Fox Networks and Pandora are exploring what perks they can offer people in exchange for consuming the ads they host as they search for alternative ways of selling attention now that CPM rates are fast becoming a zero sum gain.
The transactional nature of advertising, whereby a person willing engages with an advertiser in exchange for something, is fundamentally broken according to both media owners. A person’s attention online is increasingly funnelled into a feed, quickly rendering the old way of buying CPMs to get noticed on a page redundant, thereby meaning ads need to get back to offering something of genuine value.
Brands would like to believe that they can become more connected to people but that that’s not going to change, according to Joe Marchese, president of advanced advertising products at Fox Networks. Speaking on a panel moderated by The Drum’s editor at large in North America Doug Zanger at SxSW he added: “What’s broken is the transactional nature of advertising where it’s fair trade”.
It’s why original programming is still the best sales pitch for 20th Century Fox’s ad sales team and is why Pandora has a product that lets listeners skip audio promos for an hour if they click on a video ad.
Advertising is no longer about mass frequency for Pandora, it’s more about personalisation. “It’s ok if someone sees and ad and then wants to skip it,” admitted Joe Krawczyk, vice president of product at Pandora as “we know that when people see ads more than 12 times it can have a negative impact and they start to purchase the product less.”
“We find that when select the right advertising which makes a meaningful impact to our listeners they listen for longer,” added Krawczyk. "If you provide ads that makes sense to listeners that is actually native advertising as it's based on the content around them. There’s no such thing as good advertising. There's just advertising that doesn't annoy you."
It’s part of the streaming service’s attempt to make money in a market where the price of media is continuously being squeezed. The fight for volume has meant media is often traded for the lowest rate possible but that scale is also compromising its quality.
However, both media executives agreed that native advertising, for all the plaudits it gets as the mass advertising format of the future, said examples like product placements and bespoke formats weren’t scalable.
“I think native is a zero sum gain,” opined Marchese. “There’s only so much time that people have. A terrible 30-second ad that just gets across the point and tells me what I need to know, delivers return on investment back to the advertiser and lets me get back to watching my programme might better than a six-minute epic art piece on why I love diapers and why diapers care about me.”
“Getting back to quality is going to require an increase in per unit measurement [of ads], which is fine as this will translate back into return on investment,” added Krawczyk. “We need to be ok with the fact that maybe we did pay 50 per cent more but that 50 per cent actually connected with people rather than being part of the 50 per cent ads that are never actually seen on the Internet."
Marchese continued on this point: “Now that people’s attention goes to whatever is in the feed it’s a different beast altogether and that’s freaking marketers out because you don’t buy media in the same way. The average CPM rate, let’s say, for example is $20 to $30. That’s like two to three cents for 30 seconds at a time. I know that my time is worth more than that and I assume most people would feel the same way. We have a broken transactional nature [in advertising], not a need to get rid of the transactional nature. Attention is the single most valuable resource — can marketers get to a point where they respect that?"