At the Digiday Video Summit last month in Scottsdale, Arizona, we sat down with 51 publisher executives to learn about social platforms’ contributions to their video revenues. Check out our research on publishers’ growing concerns about their ability to monetize content for over-the-top services here. Learn more about our upcoming events here. Continue reading “Digiday Research: Where publishers get their video revenues”
At the Digiday AI Marketing Summit this month in Santa Barbara, California, we spoke with leaders from 37 companies interested in applying artificial intelligence to marketing and learned about their plans for voice marketing. Check out our earlier research on AI’s potential to replace media buyers here. Learn more about our upcoming events here. Continue reading “Digiday Research: Voice is a low priority for marketers”
At the Digiday Publishing Summit Europe in October, we sat down with 35 industry leaders from across the continent and drilled down into two hot topics, ePrivacy and the General Data Protection Regulation. We asked their feedback on and expectations for the coming changes. Check out our earlier research on the state of agencies here. You can also learn more about our upcoming events here.
This report does not seek to outline every upcoming policy and procedural change. It merely reflects the opinions of industry veterans — from publishers headquartered in and out of Europe — undergoing this profound change.
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Digiday’s “Research in brief” is our newest research installment designed to give you quick, easy and digestible facts to make better decisions and win arguments around the office. They are based on Digiday’s proprietary surveys of industry leaders, executives and doers.
Amazon is eating the world. Just about everyone is saying it these days. The Amazon avalanche is coming to ad tech, too. In its third-quarter earnings call, Amazon announced that its advertising business grew 58 percent year over year to $1.12 billion.
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This is the fifth and final part of a research series on a set of emerging technologies in media and marketing. Read our other reports on virtual reality, augmented reality, chatbots and personalization.
When the web changed the game in the mid-’90s, it caught the entire industry by surprise. In many ways, the media landscape is still recovering. With a new set of technologies on the horizon, publishers refuse to be left in the dust again.
“As an industry, we let the internet happen to us and have done basically nothing to help shape the experience,” said Marc Lavallee, executive director of The New York Times’ Story[X] innovation division. “When you think about the missions of journalistic organizations, that borders on negligence.”
But just because something can be done doesn’t mean it always should be. Determining which tech innovations to pursue and which to ignore isn’t easy, especially amid the deafening industry buzz that accompanies each new launch. So we surveyed 172 publishers and marketers about their innovation budgets and had them compare VR, AR, chatbots and personalization technology across key attributes. Some top-line findings:
- The clearest winner across all measured attributes was personalization technology.
- The clearest loser: virtual reality.
- Forty-four percent of publishers and 38 percent of marketers have budgets dedicated to emerging tech.
- Despite this, many can only dedicate less than 5 percent of overall company budgets, though that number is expected to grow.
- Marketers pull their resources most often from marketing portions of budgets.
- Publishers are more likely to dip into R&D/innovation budgets.
Here’s how they stack up:
For both publishers and marketers, the clear winner on all fronts was content personalization. The most familiar of the four technologies (many media and marketing companies are already doing some form of personalization today), its low cost (chatbots were the only technology perceived as less expensive) and high ability to scale are particularly attractive.
On the other hand, VR has the cards stacked against it, even suffering low marks in user engagement, a category in which its immersiveness was expected to give it an advantage.
Interestingly, in the case of both publishers and marketers, ratings for the ability of a technology to scale strongly correlated with the level of user engagement for that technology. If something was viewed as less scalable, it was also seen as less engaging.
An exception: chatbots. While generally viewed as less engaging (due to the stilted conversational potential), they’re actually ranked the second most scalable. As more and more personal assistants infiltrate our many devices and the underlying machine learning improves, we can expect its position to appreciate.
Following the money
When industry professionals think innovation, they think Google. Its parent company, Alphabet, allocates about 20 percent of development resources (both time and money) to researching and deploying new technologies. Most media and marketing companies don’t have that luxury.
About 44 percent of publishers and 38 percent of marketers have specific budgets for innovation and research and development involving emerging media technologies.
However, these budgets are fairly modest: 50 percent of marketers and 38 percent of media companies are only able to dedicate less than 5 percent of their company’s overall budget to keeping things on the cutting edge.
“You have to be prudent in the types of risks you take,” said Michael Lebowitz, CEO of Big Spaceship. “We’re building credibility and making sure that we’re not perceived as boosting a technology because it’s going to be fun for us. Would we love to do another VR project? Sure, but we couldn’t in good conscience recommend it for most of our clients.”
Despite the air of caution, these innovation/R&D budgets are an increase from similar 2016 budgets for 54 percent of brands and 52 percent of publishers, likely due to a rise in high-profile emerging tech.
Of course, R&D departments aren’t the only places media and marketing companies are trying new things. For marketers, most of the emerging technologies considered in this report come most often from marketing budgets: content personalization (42 percent), chatbots (21 percent) and augmented reality (16 percent); virtual reality is most often financed through a production budget.
This reliance on marketing budgets may be linked to the rise of the chief marketing officer in most brand organizations.
According to the 2016-17 Gartner CMO Spend Survey, CMO technology spending is on track to exceed chief information officers’ technology spending this year. And more and more often, marketing departments are incorporating functions like sales, IT, innovation and customer experience. It makes sense: These flashy technologies can be used to get attention, both from consumers and the press, resulting in a surplus of earned media.
Publishers, however, are much more likely to dip into R&D and innovation budgets for most emerging technologies than any other budget, though 21 percent pay for content personalization through either a marketing or production budget.
But publishers have another option: sponsorship. To bring a big idea to life, they can often find a partner with aligned interests capable of bankrolling production.
“We have an interest in advancing 360 video, and Samsung has the ability and interest in that as well,” said Lavallee. “And in that case, it’s really easy for them to give us a couple of hundred 360 cameras that we can send around the world to folks on the ground. So, that provides access to things that would otherwise be completely out of reach or just [acts as] an accelerator, probably somewhere in between those or both.”
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The 2016 election was a hotbed of media experimentation, and The New York Times was no wallflower. To cover the last 19 days of the race, it built a Facebook Messenger bot engineered to deliver insight from political reporter Nick Confessore.
Digiday Research surveyed 172 executives from media and marketing companies to uncover their approaches to chatbots — and the development of the market. Key findings:
- About 47 percent of publishers and 31 percent of marketers use chatbots.
- Fifty-two percent of publishers and marketers say chatbots are mostly deployed as information resources.
- Facebook Messenger is the chatbot’s natural habitat, with 88 percent of both publishers and marketers deploying them on that platform.
- According to marketers, chatbots conduct less than 20 percent of consumer interaction before passing the conversations off to human support.
- The proportion of chat requests fulfilled and the number of chats initiated are the dominant ways chatbot performance is measured now.
The Times editorial team wrote a “choose your own adventure”-style script each day to simulate conversation with Confessore. Text prompts guided users through a pre-structured dialogue. “It was fully automated, but originally created by a human,” said Andrew Phelps, a member of Story[X], the Times’ innovation division. “So people still really identified with Nick the reporter, and it felt like a personal experience.”
Chatbots like these dot the publishing landscape: About 47 percent of publishers surveyed have used them. But they’re still far from intelligent.
“The illusion that HAL is out there, and the machine is alive is just that: an illusion,” said Derek Fridman, global executive experience director at Huge. “There’s machine learning taking place and algorithms making decisions, but in most cases, we’re scripting sequences.”
That’s fine for now, since 52 percent of media and marketing professionals say chatbots are predominantly employed as information resources.
“We’re really pushing brands to focus on utility, things that consumers are going to want to use on a regular basis,” said Adam Simon, director of strategy at IPG Media Lab.
“Anything that makes my life more convenient, I’m willing to give you everything up to my fingerprint for,” agreed Fridman. “With chatbots, it’s all, ‘Give me, give me, give me.’ I want to make a request. I want something back right away.”
When FT Labs created a chatbot integrated with the site search capability, they were doing just that — two years too soon. “We had to explain to users what [Slack] was,” said Chris Gathercole, head of the Financial Times’ FT Labs, of the now-ubiquitous workplace chat platform that housed the bot. “The project ran out of steam; we tried too early.”
But Gathercole is more optimistic about the future, especially around emerging voice environments: “That’s a good back end to support conversations.”
Educating users about new platforms is a persistent, chronic challenge both media and marketing professionals feel when pushing emerging tech. That’s why an overwhelming proportion of both publishers and marketers (88 percent) deploy chatbots on the most familiar platform of all: Facebook Messenger.
“We tend to make bets where we see opportunities to provide the best value for users in a space that’s familiar to them, but can be made new through innovation and technology,” said Brian Dell, director of Quartz Creative.
There are other clear reasons to employ chatbots in closed, private-message settings, especially given Microsoft Tay’s highly public, highly toxic Twitter malfunction. “A chatbot makes a lot more sense as a closed, one-to-one session, rather than broadcasting all of the problems consumers are having to everyone at all times,” said Michael Lebowitz, CEO of Big Spaceship.
This potential for public failure is vital to grasp, given that 38 percent of marketers who use chatbots use them for customer support purposes.
Even then, humans step in when the situation calls for a true conversationalist. Most marketers (91 percent) say the chatbots themselves conduct less than 20 percent of consumer interaction, passing the conversations off to human support when things go off-script.
The technology simply isn’t far along enough to absorb the brunt of customer interaction. Too many conversational dead ends (or misunderstandings) cause most unsupervised chatbot chats to spectacularly fail the Turing test.
This is fine, as long as marketers acknowledge the problem (and keep the conversations fairly private). “That would not be an error of the technology, but of putting too much trust in the system,” said Lebowitz.
Still, the ability to at least initiate many conversations points back to chatbots’ main strength: scaling one-to-one interactions. Forty-one percent of media and marketing professionals say chatbots have high or the highest potential in this area.
This is also reflected in how chatbot success is currently measured: 38 percent of marketers say the proportion of chat requests fulfilled, while 33 percent say it’s the number of chats initiated. Publishers aren’t so split: 66 percent say it comes down to the number of chats initiated. The focus, so far, is on connections, not engagement, reflecting a still-dominant industry preference for impressions.
But that doesn’t mean marketers are going all in on utility at the expense of entertainment with their bots. “Where it gets more interesting is how chatbots could become part of larger narratives,” said Lebowitz. “Years ago, we took over digital for the Skittles brand, and the conceit of our [Facebook] presence was that all of the posts would be issued from the character of The Rainbow. Could the brand be issuing funny-enough content in a one-to-one or one-to-few setup that it would be worth bringing that personification to a chatbot?”
According to IPG Media Lab, yes. The lab worked with ‘90s fizzy alcoholic hit Zima for its 2017 comeback, programming a bot emerged freshly from millennials’ halcyon days with no awareness of contemporary trends or current events. To assess its success, IPG Media Labs is looking past impressions to compare how the chatbot performs as a channel relative to other campaign channels.
“How does this perform on a cost basis against your mobile site or your Instagram feed,” said Simon. As for why consumers would even be interested in a branded chatbot without much utility, “it’s the same reason people are on Facebook in the first place: They’re killing time in line at the grocery store.”
Both media and marketing professionals still have a lot to learn about this new set of conversational interfaces, but all of the information they’re capturing through these early experiments will help accelerate the process.
“At the end of the day, we’re seeing our clients just want to collect as much data as possible about what their consumers’ wants, dreams and needs are,” said Fridman. “As the machine becomes more aware, we can begin to leverage all that data to be a hell of a lot smarter in the next generation from an AI standpoint.”