it easier to find something to watch. As pay TV VOD provides user interface upgrades and greater content libraries, time spent with their platform 12 l Winter 2016 increases and viewers get younger. In third quarter of 2015, Nielsen reported that pay TV VOD users are primarily 18 to 49 years old and their share of audience exceeds that of traditional TV. Pay TV VOD enjoys a nearly 30 percent share of 18- to 34-year-olds as compared to the 13 percent traditional TV captures. HUB Entertainment Research found that only 29 percent of millennials watch time-shifted TV in order to skip ads and instead cited convenience and “catch-up TV” as their primary reasons for delayed viewing. These findings would seem to indicate that the platform isn’t necessarily the driver for time shifting. If given the choice between an adfree viewing experience on Netflix and a forced ad-viewing experience on most pay TV VOD platforms, this audience will follow the content and a convenient user experience. This is certainly good news for advertisers trying to find time-shifted audiences increasingly fleeing the traditional TV space. Even more important though, are the data applications of the pay TV VOD space. Cable operators have a wealth of STB data on every household in the U.S. and taking these viewership learnings and applying them to VOD content can enhance the overall effectiveness of pay TV advertising. Unlike Netflix’s proprietary user information that can only be applied to future streaming rights purchases, pay TV is taking steps to publish and capitalize on viewer behaviors from a marketing standpoint. New technology built into the user interface can recommend VOD programming (similar to Netflix), as well as live TV and will likely be further enriched by product placement and video advertising based on household information. Expect pay TV VOD to attempt to catch up to the technology touted by OTT landscape over the next 12 months. Advertisers will rejoice, but only time will tell whether it’s too little too late to justify the high cost of pay TV subscriptions. Soc| social 100,000 people talking about this social media 50,000 people talking about this Search engines aren’t the only way consumers are discovering brands these days. Like social is the new mantra 8,308 people talking about this Social is the New Search Popular Search- 100,000 people talking about this Article by Sara Brown W ord-of-mouth has always been a powerful tool for finding and choosing new products or services. Even with advances in digital technology and new ways to reach consumers, word-ofmouth continues to be one of the top consumer influencers. In a MarketingSherpa poll from August 2015, 57 percent of respondents cited word-of-mouth as one of the best ways to discover new products, beating out a multitude of other sources including search engines, offline and online advertising. However, advances in technology over the past few years have provided word-of-mouth recommendations and reviews a new mass platform: social media. The Internet has infused new reach and power into word-of-mouth and accessing it has never been easier thanks to new search capabilities. The word “search” automatically evokes the names of Google or Bing, but when it comes to finding word-of-mouth recommendations online, the big players often fall short. Social media platforms, where digital word-of-mouth typically lives, have a variety of privacy controls and firewalls that make it hard for search engines to access them, and due to privacy issues, integrating personal social interactions into search engine results never took off. Twitter has resisted access from Google, using technological barriers to block its content from being ranked on the engine. Facebook also resisted integrating its content into search engines, and instead partnered with Bing to power their own internal search technology called Graph Search. 14 l Winter 2016 In the absence of data from major players like Facebook and Twitter, Google created its own network called Google+, but few users were motivated to add yet another platform to their list for the simple benefit of having socially integrated search results. This means that established social networks are still the vaults of personal opinions and reviews, and it is not easy to pry that data free and match it up to billions of web pages. Users have adapted to the lack of social search. Rather than scouring the big search engines and later asking their social channels about the results, they’re going straight to the source and searching their own social networks. This has lead to the rise of powerful new search tools integrated directly into social media platforms. Fragmented data across millions of posts on Facebook is now easily sorted and accessed via an ever-evolving search algorithm powered by the Bing Graph Search partnership. Twitter’s Advanced Search tool lets users quickly see the latest posts from a particular person, place or topic. Yelp reviews of everything from dog groomers to cocktail bars are easily accessed and sorted by time, rating or language. Even music platforms such as Pandora now allow users to access curated playlists created by friends and celebrities. L’Oreal has taken advantage of these developments, targeting users scouring Twitter and Instagram for red carpet looks during the 2015 Golden Globes. The brand created Comment Share shoppable images with its products and included the event hashtag, #GoldenGlobes. The how-to GIFs matched stars’ looks with L’Oreal products and garnered 21 million impressions. Starbucks also took advantage of social chatter in 2014 with the “real PSL” campaign, which capitalized on the pumpkin craze that takes over social media every fall. By replying to fans on Twitter and driving them to a branded Tumblr contest, the coffee-making giant was able to spark engagement for its pumpkin spiced lattes and drive a 22 percent increase in sales over the previous fall. Search engines are and always will be a powerful tool for finding information, but when it comes to the power of word-of-mouth, social media reigns. When an individual wants to know what restaurant to eat at, he or she turns to Foursquare or Yelp. When someone wants to know what music to listen to, that person turns to Spotify. What video to watch? YouTube. Where to go on vacation? TripAdvisor. What breaking news to read? Twitter. These networks have the kinds of recommendation answers that users are looking for on such a wide array of topics that they have now become a new type of search engine. Today the dream of social search filtering through one central engine has largely been halted, as social networks are expected to continue resisting the major engines’ access to necessary content. However, searching on individual social platforms is expanding rapidly and getting better each day. If brands aren’t present and engaging on social media through original content or partnerships with fans and influencers, they’re missing out on a whole new world of word-of-mouth. Users are searching their networks for recommendations, reviews and more, so brands must ensure their content is included in the mix. Ways of Discovering New Products from Brands and Retailers According to U.S. Internet Users % of respondents In-store browsing 59% Word-of-mouth from friends, family and collegues 57% Using a search engine 47% Articles in print magazines/newspapers 34% Through offline advertising 27% Through online advertising 26% Customer reviews on the comany’s site 22% Professional reviews through social media accounts of friends, family, colleagues 20% In-store recommendations from a salesperson 18% Through online content directly from the company 16% Through outside online content 15% Automated personalized product recommendations on an ecommerce site (e.g., “you might also like”) 10% Talk with a customer service representative at an ecommerce site 10% Other articles 14% Other 5% Note: ages 18+ Source: MarketingSherpa as cited in Adweek, Nov 1, 2015 State of Media l 15 W hile Hollywood has always been synonymous with the stars, a new breed of celebrity has risen to power in a world far beyond California. Online influencers with massive audiences now live and thrive on platforms such as Facebook, YouTube, Instagram and blogs. They were once average social posters with big personalities who eventually amassed large and loyal online audiences through original content. Their ascensions caught the interest of brands, eventually leading to paid partnerships. While teaming up with online influencers is not a new concept, these potential ambassadors are now giving traditional celebrity spokespeople some tight competition for marketers’ money. Given the increasing focus toward valuing engagement over reach, this shift is happening with good reason. Before diving in, it’s important to note the origin of the social media influencer phenomenon: people love to share. For the millions of consumers born into the digital age, creating and sharing content is second nature. Zeroing in on Instagram for some perspective, more than 60 million photos are uploaded on Instagram every day, according to WeRSM. In other words, the blog recently stated that the height of photos uploaded to Instagram every 12 hours would reach Mount Everest (8,848 meters), and every six days would reach the outer edge of the earth’s atmosphere (100,000 meters). Clearly the amount of content shared online is mind-blowing and is only continuing to grow. Online influencers emerged alongside this explosion of content. These unique personalities have built large, 16 l Winter 2016 loyal communities through original content and serve as relatable, trusted sources for consumers. They have become celebrities in their own right and proven that the biggest names in Hollywood are not necessarily the best fit for any given brand, nor always the most influential or valuable. Forbes recently released its first-ever ranking of top-paid YouTube stars, basing data figures from Nielsen and IMDB, as well as from interviews with those connected to the stars including agents, managers, lawyers and industry insiders. The top 13 stars have attracted millions of fans and a pretty penny from brands. Topics include baking and makeup tutorials, pranks, comedy acts, videogame commentary, violin dancing, reaction videos and even live-action skits based on Pokémon games. The top YouTube earner of 2015, PewDiePie (whose real name is Felix Kjellberg), raked in $12 million. In July 2014, his “playing videogames with your bros” channel collected more than 10 billion video views, surpassing RihannaVEVO and becoming the most viewed channel of all time. Also in 2015, PewDiePie was included on Time Magazine’s list of the 30 most influential people on the Internet. Although PewDiePie has partnered with brands such as Mountain Dew, he conducts very few promotions and works with few brands by choice. According to a 2014 survey by Variety, PewDiePie is not only more influential but also more popular than mainstream celebrities among U.S. teenagers between the ages of 13 to 18. Defy Media makes a case that online influencers, specifically those on YouTube, rival traditional celebrities. Among U.S. teenage Internet users polled in November 2014, 54 percent followed YouTubers on social platforms compared to 42 percent who followed TV and movie stars. Making millions from YouTube may seem crazy, but it’s not so unreasonable when taking into account the massive fan bases and unprecedented engagement statistics. A recent study by software maker ZEFR found that not only do influencers often have follower counts on social media that rival traditional celebrities, they boast greater engagement in many instances too. One example is ZEFR’s comparison between Connor Franta, a popular YouTube star, and Jimmy Fallon, currently the most popular TV host in the U.S. The results indicated that while Fallon’s average reach across social platforms was 207 percent higher than Franta’s (38.4 million for Fallon versus 12.5 million for Franta), Franta’s engagement was 66 percent greater (2 million for Franta versus 1.2 million for Fallon). Another compared Grace Helbig, who got her start on YouTube and Kelly Ripa, a traditional star who’s been on TV for more than 20 years. Not only did Helbig achieve 60 percent greater average reach across social platforms (4.1 million for Helbig versus 2.6 million for Ripa), she also scored a whopping 721 percent greater engagement (312,800 for Helbig versus 38,100 for Ripa). Grace Helbig is a great example of how online influencers are redefining or morphing into mainstream celebrities. Helbig parlayed her success on YouTube into her own talk show on E! called “The Grace Helbig Project” and wrote a book that eventually topped the New York Times Best- seller list called “Grace’s Guide: The Art of Pretending to be a Grown-up.” Not to mention, she was nominated this year for “Choice Web Star” on FOX’s Teen Choice Awards. This award in and of itself is proof of the blurring lines between online and traditional celebrities, and Helbig is just one example of many who have taken Internet fame outside of cyberspace. Others have secured roles in movies, their own clothing lines, record deals and various other claims to fame. Defy Media’s study also investigated other qualitative factors which play a role in overall engagement. One takeaway stated that 34 percent of teens say they respect YouTubers, and the same percentage say YouTubers were people they would like to be. In contrast, just 25 percent said the same about TV and movie stars. Even more so, when asked how relatable the two groups were, 41 percent of teens said YouTubers did the things they wanted to do, whereas 15 percent said the same about TV and movie stars. Considering these responses, it’s no wonder YouTubers had a much bigger influence on purchase intent among teens; 63 percent said they would try a product or brand suggested by a YouTuber, compared to 46 percent who said the same about recommendations from a TV or movie star. Of course, while key engagement metrics can help indicate the extent of fan interaction and influence, the target audience must be a good match in order for the partnership to be successful. Not all consumers are actively engaged with online personalities or platforms. But those who are, namely teens and young adults, make up an extremely receptive audience. eMarketer’s Alison McCarthy suggests that young consumers—especially those in their early teens—have grown up in an era where branding and advertising have been tightly integrated into most aspects of daily life. In general, the wide range of marketing content this demographic has been exposed to at an early age makes them savvy consumers and more accepting of different types of marketing messages. For example, according to an August 2015 survey by Trendera, 40 percent of respondents between the ages of 13 to 20 said that Internet celebrity partnerships make them more interested in a brand compared to 18 percent of adults aged 21 to 35 and 12 percent of adults aged 36 to 50. Most notably, personal recommendations were by far the most likely type of brand marketing to pique the interest of teens and millennials. Consumers are having conversations online with friends and family way before they make a purchase. They are seeking out relevant, first-hand information from like-minded people they trust— third-party experts and their personal networks—which include online influencers, in the case of millennials. Those who partner with relevant personalities are able to piggyback on this trusted relationship and immerse their brand in the conversation. By now, there are countless success stories to know this type of influencer partnership works. In fact, a 2014 study from IZEA found 52 percent of marketers claimed they have used social influencers in the previous year. Engagement, generally measured in likes, comments and shares, is higher for content that comes from influencers. AT&T noted engagement on its Instagram feed had increased about 250 percent per photo since last fall when the phone company partnered with Dave Krugman, a pho- tographer who has more than 200,000 followers on the platform. While there are many upsides to partnering with influencers and celebrities, it’s important to consider the risks of extending control over how a brand is represented. Those choosing to partner with online influencers can obviously face much of the same fallout risks as companies who get burned by a celebrity spokesperson’s bad choices (such as Subway). For instance, consider the controversial clips shared in quick succession by Sam Rader, one half of the popular Christian vlogging duo “Sam and Nia.” The couple posted a viral pregnancy announcement and an equally viral miscarriage video, which were both accompanied by ads. The videos were timed and setup in such a way that made viewers question if the pregnancy had been made up for profit. Surely the brands whose ads ran alongside these videos intended to align themselves with the personalities behind the channel, not the controversy. Then there is Belle Gibson, the 24-year-old Australian blogger and entrepreneur who for several years claimed that a healthy diet and alternative medicine had cured her metastatic cancer. Trusting consumers got on board and sales for Gibson’s app and cookbook soared, but when the truth came out that she had never been ill, her fanbase dismissed her overnight. It’s likely that Gibson received interest from brands looking to associate with such a ground-breaking movement as her popularity was on the rise, but fortunately the truth came out before anyone got seriously burned. Beyond potential scandals, brands must also be acutely aware of the U.S. Federal Trade Commission’s (FTC) regulation and compliancy rules when running an influencer campaign. Those that aren’t can face both consumer blowback from individuals who may have felt duped by a cam- paign, and potential fines from the FTC. Lord & Taylor was one of many rule breakers in 2015. This retailer employed 50 popular fashion bloggers to post photos of themselves in the same dress on Instagram to help introduce a new collection. While the dress sold out quickly and the campaign was deemed a success, the bloggers neglected to include a disclosure that they had been paid by Lord & Taylor to post this content. Those actions violated the FTC guidelines for digital advertising, which state that when people are paid to post, they must disclose that fact in a “clear and conspicuous” way. Examples of this include adding a hashtag that reads “#ad,” or copy that includes “sponsored by.” Given that these rules have been published since 2009, claiming ignorance is a questionable excuse. Although the FTC has yet to seriously enforce such violations, disregarding the rules can still have repercussions on brands and influencers alike; consumers may lose trust in a brand, perceiving it negatively if they feel like they’ve been tricked, deceived or lied to. Consequently, they may no longer view the influencer as authentic or credible. At the end of the day, influencers–vloggers, bloggers, YouTubers, Instagrammers–are people too, and they make mistakes. It’s critical that brands vet their potential partners thoroughly before establishing a relationship. All things considered, brands have to weigh the benefits against possible risks in their individual situations. For those that do choose to deploy online influencer strategies, opportunities to engage and build loyalty with captivated, young consumers through unique partnerships await. As long as engagement continues to reign supreme in 2016, as is expected, influencers will too. Internet Users Who Would Try a Product or Brand Suggested by a YouTuber* or Traditional Celebrity % of respondents in each group 63% 62% 46% 49% Teens (13-17) Young adults (18-24) *someone who regularly creates videos on YouTube Source: Defy Media, Acumen Report: Constant Content, March 3, 2015 18 l Winter 2016 Excitement is building as the Summer Olympics are approaching and advertisers finalize their sponsorship packages. Rio de Janeiro will host the 2016 Summer Olympics this coming August, the first South American city to host any Olympic games. With limited major league sports in summer months, the Olympics will capture headlines and produce high ratings. Some storylines to watch: Television National cable and digital ad sales are projected to exceed the $1.3 billion (not including local ad spending) that was generated during the London Olympics. While still seven months out, recent deals have pushed the pace ahead of ad sales from the London games. Because of the demand, NBC Universal (NBCU) is executing fewer category exclusivity deals. NBCU is reportedly asking for more than $1 million for a :30 Prime TV spot. In addition, they are requiring advertisers to commit to a minimum spend of $7 to $10 million before allowing them to purchase digital media. Given the surge of media consumption on mobile and tablet devices since the last Summer Olympics, digital ad spend for Rio will certainly surpass the London games. Online YouTuber* Traditional Celebrity (TV/Movie) By Sara Van Kuiken Because Rio is in the Eastern Standard Time zone, most of the key events will air during Prime in the U.S., which is incredible for advertisers that are trying to capture audiences with live viewing. The London Summer Olympics were ahead by six hours and averaged 31 million viewers per night. We can expect that number to increase exponentially this year with more live events scheduled to appear in Prime. One of the most exciting developments for the summer games is NBCU’s partnership with TiVo Research and RealityMine to provide single-sourced, cross-platform measurement. This research will measure viewership across devices (TV, mobile, tablet, computers and social), identify the overlap, where and when people are consuming coverage and the impact of social media. Social will also play a bigger role than it did in the London games. In the Sochi Winter Olympics, athletes and journalists took to social media to share their underwhelming and entertaining experiences with the host city’s accommodations before the games even began. Fans and media outlets back home were captivated by the coverage. In turn, social media provided an opportunity for fans to engage, participate and support their country’s athletes beyond just watching the events. NBC will again partner with social media platforms and has added Snapchat to the roster. Political Advertising Given the significance of the U.S. presidential campaign in 2016, it’s also expected to see some candidates airing positive campaign ads in Olympic programming. In 2012, Obama’s re-election campaign aired a new television ad during the opening ceremony of the 2012 Olympic Games. Political candidates will certainly make use of an adjacency to the “feel-good” content of the Olympics. State of Media l 19 How Does Political Marketing Influence Voters? Over the past two decades, political polarization in the United States has grown considerably. In fact, Pew Research claims that Americans are now more polarized than they’ve been since the Truman administration. Why the growth in division, especially in more recent years? Some attribute the divide to the apparent political parochialism that many “consistently liberal” or “consistently conservative” voters consign themselves to in today’s technologically-siloed society. With an ever-expanding amount of information sources to consume, many can stick to reading only the media that tends to align with their views. So if political polarization has been exacerbated over the past 60 years, how do marketers tap into those amplified passions in the most effective way possible? To answer that question KSM and ORC International once again teamed up to conduct a consumer survey, this time to see how the general public feels about political marketing. More than 1,000 U.S. adults, 18 years or older were asked questions ranging from their sentiments toward various types of political ads and media formats, to their thoughts on exposure timing and new targeting tactics. When does the public start researching candidates? To craft any marketing effort, one of the most logical places to begin the brainstorming process is with campaign timing. Understanding the flight dates helps shape key considerations regarding possible messaging and event alignment. In politics, the act of researching candidates and key issues is tied closely to the proximity of election days. However, when analyzing this behavior across party affiliations and age groups, some interesting differences arise. Millennials will continue to be heavily prized by political candidates for their growing importance in upcoming elections, but the group is often criticized by some strategists as being disengaged with traditional political and media formats. Whether they deserve this backlash will be analyzed later in this report, but in regard to the timing of when certain groups begin researching political candidates, millennials surprisingly differ from some larger trends seen across other age groups. When asked how early respondents begin researching presidential candidates, KSM’s political marketing survey uncovered that millennials are actually more likely than baby boomers to vet candidates very early on in the campaigning process. The difference is a statistically significant 38 percent of millennials who say they begin researching presidential candidates one year or more prior to an election, compared to 27 percent of baby boomers who do the same. Generation X nearly splits the difference at 31 percent. In other words, millennials are 1.4 times more likely than baby boomers to research candidates early on. In contrast, 35 percent of baby boomers (this group’s most popular answer) and 31 percent of Gen Xers research just three to 11 months prior. What are the forces driving millennials to start analyzing the field early on, and baby boomers to hold off until the primaries really start moving into high gear? The casual observer could chalk this difference up to the relative inexperience of younger voters who may not realize that names change often during the typically yearlong process leading up to primaries and prior to a party naming their nominees. But it also shows that when compared to other generations, millennials are engaged early on in the rallying process and could mean they have more of a sense of involvement in the campaigning process from start to finish. This might especially ring true when looking at the overall engagement millennials have with politics on social media. It’s no secret that this age group is more open to interact with civic and political content on social networks. In fact, a Pew research study stated that 48 percent of 18- to 29-year-olds make the choice to further investigate political or social topics as a direct result of what they read on social networks, and 57 percent claim they “engage in political activity on social media and nowhere else.” Pair the relative ease and extremely low cost of creating and supporting social pages with the perception from millennials that social is a safe place to express oneself, and it makes logical sense to infer that many users begin their first campaign interactions on social well before the primaries. Interest Levelin in Political Political Advertisements Interest Level Advertisements Extremely/very/somewhat interested Not very or at all interested 18-34 Total Adults 18+ 42% 58% By Jon Christens, with contributions from Darrell Drake and Elizabeth Kalmbach 35-50 Millennials 51-69 Gen Xers Baby Boomers 48% 40% 52% 60% 38% 62% Question: In general, how interested are you in politcal advertisments? Source KSM 2016 Political Marketing Study State of Media l 21 When it comes to research timing comparisons among party affiliations, the numbers also vary substantially. For instance, about one fifth of Republicans claim they begin the research process for midterm candidates between six to 11 months prior to that region’s respective Election Day. That group, representing the largest subset of Republicans when looking at midterm researching activity, was followed closely by the third-largest subset of 19 percent who claim they start vetting competitors between three to five months before Election Day. Compare this with midterm numbers for Democrats and independents, and some stark differences arise. The latter two groups claim they either don’t start their research process until a couple months prior to Election Day (17 percent for both Democrats and independents), or go as far as stating that they don’t research midterm candidates at all (25 percent of Democrats and 26 percent of independents). This data seems to indicate that Republicans place a greater importance on midterm elections when compared to members of the Democratic party or independents. A finding like this makes sense after thinking back to the past two midterms, when Republicans were focused on gaining control of both the House and Senate during Obama’s presidency. Though for both presidential and midterm periods, a surprising finding appears when going back to respondents who claim they “usually know who [they’re] voting for without conducting extensive research.” Overall when looking at research timing for total adults 18 or older, the highest percentages came from those who claim they conduct no research prior to either presidential or midterm elections. A quarter of respondents marked this answer for midterm elections, and 23 percent did so for presidential. When breaking these answers down by party affiliation, 25 and 24 percent of Democrats don’t research prior to midterm and presidential elections respectively. For independents, the numbers were 26 and 22 percent for midterm and presidential elections respectively. All four of these subsets represented the largest percentage of respondents for their respective parties’ answers. Republicans on the other hand, while still having high percentages of non-researchers at 20 and 17 percent for midterm and presidential respectively, had other higher percentages for research period habits. Is this a sign that nearly a quarter of both Democrats and independents feel they rely more upon emotion than research when voting? Or do these individuals simply have a stricter definition of “research” than other groups, and are possibly implying that they rely upon sources like political debates and word-of-mouth to form their voting decisions? While an exact answer to that question cannot be made based upon this survey’s data, political marketers should still make a note of key research period differences between the parties and age groups. Most influential sources of information Moving on to rank the most influential sources of information to voters, 73 percent of all respondents listed televised debates in their top three, 71 percent listed news reports and 62 percent listed friends or family. Theatrics and showmanship aside, findings to support the great importance of televised debates in the eyes of voters exist in numerous studies conducted in both the U.S. and U.K., and are often cited by political experts. A recent U.S. News & World Report article stated that televised debates are “one of the top sources of information for voters,” and a 2015 Panelbase survey claims that the big media outlets and debates often “led online conversations.” Political ads on the other hand, ranked near the bottom in terms of perceived influence for both total respondents and across all political party affiliations, which is to be expected. In general, when consumers are asked to choose the overall level of influence or trustworthiness between sponsored and non-sponsored content, non-sponsored content often ranks higher. But when asking all respondents to focus in on ranking just the most effective advertising formats that influence voting behavior, television had the most support with 26 percent of all respondents ranking it as either extremely or very effective. This format was followed closely by print Most Effective Ad Formats Influencing VotingBehavior Behavior Most Effective Ad Formats for for Influencing Voting Gen X (35-50) Independent Millennials (18-34) Democrat % Extremely or very effective (combined) 38% 30% TV ad 25% 17% 10% 17% 16% 16% 22% 20% 16% 12% Letter marketing (hard-copy mailings) 21% 16% 14% 12% Online banner ad 22% 13% 20% 14% 9% 17% 19% 17% Outdoor (billboard, public transit ad, etc.) Email marketing 18% 21% 18% 19% 30% 22% Online video ad 19% 25% 22% 20% 35% 23% Social media ad Radio ad 25% 26% 29% 27% Print (newspaper or magazine) ad Baby Boomers (51-69) Republican 11% 17% 8% 13% 9% 15% 11% 11% 4% 10% 7% 10% 6% 9% Question: Thinking about your exposure to political marketing and advertising, how effective are each of the following in influencing your voting behavior? Source: KSM 2016 Political Marketing Study 22 l Winter 2016 ads (newspaper or magazine) with 22 percent and social media ads with 19 percent of all respondents placing them in their top two most effective formats respectively. This data not only reinforces the importance of a solid cross-platform presence if the specific campaign is a good fit, but also emphasizes the need for creativity in these integrations. For instance, aligning a candidate’s social dialogue efforts with key debates and thinking of ways to generate spontaneous and shareable content (e.g., memes, GIFs, hashtags and reactionary posts) is absolutely essential. Rankings in preferred ad formats across political affiliations mirrored practically all of the findings for total respondents. However, overall percentages showing influence rankings for Democrats across the top four “extremely or very effective” formats (TV, print, social media and online video ads) were higher when compared directly to those of independents and Republicans. Democrats averaged 5.25 percentage points higher overall in their rankings of the top four formats, and actually diverged from the other two parties by awarding the number five spot to outdoor ads instead of radio. Because outdoor includes ads on public transit, taxis, buildings and billboards, and urbanized areas have a higher concentration of these formats, it makes sense that liberals would claim outdoor as more influential than other party-affiliated respondents. After all, everything from voting behavior to a 2014 study from the Pew Research Center showing liberals’ preference for living in cities and conservatives’ for the opposite, can back up these findings. So what’s the biggest takeaway for marketers targeting liberal voters? Once again get creative, but this time with out-of-home efforts. For those honing in on conservatives and independents, TV and print are still the most effective tools followed in order by social, online video and radio ads. Moving to age breakouts, a finding that seems to contradict much of the common rhetoric surrounding millennials presents itself again. Surprisingly, this group feels that TV ads are the most effective format for politics with 38 percent stating so, followed closely at 35 percent by social media ads. Online video, print and radio ads at 30, 29 and 25 percent respectively rounded out the top five for this group. Clearly, this throws some water in the face of those who say millennials are not tapped in to traditional media sources, and are only engaged with online formats when it comes to politics. Data from one of Nielsen’s latest media consumption report backs this up by stating that 78 percent of young voters (18 to 34) watched broadcast TV in the past week. Even more millennial myth-busting arose from data regarding overall interest levels in political advertising. Power and purpose of political advertising Asking audiences about their overall interest levels in ads can produce some fairly jaded responses. Sure, they understand how important this revenue stream is to content providers, but when asked directly about how well some ads hold their attention, a range of indifference to sometimes bitter emotions usually appears. Political advertising is no different in this respect, with a majority of respondents both overall and across party affiliations expressing slightly more disinterest than interest in these ads. The numbers for total adults break out to 58 percent who claim more impassivity than engagement. But when digging deeper into age breakouts, unexpected data emerges. Millennials again differed somewhat significantly here from the responses of other age groups, with 48 percent claiming that they are either extremely, very or somewhat interested in political ads. Place that number against just 38 percent of baby boomers and 40 percent of Gen Xers who said the same, and the gap is put into perspective. So if millennials say they’re more interested in political ads than other age groups, why do so many sources claim that members of this generation are disengaged with the political process? Well, the answer may lie in the actual content. With the rise of social media, younger generations have increasingly demanded more authenticity from brands and corporations. Why then are some of the same and often-inauthentic creative tactics still being used by political candidates looking to win over the hearts and minds of young voters? A recent article by Elizabeth Wilner appearing in the Cook Political Report seems to chalk the status quo up to a combination of unimaginative creatives, repetitive super PACs, quadrennial hiatuses between campaigns and ad regulations that all drive this complacency and continuation of formulaic spots. Essentially the big takeaway is if politicians want to drive higher voter engagement then more money needs to be spent on the creative and developing an authentic brand behind the message. But turning the tables to focus on candidates who target older audiences also presents many of the same issues. The 62 percent of baby boomers who feel disinterested in political ads could very well be fueled by similar complaints about formulaic ad State of Media l 23 Attention-Getting Political Online MostMost Attention-Getting Political AdsAds Online Total Adults 18+ Democrat Independent Republican Type most likely to get attention: Social media ads Online video ads Email marketing Banner ads 34% 29% 19% 18% 35% 38% 29% 29% 18% 18% 18% 15% 26% 29% 23% 21% Question: Which of the following forms of online political advertising is most likely to get your attention? Source: KSM 2016 Political Marketing Study fatigue. No better evidence of this exists than to look at the current Republican field and notice Jeb Bush sitting single digits in most polls, even though his campaign has spent more than $40 million on TV as of the close of 2015. Trump, the current Republican front-runner, had spent absolutely nothing on television during that same period. He only just recently launched his first TV spot, saying he’ll spend about $2 million per week on the format. True to his earned-media form, Trump is keeping the message relevant to his most impassioned audience by starting the format off with a spot focusing on immigration and terrorism. While it remains to be seen how this kind of polarizing approach will work throughout the rest of the primaries, it is most certainly authentic to his brand. Over on the less-crowded Democratic side, somewhat similar patterns can be found in regard to media spend habits between Bernie Sanders and Hillary Clinton. While both in the less-congested field are understandably spending far less than Republicans, Clinton has still thrown about $14 million at TV since August 2015. Sanders on the other hand first kicked off his TV spend three months later than Clinton, and to-date has spent around $9.7 million since November 2015. His poll numbers have since notched up considerably, creating an unexpectedly tight race for the early primary states. He also faces some fairly large issues with polarization among liberals, but so far his strategy is gaining pace. Clearly, all four cases indicate that while TV is still more important than ever throughout the campaigning process, prioritizing a solid brand presence through earned and other organic grassroots formats first is absolutely crucial. In terms of how the public views the purpose of political advertising, some sentiments echoing the aforementioned findings are present. “Getting a candidate’s name out” was listed as the most popular purpose of political ads, netting 38 percent of total adults and 42, 32 and 39 percent of Democrats, independents and Republicans respectively. “Criticizing the competition” was the second most popular reason chosen, with “altering perceptions of a candidate,” “make issues more widely known” and “drive the public to research more” rounding out the bottom-three rankings. Independents were also more likely to see attack ads as a 24 l Winter 2016 top purpose of these spots, with 27 percent feeling this way compared to just 18 percent of Republicans and 19 percent of Democrats. Put those numbers up against respondents’ feelings about candidates after viewing various types of political ads, and a storyline begins to emerge. By far the most popular type of political ad for all age groups and political allegiances are issue-based ads. This ad focus made 67 percent of total adults feel generally “more positive” about a candidate after exposure. Digging into party breakouts, 73 percent of Republicans and 72 percent of Democrats had the same positive feelings. Family-focused or “humanizing” ads drew just 42 percent of all respondents to claim more positive feelings about candidates after exposure. Attack ads on the other hand generated some strong responses on the opposite end of the spectrum, with 64 percent of all respondents feeling negative about candidates after viewing those ads. The lower percentage of positive feedback toward humanizing ads among all adults may seem contradictory to the notion that audiences want more authenticity, but keep in mind that the call to action is to improve inauthentic and outdated creative rather than its underlying intentions. In fact, when focusing in on just millennials for this question, a majority (51 percent) actually felt more positive about a candidate after viewing “humanization” ads. This is exactly why more audiences, especially younger ones are feeling drawn to social media and other online sources when vetting candidates. They’re seeking more information on who a person really is, rather than who their formulaic and stiff family-ad says they are. three and four spots respectively. This breakout was true for all party affiliations except when looking at Republicans, who had 29 percent listing online video ads as their most “attention getting” online format and 26 percent choosing social media ads. Age breakouts also present an interesting difference from the overall picture: Gen Xers displayed the highest percentage of preference for social media ads at 42 percent, with millennials close behind at 40 percent. Compare this to baby boomers’ top pick of email marketing at 26 percent, and a tie of 25 percent who feel political social and online video ads are memorable. Again, while a solid organic social strategy should be used as a foundation for any paid efforts, it’s still important to note that Gen Xers are just as, if not more swayed as millennials by political social ads. This reinforces the notion that political marketers should devote additional budget to creative concerns, especially when delving into online formats. The more key audiences a campaign has available to target on any given format, the more investment teams should earmark towards developing unique messaging that truly resonates with each group. What does the public think the future holds for these online formats? While a majority across all age groups and party divides feel that online political advertising (such as banner, video, social media and email marketing ads) will have no change in impact for this upcoming election, more respondents think these formats will increase their effectiveness rather than decrease. Overall, 31 percent of respondents think these online ads will have “much” or “somewhat” more of an impact, with just 16 percent saying “somewhat” or “much” less of an impact. And what should come as no surprise at this point is that millennials again show higher percentages in favor of social impact, with 43 percent thinking the effect will be greater in this upcoming election. From an organic standpoint, overall interactions with social political content are also up when compared to reported activity from past elections. An 11 percent increase in social interactions (e.g., likes, shares, comments) for this upcoming election was reported by all respondents. Democrats claimed the strongest levels of interaction across party groups, with a quarter claiming they’ve already interacted with political content for the 2016 election. Even though social interaction levels for independents and Republicans showed lower percentages overall, both groups are reporting increased activity compared to past elections, with a 6 percent and 29 percent increase respectively. When Voters Begin When Voters Begin Researching Candidates Researching Candidates Total Adults 18+ Democrat 30% 25 24 20% 10% 19 13 11 15 13 18 16 17 9 8 Midterm election Presidential election 11 3 0% >1 yr 1 yr 6-11 mos 3-5 mos 1-2 mos Just Never before How long before the election Independent 30% 26 22 20% 17 15 10 10% 7 17 12 Presidential election 17 10 9 Midterm election 12 10 0% >1 yr 1 yr 6-11 mos 3-5 mos 1-2 Just Never mos before How long before the election Republican 30% 20% 20 21 18 17 20 17 19 15 15 10% Midterm election Presidential election 11 8 6 6 6 0% >1 yr 1 yr 6-11 mos 3-5 mos 1-2 Just Never mos before How long before the election New formats rising? If social media will only continue its ascension of importance in the role of politics over the coming years, then how does the public view advertising on this format? According to KSM’s survey, social media ads were listed as the most “attention-getting” source of content when comparing the most common forms of online advertising. Out of all adults surveyed, 34 percent placed social media ads at the top of this list, with 29 percent feeling similarly for online video ads. Email marketing and banner ads took the number State of Media l 25 Summary of findings With data supporting the importance of traditional formats like TV paired with emerging social activity, and the increasing call for candidate authenticity, a clear challenge is being sent to political marketers for them to up their game in both creative executions and brand building. Best political ad formats overall: Television advertising is the most effective in influencing voting behavior, followed by print and social media. In all types of political marketing, democrats are more likely to be swayed by political ads than those with other party affiliations. In particular, they are more likely to be influenced by outdoor ads (public transit, billboard, building, etc.), which would make sense given the higher concentration of liberals in urban areas. Branding and strong creative are the foundation behind successful campaigns: While it may seem obvious that branding a candidate is a key first step, the current landscape has shown that some strategists are consigning this aspect to a secondary role. Formulaic creative and a lack of initial positioning through earned media and organic channels will not end well for most. Just like today’s consumers, modern voters are increasingly demanding authenticity from the campaigns they choose to interact with. Those who do this well through strong media relations, organic online presence and dynamic creative will position themselves above the rest. Young voters are interested and engaged with political messaging: Though voter turnout may be low in comparison to other age groups, millennials are the most interested age group when it comes to political advertising (48 percent claim some level of interest, compared to 40 percent of Gen X and 38 percent of baby boomers). Marketers need to look no further than Barack Obama’s 2008 run to know that campaigns which tap into this interest with authentic and targeted messaging will drive these voters to the booths. Young voters also start researching candidates earlier than other groups: Millennials begin researching candidates one year or more prior to a presidential election, which is more than any other age group, with 38 percent claiming they do so. This percentage is 40 percent higher than the 27 percent of baby boomers who claimed the same activity. Millennials also have a higher “one year or more” research-timing percentage for midterm elections, coming in at a rate that was 78 percent higher than Gen Xers or baby boomers. Clearly, this signals that political marketers should begin engaging young audiences through organic means such as social, blogs and online outlets early on to provide an engaging foundation well before the bulk of ad spend revs up. Millennials influenced most through TV? In political advertising, traditional formats work in tandem with online: In what may come as a surprise to some, 38 percent of millennials listed television as the most effective ad format for influencing their voting behavior. Compare this to just 19 percent of baby boomers who said the same. But the second most influential ad format for millennials should come as no surprise: social media captured 35 percent of their vote. Cross-platform messaging is essential in targeting this group, but this data shows that television should still play a key role. Televised debates, news media and word-ofmouth are still the most influential sources to voters overall: Across all respondents, 73 percent ranked televised debates in their top three most influential sources for gathering information on candidates, with 71 percent doing the same for “news/media reports” and 62 percent for word-of-mouth from friends or family. Nearly a quarter of voters claim they usually know who they’re voting for without research: Across all respondents 18 or older, 25 percent for midterm elections and 23 percent for presidential claimed they usually don’t conduct research prior to voting. These responses represented the highest answer percentages overall, and were driven primarily by democratic and independent voters. So do these respondents feel they rely more upon emotion than research when voting? Or do they simply look to sources like political debates and word-of-mouth to form their voting decisions, and don’t consider this to be “active” research? Voters care most about issues when watching ads: Issue-based advertising left more respondents feeling positive about candidates (67 percent) than negative (7 percent). This topic also beat out “personalization/humanization ads” and attack ads to reign as the most preferred subject matter for political advertising. Attack ads left a majority (64 percent) of respondents feeling negative about a candidate post-viewing. Rise of new formats: Compared to the 2012 presidential election, about a third of respondents believe online political ads will have more of an impact on their voting behavior in this year’s election. Slightly more respondents overall are interacting with political ads on social media for this year’s election when compared to past elections. Democrats represent the group most responsive to political ads on social media, and a quarter of this group is already reporting interaction (likes, shares, comments, etc.) with ads involving the 2016 election. *Data reflects an accurate representation of the total U.S. population aged 18 and older, with completed interviews being weighted by five variables to ensure this objective. Full Methodology available upon request. 26 l Winter 2016 By Elizabeth Kalmbach It’s no secret that the growth of the online content market constricted the traditional newsprint and magazine publishing industries in both subscription numbers and overall revenue. Though the most dramatic decline in revenue was largely confined to the years of 2008 and 2009, it has been widely reported that the days of the traditional magazine are numbered. However, the content creation and management skills of the publishing industry have been cultivated over decades and its staying power should not be underestimated. Unlike the traditional newsprint sector, which struggled to define their differentiating factors in an Internet-based 24hour news cycle, magazines have long relied on their special relationships with readers and their ability to provide unique content that sets them apart from their competitors. The titles that didn’t (namely the newsweeklies) were some of the first to fold in the wake of the rise of Internet news. Those which have survived have been forced to fight a continuous battle for relevancy in order to attempt to maintain circulation numbers. As recent data shows some troubling indicators for the future, it’s clear that the magazine industry won’t have an easy road. Decreasing newsstand sales are one of the most troubling signs of what’s to come. If impulse purchasing is commonly thought to be a signifier that the general public can still be enticed by the unique content touted on print covers, it seems their appetite is waning. For most titles, newsstand sales represent only about 7 percent of total revenue, so the alarming declines don’t signify the end of magazines. However, they could be a harbinger of doom. In an effort to keep magazines top-of-mind and accessible to all, consumer titles have experimented with digital formats over the past 10 years. In nearly every case, converting the glossy pages of traditional publications to an interactive, convenient and competitive version has been an expensive and complicated challenge. The endeavor is also nearly impossible to replicate consistently over the course of a traditional publishing schedule. It is generally understood that magazines’ strongest asset is their ability to capture attention and connection in a manner not replicated by any other medium. Unfortunately, the industry has not been able to replicate that attention on a digital platform, nor have they determined how to fully monetize engagement levels in the face of ever-cheapening CPMs (cost per thousand) on largescale digital platforms. There’s no doubt that the magazine business model doesn’t work in a modern, online world where competition for 24/7 eyeballs increases daily. Up to this point, struggling magazine brands have attempted their forays into the digital platform on an individual basis in order to extend the life of their content services with dubious results. Digital subscriptions for major titles have held at about 30 percent of all magazine subscriptions and no data thus far indicates major increases on the horizon. Now, the latest publishing attempt to evolve the magazine landscape in a digital world is here, and it’s called Texture. The new Texture digital magazine app was launched several years ago as “Next Issue,” a joint project funded by magazine greats Conde Nast, Time Inc., Hearst Magazines, Meredith and News Corp. More recently joined by Rogers State of Media l 27 Communications in Canada, and boasting $50 million in a fourth quarter 2015 venture capitalist infusion, the leaders of the magazine world hope to join forces in an attempt to maintain relevancy and stop the circulation bloodbath. The Texture app is essentially built on the Netflix, “all-you-can-eat in one monthly subscription” concept and offers 145 titles for a $14.95 monthly fee. A basic monthly subscription of $9.99 removes “premium” titles like Sports Illustrated, Us Weekly and People, but still offers 95 percent of the platform’s available titles. New features support article and topic curation across titles, allowing users to create personalized content lists or simply read their favorite titles from beginning to end. After operating costs, the publisher partners share revenue based on a usage model. Articles read are attributed to each publisher and subscription revenue is split accordingly. If no one reads a title, the publisher receives no revenue share. Competition is slim in this “allyou-can-read” category; the only other major app offering this service is Magzter, which has a larger library but fewer premium titles and more of an international focus than Texture. Readership and audience Publishers aren’t yet sure whether this app will inadvertently drive down the quality of their titles’ readerships. If Texture achieves scale, touts abundant readership data collected within the app and attracts new readers to existing quality content, they will have succeeded and this deal with the devil will be worth it. No amount of quality audience erosion will hold them back, and it’s unlikely that quality audiences would disappear anyway, since magazine fans will consume their favorites no matter the format. What’s more, fears over this business structure have been raised before with Netflix itself, and thus far, there have been no complaints from the networks as they cash the retransmission rights checks they enjoy as a direct result of Netflix’s scale. But make no mistake, scale is essential. If Conde Nast, Time, Hearst, Meredith and News Corp can’t figure out how to attract more subscribers, the failed effort will be a sign of the decline of magazine publishing as a whole, not just another failed attempt at conversion to a digital platform. But as with many previous forays into experimental digital competition, the publishing industry has dabbled with the Next Issue or “Texture” app but never fully committed. Their commitment fears have been primarily focused on a fear of cannibalizing their print publication audience while “cheapening” the audiences they attract through a less expensive version of their premium content. But truth be told, potentially cheapening their brands has never bothered them before. Remember the ‘90s and early 2000s when cheap circulation tricks included $1 annual subscriptions at the check-out counter of Best Buy? Many would argue that falling circulation calls for radical measures and an occasional reader of a digital app is better than a rare reader of a print copy; especially when the former gave up their email address and the rare reader sailed by the title in an airport while maintaining complete anonymity. However, if it’s such a great idea, why has the app only sold a couple hundred thousand subscriptions over the last few years? Well, if no one has heard of the app, no one Google Facebook Magazine Newspaper Industry Yearly Ad Revenue in Billions (2008 - 2014) 80 70 60 50 40 30 20 10 0 2000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Folio: magazine 28 l Winter 2016 “There’s no question that small phone screens are a huge problem when it comes to readability, but magazines had a whole device designed for them: tablets.” will subscribe. The recent cash infusion was highly publicized, but $50 million won’t go far if it’s devoted in part to the technology platform upgrades. Scale needs to be achieved quickly, and it’s hoped that new TV ads will boost Texture’s profile the way Netflix boosted theirs to become a household name. User experience There’s no question that small phone screens are a huge problem when it comes to readability, but magazines had a whole device designed for them: tablets. With that in mind, it seems like magazines had the advantage in the digital technology sector. But it’s also true that entertainment time is increasingly spent on mobile phones. That said, it could be argued that magazines were never an “on-the-go” medium. It was always their ability to capture and hold the attention of their devoted readers that made them so valuable. Why can’t iPads or laptop screens at home be devoted to magazines? Why must the beauty and engagement of magazines be removed simply so readers can access them in two-minute bites throughout the day? Destroy the engagement, and everything the magazine industry stands for is destroyed. With this in mind, refining the digital experience on Texture is vital. Even after the re-structuring and feature updates Texture completed over the last year, usability could be improved. The curation capabilities are sometimes clunky and the magazines lack the depth of links, video and on- line flexibility that traditional websites offer. However, for the traditional magazine lover, the features that have been added do not detract from the reader experience and feature improvements that will likely bring in new readers. Monetization If successful, will Texture create an even greater monopoly within the top magazine publishing groups? Yes it will, but potentially only in the short term. The future success of the industry relies on scale and publishers need to band together to ensure a solid platform. Unlike the television networks’ experiment with Hulu, texture will maintain the individual identities of magazine titles. After all, each magazine brand has been carefully built to identify with specific audiences. Hard core followers of specific titles will continue to read them cover to cover and new readers have the opportunity to find brands they love by searching for specific content. Though Texture is owned by the major publishing houses, their recent infusion of capital came from an outside source, which will help them maintain a growth trajectory even if their vision is insular. Consumer demand for niche publications produced outside the confines of the monopoly will be addressed by a profit-minded third party. In terms of affecting advertisers, Texture simply contributes additional eyeballs to the print platform. The increased measurement capabilities of the digitally-scanned versions might be a boon to the reach of magazine advertising. Though one drawback could be spread advertising. Since Texture focuses its reading app on a single page view, multiple-page spreads do not have the same effect that they do in print versions. However, the biggest gain for advertisers could be the reach opportunities. Instead of confining ads to a single magazine, future opportunities could include sponsorship of whole segments of readers by genre. Running in-app ads reaching Texture readers on their homepage or within a grouping of male-targeted, parenting or women’s service publications offers advertisers opportunities beyond the scanned page. State of Media l 29 SPORTS CORNER STATE OF MEDIA CONTRIBUTORS WINTER 2016 Jersey Ads: Tracy Bielenberg Director/Business Development Sara Brown Supervisor, Digital Specialty: Researching all media formats Favorite thing about winter: Chapped Specialty: Social media Favorite thing about winter: Skiing lips (said snow one ever) followed by hot chocolate Jonathan Christens Director of Communications Darrell Drake VP, Research Specialty: Researching all media formats Favorite thing about winter: Freshly Specialty: Research Favorite thing about winter: Without Coming to a U.S. league soon? By JOSH HILGENDORF When it comes to sports, there’s no shortage of discussion surrounding the name on the back of every jersey. Fans fall in love with the hotshot quarterback or rookie point guard that dazzles with no-look passes. However, there may soon be another name featured on jerseys for the public to talk about. For the first time in the United States, an advertiser’s logo will appear on a uniform in one of the four major leagues. Participants in the 2016 NBA All-Star Game will wear jerseys featuring the Kia logo. The logo will be small and discretely placed in the upper left corner of the uniform. The two-year All-Star test is expected to be just the beginning, as league officials are pressing for uniform advertising to become commonplace in the coming years. Kia’s deal to appear on the All-Star uniforms was completed during negotiations with Turner Broadcasting. Kia, an official sponsor of the NBA, often places advertisements during NBA games on TNT, which is owned by Turner. Turner gained the ability to sell ads on NBA jerseys as an adjunct to its NBA broadcasting rights contract through the 2025 to ‘26 season. So what does this all mean? Well, jersey advertising is not a revolutionary concept. It is widespread across major sports in almost every other country, appearing on soccer and basketball uniforms in Europe, rugby shirts in Australia and baseball jerseys in Japan. Even in the U.S., corporate logos are seen plastered all over NASCAR cars and driver jumpsuits, as well as on golfers’ hats, shirts, pants and bags. But up until the NBA announced the Kia agreement, the four largest U.S. leagues, the NBA, NFL, MLB and NHL, have avoided jersey advertising altogether. At first glance, it seems illogical that advertisements are not already on every team’s jersey. After all, sports are a business, and selling advertising space on jerseys is another, potentially lucrative revenue stream. Marc Ganis, a sports marketing consultant, estimates that each league could generate hundreds of millions of dollars if small ads are sold on jerseys. But the reasons this has yet to occur are numerous. The biggest hurdle to overcome might be the backlash from fans that could occur with the introduction of this new advertising. After all, without fans, the sports genre would not be the massive moneymaker that it is today. Fans often have an obsessive relationship with their favorite teams. They respect the history of the franchises they follow, and may look at the introduction of jersey ads as an attack on their storied reputation. In addition, U.S. fans are already inundated with advertising while watching live sports. Football and baseball have frequent stoppages in play, as each game lasts an average of three hours, allowing for numerous commercial breaks. With soccer’s average match lasting less than two hours of continuous gameplay (i.e., no dedicated media timeouts or frequent stoppages in play), there just aren’t as many opportunities for standalone ads to be shown to consumers. This is the reason sideline and jersey ads work so well in European soccer leagues. But in the United States, fans of the four major sports may see jersey advertising as just another attempt by leagues and sponsors to cram more ads into an already cluttered space. Though how far would fans actually go to voice their displeasure with jersey advertising? It seems unlikely they would stop buying tickets or tuning in because of a small addition to the uniforms of their favorite players. After all, many NASCAR and golf fans embrace corporate sponsorships, even wwlooking at them as an integral part of their favorite competitor’s identity. Another big issue is that there are a lot of mouths to feed in professional sports. Aside from each organization, every team owner would most likely want a piece of the prize money jersey advertising could reap. Not to mention the player unions in every league that would assuredly want those that are actually wearing the logos on their chests to get their fair share as well. Beyond how the money would be divided is the question of how ads would be sold. Would each league strike a deal with one or two sponsors, or would each team reach out to sponsors individually? Problems may arise when advertisers aren’t as willing to spend money to put their logo on small market teams. Would there be a bidding war in the MLB for real estate on the New York Yankees uniform, while the Miami Marlins are left to take whatever sponsor is left over? The NBA’s deal with Kia serves as the perfect experiment that should shed a lot of light on these questions, as it’s an isolated game, focused more on the players than the teams they represent. If the reception is negative, jersey advertising can disappear after the 2017 edition of the All-Star game. However, if it is positive or even unnoticed, then there may be a new and lucrative edition to team uniforms in the coming years. 32 30 l Winter 2016 fallen snow, warm fires and ski trips! it I would not have the ability to fully appreciate summer Omer Fazal Digital Supervisor Josh Hilgendorf Media Supervisor Specialty: Digital Favorite thing about winter: Snowfall! Specialty: Strategy Favorite thing about winter: There’s plenty of basketball to watch Elizabeth Kalmbach VP, Group Media Director Sara Van Kuiken Associate Media Director Specialty: Strategy Favorite thing about winter: Counting Specialty: Sports Favorite thing about winter: Luz Lopez-Montera Media Planner Kelsey Maciejewski Associate Digital Strategist Specialty: Traditional planning Favorite thing about winter: Gathering Specialty: Digital media Favorite thing about winter: The down the days until summer Hibernating with comfort food and Netflix with loved ones, especially around the holidays possibility of a snow day! Jade Osowski Communications Coordinator Zach Spangler Creative Specialist Specialty: Social media Favorite thing about winter: Ice Specialty: Graphic design Favorite thing about winter: The skating seasonal beverages! 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