Changing the currency in display advertising

Building on Teal Black’s post, which I found extremely interesting, I think that is really worth it to analyze the implications of the change and the main support and resistance that this change will find.

Spending on digital-display ads in the US was  $13 bn last year (30% of the $43 bn spent in digital advertising). This is a fast changing industry with several changes each year. Teal Black’s post argues that maybe one of the biggest changes in the industry will be the change in the currency. Nowadays, the standard currency is CPC (cost-per-click) but there is a trend, far from irrelevant, that is moving toward CPH (cost-per-hour).

The main idea of charging based on CPH is that this is an attention metric, publishers pay based on the number of hours their ads appear in front of targeted groups of readers. Another advantage of CPH for the publishers is the creation of scarcity. Llike in TV there are only so many 30-second slots during a half-hour sitcom, you have only got 24 hours a day per person, so you have a constrained resource: time.

This radical rethinking of ad rates would have heavy implications:

• Marketers would change budgets due to the certainty that people are spending time with their messages.
• The analytics of the industry would change.
• Creatives would change the way they create digital-display ads.
• Media agencies would change how they buy ads.

 

The main supporters of the CPH are digital newspapers: The Financial Times will roll out ad rates based on time rather than impressions (FT is adopting the new metric because its web and mobile websites attract a relatively small audience but that it is mighty in terms of affluence and the time readers spend on the site). The Economist is guaranteeing time for its in-app ads. The Wall Street Journal is using attention metrics to analyze and adjust ad campaigns.

 

But there's also plenty of resistance to the CPH. With so much money spent in display ads, there are a number of players that would prefer to keep the status quo. For example, agencies are good at buying ads, they know how to do it and it is probably scary to change the mode of how they do business. Publishers that attract huge audiences aren't eager to see a shift either. Additionally there's also the question of whether more time on a screen would do an advertiser any good.

 

Will CPH be the new standard metric for display ads?

Sources: Is Digital Advertising Ready to Ditch the Click?
           Why CTR may not be the digital future