Yahoo to Charge Some Advertisers Only for Ads People Actually See

Portal's Viewability Product Limited to U.S. Desktop Ads at the Start

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Online advertisers have long known that a good chunk of their ads run in locations where very few people see them even when the webpage loads. Now Yahoo is moving to give some of its advertisers their money's worth, by charging only only for display ads that actually come into view on someone's computer screen, according to the company.

As one of the biggest online ad sellers, Yahoo's adoption of viewable-only impressions is notable amid industry efforts to cut waste, hold the floor under online ad rates and undo the reality that most online display ads are never seen. But the company's new viewability product, called Prime View, is limited compared to others already available, including Google's.

Ad viewability has been a hot topic in online ad circles for years, and marketers have long understood that some of their ads were going unseen -- appearing in little-traveled territory far down a web page, for example. Lately attention has increased. Last year ComScore said 54% of online display ads do not have a chance to be seen by consumers.

Industry groups like the Interactive Advertising Bureau have tried to organize efforts to tackle the viewability problem, fearing that it undermines advertisers demand and spending. After waving off the viewability discussion in 2012, the standards organization called the Media Ratings Council set a viewable impression standard earlier this year. If at least half of an ad appears on a screen for at least one second, it counts as a viewed impression. Yahoo's viewability product, which has been accredited by the council, is using the standard to count viewed impressions.

Only advertisers who buy their ads directly from Yahoo's sales teams for U.S. campaigns will be able to purchase view-guaranteed ads, said Eric Lange, VP-product management for Yahoo's advertising products. And those advertisers will be limited by what inventory Yahoo is making available for these viewable impression-only deals.

Right now Prime View only works on Yahoo sites' premium desktop ads served in the U.S. Prime View will not apply to ads served on Yahoo's smartphone or tablet properties, even though CEO Marissa Mayer recently said that Yahoo's mobile traffic will soon outnumber its desktop visitors. It will also not apply to third-party sites that use Yahoo's ad technology to sell ads.

By comparison, the viewability product Google introduced two years ago works across the more than 2 million sites in its display network and does not require an advertiser to purchase the ads on a reserved, or upfront, basis.

Inventory available for Prime View does not include Tumblr ads or the company's so-called "native" Stream Ads that appear within article feeds, which are largely sold on a per-click basis (though Yahoo last month also began selling them on a per-impression basis).

"From a long-term perspective, our goal is to be global across all of our properties both on and off our [owned-and-operated] network," Mr. Lange said. "This is our first step into viewability." He declined to offer any timeline for plans to extend Prime View, or to discuss what percentage of the inventory in the program was previously going unviewed.

By not transitioning all of its inventory to viewable-only impressions, Yahoo may be protecting its display advertising revenue. If all Yahoo inventory was available through Prime View and if hypothetically roughly half of Yahoo's ads go unviewed, in keeping with ComScore's industry-wide figure, then Yahoo would risk sacrificing a significant chunk of its display ad revenue.

Mr. Lange declined to discuss how Prime View might impact Yahoo's display ad revenue, which has struggled to grow under Ms. Mayer. Following five straight quarters of year-over-year display revenue declines, the segment was flat in the first quarter of this year.

But viewable impressions are presumably more desirable to advertisers and might bring more potential clients to the table. Yahoo's view-guaranteed impressions will also cost more than standard impressions, Mr. Lange said.

Advertisers can choose to not buy the view-guaranteed impressions and stick to rolling the dice on buys using standard impression counts.