The rise of ad blocking shows it’s time to reorient publishing and advertising around the needs of users rather than those of publishers and advertisers, writes RICHARD CLOGG, Senior Technology Consultant at Acceleration.
Since the rise of mass media, there has been an implicit contract between audiences, brands, and publishers. Publishers invest in producing content, to entertain and inform their readers or viewers, largely paid for by advertising from organisations that wish to influence the audience. That model has undermined by several waves of change since the birth of the web.
It all started when publishers introduced banner ads to monetise their web content, figuring that the digital world would work much the same way as print or broadcast. They soon found that advertisers weren’t willing to pay as much for digital placements as they were for print and broadcast. Brands, meanwhile, were often disappointed in the results they tracked from their digital campaigns.
And end-users, of course, grew to resent digital adverts as they became increasingly intrusive, thanks to roadblocks, pop-ups and pop-unders, self-playing videos, tagging, and other “innovations”. From the user’s point of view, ads slow down their page downloads, track their behaviour and stalk them across the web with unwanted offers for things they Googled earlier in the morning.
Little wonder that the ad-blocking feature in Apple‘s iOS 9 is causing such anguish for the advertising industry – it’s an enormous threat to their revenues in an overtraded market where margins are already thin. As Business Insider’s Paul Berry writes, ad-blocking isn’t just a software feature – it’s a cultural movement.
Meanwhile, Goldman Sachs says that the rise of the social media giants and the backlash against digital advertising will see the ad industry “fundamentally restructured” in the years to come. But given that no one seems particularly happy with the status quo – even the IAB admits the industry has “messed up” – that might not be a completely bad thing.
What might an advertising paradigm for the future look like? It would be focused on user experience first, rather than on automation, efficiencies and data gathering for agencies, brands, networks, and publishers. It would ensure faster loading of content. And rather than steamrolling users with invasive sounds and visuals, it would present them with targeted, interesting experiences that they welcome.
Publishers, brands, and the adtech companies are still shaping the future of advertising. However, the future might include an element of paid subscriptions for users who don’t want to see advertising at all, more use of native advertising as a way of offering experiences that feel natural within the publisher’s environment, and the use of the platforms that the likes of Twitter, Facebook, Apple News, and Medium offer for publishers.
We find it particularly interesting how these new platforms might enable more efficient targeting for advertisers and a better user experience. On the flipside, content producers risk being sidelined as distributors and aggregators such as Facebook, Apple News, Medium and Twitter control the audience and monetize their content.
We’ll also see some interesting innovations around mobile, for example, the advances offered by Google’s Accelerated Mobile Pages project.
Advertising accounts for around 1.5% of the GDP in the United States – a number that has stayed constant even as spending has spread from print to broadcast and then to digital. This is a large industry everywhere in the world. We don’t see the advertising sector disappearing completely as a result of the ‘adblockalypse’, but it is going to change dramatically. There will be new paradigms in consuming and publishing content, possibly enabled by new tools and technologies.
Against this backdrop of change and transition, publishers and brands face the challenge of ensuring that they can target and engage the audience wherever it goes. To succeed, they will need to create digital frameworks that help them to accommodate a shift in how audiences move around and interact with content. An agile but robust architecture and streamlined business processes will help them navigate the changing the landscape.
VoD cuts the cord in SA
Some 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.
That’s according to GfK’s international ViewScape survey*, which this year covers Africa (South Africa, Kenya and Nigeria) for the first time.
The study—which surveyed 1,250 people representative of urban South African adults with Internet access—shows that 90% of the country’s online adults today use at least one online video service and that just over half are paying to view digital online content. The average user spends around 7 hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.
Consumers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television. People aged 18 to 24 years spend more than eight hours a day watching video content as they tend to spend more time with free digital video than people above their age.
Says Benjamin Ballensiefen, managing director for Sub Sahara Africa at GfK: “The media industry is experiencing a revolution as digital platforms transform viewers’ video consumption behaviour. The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption.”
The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services. Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still sometimes watch content on disc-based media.
“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research & regional business development at GfK Sub Sahara Africa. “Among most demographics, usage of paid online content is incremental to consumption of linear television, but there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”
New data rules raise business trust challenges
When the General Data Protection Regulation comes into effect on May 25th, financial services firms will face a new potential threat to their on-going challenges with building strong customer relationships, writes DARREL ORSMOND, Financial Services Industry Head at SAP Africa.
The regulation – dubbed GDPR for short – is aimed at giving European citizens control back over their personal data. Any firm that creates, stores, manages or transfers personal information of an EU citizen can be held liable under the new regulation. Non-compliance is not an option: the fines are steep, with a maximum penalty of €20-million – or nearly R300-million – for transgressors.
GDPR marks a step toward improved individual rights over large corporates and states that prevents the latter from using and abusing personal information at their discretion. Considering the prevailing trust deficit – one global EY survey found that 60% of global consumers worry about hacking of bank accounts or bank cards, and 58% worry about the amount of personal and private data organisations have about them – the new regulation comes at an opportune time. But it is almost certain to cause disruption to normal business practices when implemented, and therein lies both a threat and an opportunity.
The fundamentals of trust
GDPR is set to tamper with two fundamental factors that can have a detrimental effect on the implicit trust between financial services providers and their customers: firstly, customers will suddenly be challenged to validate that what they thought companies were already doing – storing and managing their personal data in a manner that is respectful of their privacy – is actually happening. Secondly, the outbreak of stories relating to companies mistreating customer data or exposing customers due to security breaches will increase the chances that customers now seek tangible reassurance from their providers that their data is stored correctly.
The recent news of Facebook’s indiscriminate sharing of 50 million of its members’ personal data to an outside firm has not only led to public outcry but could cost the company $2-trillion in fines should the Federal Trade Commission choose to pursue the matter to its fullest extent. The matter of trust also extends beyond personal data: in EY’s 2016 Global Consumer Banking Survey, less than a third of respondents had complete trust that their banks were being transparent about fees and charges.
This is forcing companies to reconsider their role in building and maintaining trust with its customers. In any customer relationship, much is done based on implicit trust. A personal banking customer will enjoy a measure of familiarity that often provides them with some latitude – for example when applying for access to a new service or an overdraft facility – that can save them a lot of time and energy. Under GDPR and South Africa’s POPI act, this process is drastically complicated: banks may now be obliged to obtain permission to share customer data between different business units (for example because they are part of different legal entities and have not expressly received permission). A customer may now allow banks to use their personal data in risk scoring models, but prevent them from determining whether they qualify for private banking services.
What used to happen naturally within standard banking processes may be suddenly constrained by regulation, directly affecting the bank’s relationship with its customers, as well as its ability to upsell to existing customers.
The risk of compliance
Are we moving to an overly bureaucratic world where even the simplest action is subject to a string of onerous processes? Compliance officers are already embedded within every function in a typical financial services institution, as well as at management level. Often the reporting of risk processes sits outside formal line functions and end up going straight to the board. This can have a stifling effect on innovation, with potentially negative consequences for customer service.
A typical banking environment is already creaking under the weight of close to 100 acts, which makes it difficult to take the calculated risks needed to develop and launch innovative new banking products. Entire new industries could now emerge, focusing purely on the matter of compliance and associated litigation. GDPR already requires the services of Data Protection Officers, but the growing complexity of regulatory compliance could add a swathe of new job functions and disciplines. None of this points to the type of innovation that the modern titans of business are renowned for.
A three-step plan of action
So how must banks and other financial services firms respond? I would argue there are three main elements to successfully navigating the immediate impact of the new regulations:
Firstly, ensuring that the technologies you use to secure, manage and store personal data is sufficiently robust. Modern financial services providers have a wealth of customer data at their disposal, including unstructured data from non-traditional sources such as social media. The tools they use to process and safeguard this data needs to be able to withstand the threats posed by potential data breaches and malicious attacks.
Secondly, rethinking the core organisational processes governing their interactions with customers. This includes the internal measures for setting terms and conditions, how customers are informed of their intention to use their data, and how risk is assessed. A customer applying for medical insurance will disclose deeply personal information about themselves to the insurance provider: it is imperative the insurer provides reassurance that the customer’s data will be treated respectfully and with discretion and with their express permission.
Thirdly, financial services firms need to define a core set of principles for how they treat customers and what constitutes fair treatment. This should be an extension of a broader organisational focus on treating customers fairly, and can go some way to repairing the trust deficit between the financial services industry and the customers they serve.