In
my role during my internship this past summer, I spent time learning about advertising
for media publishers as I was working at The Wall Street Journal. I kept
hearing the terms “CPM” and “Click-Through Rates”. CPM is the basis by which the
majority of digital advertising is sold (CPM means cost per thousand
impressions). Essentially, the more eyeballs a publisher has, the higher it can
charge advertisers. But now, some digital content providers are thinking about
other metrics, such as time. A recent article in Ad Age really resonated with me, and I am commenting on the article in addition to Teal & Miguel's posts (which I had not seen prior to writing this in Word on my laptop - oops!).
In March 2013, Jon Slade – commercial director of digital advertising and
insight at the Financial Times – presented the idea of time as a currency to
the paper's Asia sales staff. In October, the Financial Times will be rolling
out ad rates based on time rather than impressions. This means that they will
charge advertisers by the number of hours the ad spends in front of targeted
readers – this rate is called CPH (cost per hour). "We're definitely
challenging the status quo. No one has come up with a new currency in digital
advertising in -- a while." said Mr. Slade.
Challenging
the status quo is important for publishers these days. While ad revenues in the
US last year were $43 billion, 70% of these revenues went to the top 10
ad-selling companies (like Google, Yahoo, and Facebook). Large ad networks take
much of the remaining revenues, which leave publishers struggling.
Over
half of FT’s revenues come from subscription revenues – and 2/3 of these
subscriptions are digital subscriptions. While publishers like FT may have
smaller audiences than other websites, these audiences are more affluent and
spend more time on their site. This is why attention metrics – like time and
CPH – may make more sense.
I
think an interesting quote was one made by Tony Haile, CEO of Chartbeat, a
digital analytics company that was recently accredited to measure ad
viewability by the Media Ratings Council, a standards organization. He said: "Time
is the only unit of scarcity on the web. You've only got 24 hours a day per
person. So what you've got is a constrained resource: time. That directly
correlates with the goals of advertising. Just like any economy of scarcity,
anyone who captures most of it can charge more."
There are many players who would rather keep
the current order, such as agencies and publishers with larger audiences. The
current system seems to work quite well for them. In addition, critics question
whether more time on a screen would even help an advertiser. Readers are more
or less trained to ignore banner advertising, regardless of how much time they
spend on a screen.
Looking
at other metrics, click-through rates are still used to measure reader
engagement. Many publishers and media buyers have sought to kill this measure,
but it is very difficult. I had the pleasure of meeting Romy Newman, head of digital advertising at The Wall
Street Journal, this summer. In the article, she recalls an ad campaign that ran 18 months ago for an enterprise-technology company that targeted chief technology officers. "It's probably
an audience that doesn't have a high propensity to click" she said. WSJ
measured click-through rates and canceled the campaign 2 weeks later citing lack
of performance. However, WSJ reviewed attention metrics and found another story:
their ads were in view to their target CTO audience for an average of 56
seconds, which was a success in their minds.
It
will be interesting to see how metrics will change for digital advertising in
the near future.
