Don’t Let the CPM Die: Fix It

I was at Ad:tech earlier this month and there were many discussions around brand advertising, such as measures beyond the click, and whether analog dollars turn into digital dimes for premium content and media companies. There were specific conversations about time being an increasingly important driver of ad value. In my mind, these discussions are closely related. As Wenda Millard, president of MediaLink, said, there are no silver bullets, but . . . if online is going to earn its fair share of brand marketing dollars, online must measure if, and for how long, a consumer sees an ad impression.

If you were a brand advertiser, would you pay a premium price for a great unknown?

Chances are, you didn’t even notice that leaderboard at the top of your favorite news site. What about the three ads on that other page where you spent 5 seconds looking at a friend’s photo? How many of those do you recall? As others have also argued, perhaps impressions should not be based on page views, but on time viewed.

Measuring, pricing and selling impressions with a guaranteed duration of view — a “time stamp” — would be better for users and deliver real value for brands.

TV currently is the reigning world champion for brands, and it guarantees time. A weakness in the TV model is the accuracy of ad delivery — what proportion of the show’s audience actually saw the 30-second spot. In contrast, online already has the technology to accurately measure actual ad delivery for a minimum amount of time — but we don’t use it. The online industry measures almost all display ad impressions the same way: ads loaded by a browser, regardless of how long, or even if the ad was visible to the user. That’s a multi-billion dollar shame. As Shelby Bonnie recently pointed out, the incentives created by these untimed impressions are destroying us.

Think about the behavior and consequences created by this system, with publishers adding more and more inventory to get increasingly meaningless impressions, including, as Emily Steel from The Wall Street Journal recently wrote, impressions that aren’t even seen. Click rates plummet and CPMs descend to single-digit pennies. The only marketers who can realistically play in this environment are direct response marketers paying by CPC or CPA — overwhelming brands that would pay for good impressions if they could find them.

Low click rates destroy one of the competitive pillars of online: ad interactivity. The worst example today: most social media ads. Users load three ads per 20-second page view and can go through 40 pages or more per session. That’s 90 ads delivered in 10 minutes of time spent on a social site, and it’s easy to see why they have such low click rates. In contrast, TV shows might show 6 good ads per 10-minute slice. In that world, I’d buy TV, too

If we measure actual time spent with an ad in the browser’s viewing area, those ads with sufficient time will work better, generate higher prices, and enjoy higher levels of interactivity. Andy Monfried of Lotame learned that the average leaderboard was seen for 5.4 seconds, a skyscraper less than 2 seconds, and the 300 x 250, 13 seconds.  Monfried anticipated that the longer the impression, the higher the click rate. It would appear that pricing is already higher for ad formats such as the 300 x 250 which deliver longer impressions. Average impression times across formats are likely driven down by the glut of un-noticed impressions: there are some really long impressions but which is which?  Brian Morrissey wrote about the importance of time this year. And we’ve tested it across Meebo’s platform, to about 90 million people per month and over billions of impressions. It turns out that increasing impression time works wonders for both click rates and engagement. So the players in our industry who value the impression should measure time per impression.

Publishers adopting a time-based impression guarantee will be less inclined to auto-generate a new ad call every page view. Rather, they will sell and report on impressions with a known amount of time. Premium content will generate quality engagement and high time spent. CPMs will rise. OPA sites should be the biggest beneficiaries of ad impressions that have a minimum guarantee of 15 or 30 seconds of user attention, and I’d venture to guess that ad interactivity would increase.

Quality Web sites will be rewarded. Engaging content and services that consume users’ time will become a competitive advantage in performance and pricing, instead of a cost burden vs. an ad network selling a fleeting impression on a site without any engagement. More engaged users will mean longer impressions, thus higher performance and pricing. Sites clogging Google search results designed to generate fleeting impressions will suffer.

Creative agencies will win. With a known amount of time they’ll be able to build a compelling story. Integrated media agencies will play a hugely valuable role in the integrated cross-media planning between online and offline, and have an easier job convincing clients to move money online.

Big brand marketers will generate the most value. They will finally have reliable and comparable numbers to put into their media models to forecast sales. With enough time per online impression, their creative can materially increase recall, brand lift, interactivity, preference and propensity to buy. Finally, they will come online like we — and they — think they should. 

If we properly fix the CPM, our industry can become the most effective and measurable advertising environment ever.

Martin Green is COO of Meebo. He can be reached at martin@meebo-inc.com.