July 25, 2017

Good morning and happy Tuesday. This is the fifth edition of Axios Media Trends. Send tips and ideas to [email protected]. ... ICYMI: Google's massive $2.7 billion EU antitrust fine caused Alphabet profits to sink 27.7% to $3.5 billion from last years' $4.9 billion. Alphabet shares were down 3% in after-hours trading Monday.

1. Exclusive: Flipboard is crushing it on mobile

Flipboard is becoming one of the biggest drivers of traffic to news stories on mobile, according to exclusive data from media analytics firm Parse.ly, which found that Flipboard's traffic has been growing steadily, while digital magazine competitors like Pocket and Feedly have plateaued or gone into decline.

Why it matters: Flipboard's investments in a simple mobile user experience and editorially-curated quality content are paying off. In an interview with Axios, Flipboard CEO Mike McCue says the company had its first cash-flow positive month in February since he founded the company 7 years ago in 2010. Other outlets, like Apple News and Snapchat Discover, are also banking on vetted, curated content to lure ad dollars from companies concerned about brand safety and monetization on bigger, automated platforms.

Money quote: "Creating great user experiences is similar to producing great writing — it's not always about what you add, but often about what you leave out," says Parse.ly CTO Andrew Montalenti. "Parse.ly data indicates that platforms that simplify the user experience around content, like Flipboard and Reddit, have seen sustained growth, especially on mobile, and will likely be a larger portion of traffic moving forward."

2. The ad tech cookie that’s about to crumble

A wave of consolidation in the advertising technology industry will soon eliminate the majority of players in the space. Some of the biggest ad tech companies that went public during the ad tech boom around 2013 now trade in the single digits.

  • Last week, Sizmek announced plans to acquire Rocket Fuel for $125.5 million and there are reports that a merger between Taboola and Outbrain is in advanced stages. Earlier this year, Terry Kawaja, founder and CEO of media and technology firm LUMA Partners, said consolidation in the ad tech space will cause 90% of the companies disappear.
  • Why this is happening: Ad tech was created to help advertisers save money and create a better user experience, but the market grew too fast for publishers to manage. That led to regulatory backlash (like the General Data Protection Regulation (GDPR) in Europe), the rise of ad blockers, and publisher/advertiser backlash (see below.) Once media shifted to the smartphone, many ad tech companies that were cookies and targeting-based (works well on desktop, not on mobile) were left in the dust.
  • Most of this consolidation is occurring in the ad targeting and distribution space. We're now seeing a whole new wave of ad tech companies popping up that specialize in new digital formats, like augmented reality, artificial intelligence and measurement. These companies will inevitably go through the same rise and fall driven by consumption habits. There's always the next best thing!

3. Why mainstream news sites are so slow

A Princeton study from earlier this year found that mainstream news websites use more third-party ad tech vendors than any other type of website: sports, shopping, adult, etc. Ad tech can slow down publisher sites if there are too many cookies dropped on a page, or if they're using certain techniques to capture data.

Going in-house: As a result, some mainstream news publishers are trying to reduce clutter by building their own proprietary ad tech to replace third-party vendors. Bloomberg and The Washington Post have have both been able to reduce page load times significantly by bringing ad tech in-house over the past few months.

News publishers and advertisers are both economically incentivized at this point to cut out the "middle men" in the digital advertising supply chain. Procter & Gamble Chief Brand officer Marc Pritchard told Axios last week he thinks only 40% of ad dollars make it to publishers after ads are done going through ad tech middle men.

​4. Media watchdog considers shakeup on crappy ads

The Media Ratings Council, the de facto advertising watchdog, is considering toughening its standards for digital ad viewability, Ad Age reports. The standards are currently that 50% of a digital banner ad's pixels have to be in view for at least one second. They're considering shifting that to some agency standards of 100%, which would rock publishers with crappy ad load experiences.

MRC may also be rethinking its requirements for what constitutes a video view. Currently, it requires half of a video ad to be in view for at least two seconds in order to be considered "viewable," which is nothing when compared to some agencies that require videos to be in view for at least 30-seconds or half the time an ad was purchased (whichever is longer). For perspective, Facebook's self-reported video metrics count a video view if it played for at least 3 seconds.

What we're hearing: Agency and publishing executives tell Axios they'd support the movement, because it would push the "walled gardens," or big tech giants, to be more transparent about their video viewing metrics.

​5. Scoop: SimilarWeb receives $47 million in funding

SimilarWeb, a digital market intelligence company that's big globally, but smaller in the U.S., is making a big play to take on comScore, and to an extent Nielsen and App Annie, in tracking audiences in America.

  • The Israeli-based company has received $47 million in its latest round of funding, bringing its total funding to $112 million. The round was led by Israeli investment firm Viola Growth, as well as Saban Ventures and CE Ventures. SimilarWeb VP Nitzan Tamari tells Axios that the money will be used to scale their data analytics offerings and build their brand in the U.S.
  • Our thought bubble: There's been a lot of talk about the major players in the media measurement space not being economically incentivized to clean up their data with more sophisticated methodologies. Market pressure from new measurement companies in the U.S. could force their hands.
  • Fun fact: Israel is a leader in ad technology. Most of the major ad tech players, like Taboola, Outbrain, eXelate and SimilarWeb, come from Israel.

6. Washington Media Trend: Niche firms take on PR giants

Small Washington-based public affairs firms are going after business typically won by large agencies. They lure clients with political expertise capable of handling crisis communications, and then expand those partnerships by creating full-scale agencies that can do everything from digital ad placement, to media booking.

Why it matters: They're taking business from NY agencies and the big traditional PR shops. Corporate media consulting and ad dollars are moving from Madison Avenue to Pennsylvania Avenue.

Timing: Political experts have been launching public affairs groups after leaving the public sector for years, but the trend has expanded with the digital ad tech boom in 2012-2013 and following the 2016 election.

Patrick Dorton, a partner at Washington PR firm Rational 360 — which is also capitalizing on this trend — says Washington also began to claim greater authority over certain industries after the financial crisis in 2008. "There was a financial reluctance in New York to get into advocacy campaigns," Dorton says. "Washington largely worked on a retainer model instead of high-end billing, which worked when dealing with unexpected political crisis communications."

Go deeper: Read more about the landscape on the Axios stream.

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​7. Exclusive: IMGE breaks from IJR

The CEO of IMGE, one of the largest center-right digital public affairs firms in Washington, purchased the company from Media Group of America (MGA) this past Friday, Axios has learned.

MGA, which also houses Independent Journal Review, was co-founded by Alex Skatell and Phil Musser in 2013. Ties to IJR had previously weighed on IMGE's business goals of remaining independent of editorial, like not being able to take on a presidential candidate in 2016. On the flip side, perception problems for potential editorial conflicts existed at IJR, so MGA agreed to make a clean break.

"As the companies have matured, Alex and I recognized this split allows both companies to fully and independently pursue all the opportunities ahead." said Phil Musser, CEO of IMGE.

IMGE has also hired Bryan Sanders, husband of soon-to-be White House press secretary Sarah Huckabee Sanders, to lead a newly-created research and insights division, IMGE Insights, that will focus on sophisticated online polling and large-scale research.

They've also recently added several big strategic partners, like Liesl Hickey, who used to run the NRCC, and longtime political operative Phil Cox, who runs the bipartisan public affairs firm 50 State, and who is taking an expanded role at IMGE as a senior advisor.

Why it matters: IMGE has become a big presence in the Republican media agency space with clients like Boeing and the newly-created Great America PAC chaired by Vice President Mike Pence. Becoming totally independent of Independent Journal Review will let it avoid entanglements with an editorial partner.

8. Facebook starts to monetize its messaging monopoly

Everyone thinks of Facebook as a social media behemoth, but they're actually much more dominant in messaging and they're starting to capitalize on that for revenue. Facebook-owned WhatsApp is the number one messaging app in 107 countries around the world, and Facebook's Messenger is number one in 58 countries, according to a SimilarWeb study.

The company announced last week that they're beginning to roll out ads on Facebook Messenger globally, meaning advertisers will start to be able to place ads on Messenger, and for some people, ads will slowly begin to appear on the Home tab. Reports are also out that Facebook is hiring talent to "lead product development on our monetization efforts" for WhatsApp, a messaging app popular in Europe that Facebook bought in 2014 for $19 billion.

Go Deeper: I look at Facebook's competition in the Axios stream.

9. 1 fun thing: What "The Athletic" says about digital sports media

The Athletic, a locally-focused, subscription-supported sports publication, announced its expansion into nationwide coverage Monday with the splashy hires of Stewart Mandel for college football and Seth Davis for college basketball, Axios' Shane Savitsky reports.

  • Changing landscape: "Mandel was laid off by Fox Sports last month while Davis was laid off by Sports Illustrated earlier this year — ESPN also notably laid off a number of big name journalists in 2017... These layoffs are happening as a result of both consolidation within the sports media ecosystem and a pivot to video-focused content, which has created an opportunity for smaller, editorially-focused sites to enter the landscape."
  • The goal? "Often, it's being snapped up by a VC firm or — perhaps ironically, given The Athletic's poaching of laid-off writers — a legacy media outlet looking to connect with a base of intelligent, information-hungry consumers."
  • "Think of Turner's 2012 purchase of Bleacher Report and Vox Media's commercial relationship with Bill Simmons' The Ringer that was announced earlier this year."