Social news site Digg takes a similar approach. It places ads into that stream of content rather than in the margins in standard ad units. Last week, it unveiled plans for its first ad product, Digg Ads, which aims to flow advertiser content into the Digg experience more naturally. Rather than standard IAB units, Digg Ads take the form of stories users can vote on, as they do with the site's other content.
"We need to find ways for brands to borrow the grammar of the [user] experience," said Chas Edwards, the chief revenue officer at Digg. "There's a limited set of publishers large enough to make the case for a unique ad format."
Digg is using those user votes to determine the price advertisers pay. The more "Diggs," the less advertisers will need to pay for impressions. This is the same approach taken by the Internet's most successful advertising innovation, Google's search ad system, which sets the price paid based on the click rate for particular ads. A popular ad pays less than an unpopular placement.
The advantage of Digg Ads: they're easy to make. Customized ads, in general, have be-come easier to produce. Standardized ad formats have the advantage of letting agencies create one set of ads that run nearly everywhere. Now, agencies are getting smarter about the production process, breaking ads down into creative assets that can be assembled into varying formats with minimal tweaking.
Meebo, a group chat service, has decided to run custom-size units that better fit their environment. Meebo has a standard 728 x 90 ad that expands to a non-standard 900 x 400 placement when users click.
Like Digg, Meebo is veering from standard pricing formats. It sells its ads on a CPM basis, but it's also moving to price based on engagement. The rationale is ads on Meebo, a site that typically has long user sessions, draw more user interaction than typical social sites.
"With the Web awash in ad impressions, there's a need to stand out in the market," said Martin Green, COO at Meebo. "There's a growing number of impressions without any interaction, so the price is dropping to zero. Actions are harder to come by than impressions."
For now, the experimentation with non-standard formats and pricing will remain the exception, said Ian Schafer, CEO of Deep Focus. He noted while it makes sense to build ad products around engagement since that's what advertisers want from those platforms, the ad industry infrastructure is based around standard display ads with impression-based pricing.
"It's a different mind-set when you're buying engagement-based media than impression-based media," he said. "But right now, most media agencies are buying impression media."
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