November 2013 Archives

A Conversation with James O’Neill, VP, Director of Interactive Media at RJ Palmer, and Diaz Nesamoney, CEO of Jivox.

The increasing capabilities of digital advertising formats provide new opportunities for marketers to engage prospects and turn them into customers. Central to this endeavor are advertising agencies who translate brand objectives into effective communications programs. Just as important, these agencies also provide the bridge to the most appropriate and effective digital execution technologies to optimize client return on investment. Given the scope and speed of change, the importance of the partnerships between agencies and technology providers cannot be underestimated. It takes close collaboration between marketer, agency, and technology partners to get the most out of digital advertising. 

One such example is the collaboration between RJ Palmer, a leading agency and member of the MDC family, and Jivox, a cross-screen interactive ad platform company and winner of the IAB Digital Video Rising Stars competition. IAB asked James O’Neill (JO), VP, Director of Interactive Media at RJ Palmer, and Diaz Nesamoney (DN), CEO of Jivox, to elaborate on this partnership.

IAB: The team at RJ Palmer were early adopters of the Digital Video Rising Stars. How did you bring this about?

(JO) Many of our clients have a high level of comfort with video being the dominant focal point of their interactive plans.  Since we have been trying to accomplish additional engagement and social interaction goals via various avenues, it serves us well to embed that functionality into the tactic on which clients focus most.

IAB: How have these formats worked for RJ Palmer clients?

(JO) These units have worked really well for us because they continue to realize not only the primary purpose of video - reach, comparable to how television is measured - but also the supplemental benefit of aiding in the achievement of social and engagement milestones.

IAB Full Player Digital Video Rising Star - Zicam demo (courtesy Jivox)

IAB:  What have you learned from your early experiences, and what advice would you give to other agencies considering in-stream interactive digital video advertising?

(JO) The biggest realization has been in the positioning of the performance. When all stakeholders are on board with a campaign’s primary focus and all else is complementary, no one is underwhelmed with what may seem like a low performance for specific interactions. For example, if additional interaction includes a coupon print, no one should compare the number or cost of the coupon prints to a digital consumer promotions campaign with Coupons Inc.; that’s not an apples-to-apples comparison.

(DN) We have learned that less is more - greater user engagement comes not from overloading the ad with lots of buttons and interactions but rather from providing a meaningful set of options with which the user can engage and then leading them into a further immersive experience rather than overwhelming them with choices. We have to keep in mind that the video is the main creative asset, so we shouldn’t lose sight of that.

IAB: How do you measure success with these Digital Video Rising Stars formats?

(JO) Success of these formats still relies on the primary metric of video views but involves more nuances, with engagement rates acting as the differentiator between in-market or interested parties. For example, if reach is the same, wouldn’t a particular execution demonstrate greater value if it proved that the consumers were more likely to engage?

(DN) We use engagement rates measured as the number of times users interacted with the interactive elements in the ads. This is often coupled with engagement time - which measures how much time the user spent engaging with the ad experience. Both of these measures show value in interactive video as a way of creating greater user engagement. 

IAB: All digital display and mobile advertising is interactive, at least via a click-thru, yet the majority of digital video advertising is still not interactive. How do you see this changing?

(JO) I think the death of the click-thru as a primary metric is the reason that digital video is not interactive. The community views digital video more akin to TV, which isn’t interactive at all, so the interactivity and engagement shows no immediate benefit under this construct. In a black-and-white world, splashes of color do nothing until we start applying value to the color.

(DN) We think digital video is where display banners were 10 years ago. The first generation of banners looked much like their newspaper classified ad counterparts, i.e. static and non-interactive. They have, of course, since evolved to where now 40% of banners are rich interactive ads. With digital video, the number is something like 15% of ads being interactive; video ads are still generating high engagement rates even without being interactive, but once we start getting the equivalent of video ad blindness, we will probably see more rich interactive video ads as a way to make them stand out. 

IAB: What technical or operational issues did you have to overcome to launch these campaigns?

(JO) There’s a great deal of inherent risk when suggesting activations like this from a media perspective because we don’t hold the keys to creative assets or thinking. It takes a degree of loosening the grip of control of the process, from both the creative and media sides, to deal with this type of activation.

(DN) The varying sizes of video players - ranging from full-episode, TV-like video players to small players that are banner ad sized - posed a bit of a challenge to delivering creative that looked good regardless of the player size. We developed a “responsive” layout model similar to that used by mobile ads, in that our platform automatically selects a correctly sized layout to match the size of the video player. VPAID support by publishers was also a bit of limiting factor, but that has since largely been addressed now, with most publishers supporting VAST and VPAID standards for interactive video.

About the Author

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Peter Minnium 


As the Head of Brand Initiatives at IAB, Peter Minnium leads a series of initiatives designed to address the under-representation of creative brand advertising online. He can be reached on Twitter @PeterMinnium.
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Congress to Propose Tax on Advertising

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The economic consulting firm IHS Global Insight estimates this could place 1.7 million U.S. jobs at risk.  Today, advertising sales help support 20 million jobs, or 15% of all jobs in the country.

IAB members have no doubt been exposed to the congressional turmoil of late over budget policy in Washington.  From one debt ceiling crisis to the next, to sequestration, and a complete shutdown of the government, U.S. budget deficits are driving policy down the same road as a kicked can.Moneypie.jpg

It is widely understood that a reform of our taxation system is the first step forward to finding a long term solution for deficit reduction and economic growth.  Early last year, House Ways and Means Chairman Dave Camp (R-MI) and Senate Finance Chairman Max Baucus (D-MT) established a process to begin review of the U.S. tax code, last overhauled in 1986. 

IAB has learned Chairman Camp is prepared to formally release the Committee’s draft tax reform bill in the coming days; and, Chairman Baucus will begin briefing Committee members next week to prepare introduction shortly thereafter. 

Why does this matter to you?

Many U.S. companies have, for decades, declared advertising as an, “ordinary and necessary cost of doing business.”  Similar to employee payroll, office rent and other business expenditures, advertising is considered a standard deduction under applicable U.S. Internal Revenue Service (IRS) tax rules.  It is the unified goal of Chairmen Camp and Baucus, and many U.S. industries, to see a lowered corporate tax rate (from 35% to as low as 28%).  However, in order to accomplish a lowered overall rate, many deductions find themselves on the chopping block as “pay for’s” to offset the reduced revenue.  

Specifically, the House Ways and Means Committee has developed draft tax reform legislation that would be funded by imposing a tax on advertising. 

Today, businesses may deduct 100% of the cost of their advertising. The proposal in the Committee’s draft tax reform legislation would allow a business to deduct only 50% of its advertising costs in the year the ad runs but to delay the deduction for the remaining 50% over 10 years - thus deducting an additional 5% each of those years. The Senate Finance Committee draft is widely rumored to mirror this “Cost Recovery” bill language. 

While Leadership in both the House and Senate is not prepared to hold a vote on tax reform this year; once introduced, the draft bills will become THE base line for all future debates. 

What are the consequences?

The very real consequence of having advertising re-classified (in whole or in part) as a taxable business activity is that client advertisers will do less of it. Any tax percentage assessed will incline companies to reduce advertising and media spending in order to mitigate or off-set any tax. This impacts ad agencies directly -and can adversely affect entire local economies and job bases where agencies and advertising-related businesses play such an important role.

The proposal also does not consider that companies buy new advertising each year and would feel the brunt of this tax annually. Not only would they have less money to spend on advertising year after year, but media companies would also be impacted as advertisers would be forced to reduce their ad buys.

Consider the impact this proposal would have on the economy:

  • Employment in the ad-supported internet ecosystem doubled over the past four years to 5.1 million, making it one of the most dynamic sectors in the recessionary American economy, according to a study by researchers at the Harvard University Business School, commissioned by the Interactive Advertising Bureau (IAB). 
  • The ecosystem contributed $741 billion to the U.S. economy in 2011, close to double 2007 figures, and accounted for 5.1 percent of the U.S. gross domestic product (GDP), an uptick from 3.5 percent four years ago.

What can I do?

Begin thinking about what this change in tax code would mean to your company’s bottom line and ability to keep hiring.  Stay plugged into IAB Public Policy news and alerts; and, be prepared for a call to action.  

Please direct any and all questions to Mike Zaneis ([email protected]) or Sarah Hudgins ([email protected]) in our Washington, D.C., office.


About the Author

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Mike Zaneis

Mike Zaneis is SVP & General Counsel at the IAB.