Ads evolve into new forms as media landscape shifts

Publishers are “no longer content to be the place where ads go,” said Ben Winkler, chief investment

Peter Naylor, head of advertising sales at Hulu, stood on a stage before a roomful of advertising executives who were there to see what the popular streaming service had in store for the year. After trumpeting Hulu’s new interactive ads, Naylor made another pitch. “We offer you the opportunity to become part of the creative process with us,” he said.

Meaning what, exactly?

“Goose Island IPA has signed on to sponsor our hit series ‘Casual’ and integrate into the show,” Naylor said. And in the current season of “The Mindy Project,” he added, “not only does Mindy fall in love with her new Microsoft Surface Book, but she also gets to escape the city in her newly designed Lexus RX.”

This kind of advertising through product placement is certainly not new. But Naylor’s announcement — made during last week’s Digital Content NewFronts, an annual sales event where companies like Hulu compete for digital advertising dollars — underscored a broader question running through the advertising industry: What exactly constitutes an ad these days?

For decades, 30-second television commercials were the gold standard, and as online video proliferated, many digital ads were essentially repurposed from TV. But in the past several years, advertisers have become more sophisticated, creating digital ads that were divorced from traditional campaigns and were better suited to the many platforms that have become available, including Facebook, Twitter, YouTube and Snapchat. Now, online ads interrupt nearly everything.

This explosion of online ads, however, has led to the rising use of ad blockers and turned “advertising” into something of a dirty word. So advertisers and publishers are now looking for ways to make online ads less like ads. Many in the industry are even changing the way they talk about ads.

During NewFronts, Hulu and many other companies, often using a rhetorical sleight of hand, put forth the idea that ads are the products of symbiotic relationships, rather than frustrating invaders. Jennifer L. Wong, president of digital for Time Inc., told advertisers the company was “helping brands develop original content” and added, “Working with us is easy.” Lisa Valentino, head of ad sales for Condé Nast, urged the audience to “take a look at the results when Condé Nast tells your story.” Ze Frank, president of BuzzFeed Motion Pictures, said the company worked “with brands and agencies to develop original content.”

Many companies ran flashy videos that showcased examples of these partnerships, much like ad agencies pitching clients. BuzzFeed, for instance, promoted its Tasty channel as a successful example of how it could work with brands like Oster, which makes grills and other appliances.

Publishers are “no longer content to be the place where ads go,” said Ben Winkler, chief investment officer for the agency OMD United States. “What we’re hearing at this NewFronts more than ever is this can be a two-way exchange.”

The rhetorical gymnastics, however, also signal a deeper trend in the ad business. As companies seek to remove clutter from their sites while also bolstering their ad revenue, many are turning to branded content, a widely used but vague industry term that generally means ads that look more like things people actually want to read or watch.

Many publishers, including Vice and The New York Times, have formed what are essentially internal agencies that create ads for brands. And many boast of success, or at least the promise of it.

“We believe branded content and native solutions is a large-scale opportunity for Time Inc.,” Joseph A. Ripp, chief executive of Time Inc., said on an earnings call last week. “We are increasingly hearing from CMOs that they want to speak to their customers in the same way that Time Inc. talks to its audiences,” he added in a reference to chief marketing officers.

Branded content is not the only technique advertisers are trying. They are also creating emojis, posting on Twitter, creating Instagram videos and dabbling in virtual reality platforms. On the traditional advertising side, some networks are showing fewer commercials and offering advertisers the opportunity to sponsor programming.

NBC, for example, announced last month that it was planning to cut about 30 percent of the ads from episodes of “Saturday Night Live” next season and allow advertisers to create original segments. Turner, which is part of Time Warner, and Viacom, which owns MTV and Comedy Central, have also said they plan to reduce the amount of commercials on their cable networks.

Underpinning all of this rethinking are big changes in how people are consuming media — and in how advertisers are allocating their money. Consumption habits have become increasingly fragmented, with more people watching programming, including television shows and live sports, on different online platforms. As a result, traditional television, with its 30-second commercials, is losing its commanding share of advertising dollars. Digital media is expected to pass TV as the biggest advertising category in the United States this year, with roughly $68 billion in ad sales compared with $66 billion for TV, according to the Interpublic Group’s Magna Global.

With online ad spending growing, finding ways to stand out among the onslaught of other online ads has become more important for advertisers. And therein lies a possible conundrum: Advertisers want their ads to look less like ads even as they are fighting harder for attention.

As Caty Burgess, senior vice president for media strategies at The CW Television Network, said, “Is the question, ‘What is an ad?’ or ‘What isn’t an ad?’”

Categories: Business

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