Meebo is adding an option for marketers to pay only when their ads generate user interaction.
The Internet chat service has begun offering advertisers the choice to pay an average of $1 when users expand ads that sit at the bottom of chat sessions. Meebo hopes to differentiate its service at a time when display unit prices are plummeting thanks to an oversupply of ad impressions.
"We think an impression without some kind of action might have awareness benefit, but if we're going to sell just billboards that don't get clicked on, why not buy a 30-foot-high one off a screen?" said Martin Green, chief operating officer at Meebo, which reaches 11 million visitors through its site and another 42.7 million via its syndication platform, according to Quantcast.
Meebo's sells 728-by-90 pixel ad units that expand to 900-by-400 via user interaction. It also serves ads on partner sites like Flixster, IGN.com and PopSugar. Meebo will continue to offer advertisers the option of paying per impression on its own site. Ads on non-Meebo sites will be sold on a CPE basis.
Meebo joins Videoegg as an Internet ad seller moving from the typical impression-based pricing model. Videoegg runs cost-per-engagement rich media ads on several social sites. Publishers have traditionally shied away from that type of pricing because of variables such as creative.
Meebo has typically sold ads for a $10 CPM, according to Green, a rate substantially higher than most social media sites. Green said Meebo justified the premium based on its ads boasting 1 percent interaction rates that led to users typically spending over 90 seconds with advertising content.
"Pricing is rational," Green said. "If you do the math, it's likely the case that CPMs going down reflect that impressions without actions have been going up. We as an industry have to provide something they cannot get from a 30-foot billboard or a 30-second TV spot."
For an advertiser like a movie studio that only wants views of a video or plays of a game, the model takes the guesswork out of whether a site would deliver, said Green. What's more, engagement pricing compels the ad seller to design experiences for ad performance, he said.
"I want everyone in our company to know the economic value we generate is when a user engages with an advertiser's content," Green said.