Kill the CPM: Why It's Better to Buy Time Than Ad Impressions
Time spent online is a key reason advertising dollars are flowing to the internet, yet when it comes to valuing and pricing online advertising, time has a limited influence at best. This makes no sense when it comes to banner advertising. The length of time that a browser is exposed to a banner ad is one of the most important factors in determining the effectiveness of the ad, yet CPM pricing continues to dominate display, with no consideration of time.
People and publishers determine the amount of time spent with advertising, and individual clickstreams drive the time consumers spend with display advertising. I might visit a specific page on CNN.com for one second, and then leave immediately, while another person might visit the exact same page and stay for two minutes to read the article. I didn't see the ad because I left the page quickly, but the advertiser pays the same price for this impression as they do for the impression that appeared for two minutes in front of a different visitor. It's no wonder trying to figure out what "works" in online advertising is so difficult.
Publishers make the problem even worse by delivering ads that never have a chance of being seen by the visitor. These ads are usually below the fold or don't load in view, and are therefore never presented to the site visitor. According to a recent comScore study, 31 percent percent of all ads are "delivered but never seen by a consumer." That's a lot of waste to factor into advertising ROI.
Our industry is putting a lot of effort into technology that improves the targeting of a banner ad, but what good is paying a premium for an ad to reach the right audience if they never see the ad? If we insert time into the pricing equation, we can put a relative value on display advertising and price ads that are never seen at $0.00 accordingly. Maybe it's time to build a time meter into display ads and pay by the second.
The CPM model that dominates display motivates publishers to chase impressions that create web page clutter and a poor user experience. A CPS (cost per second) model should help clean this up, as it will price the clutter properly. Display is going through a renaissance, with growth driven by real time bidding and data-driven strategies that improve ad targeting and effectiveness. It's time for publishers to reduce the number of ads on their pages, improve the creative formats so that the ads impact the audience, and create a marketplace that drives prices up by increasing the effectiveness and value of their ad placements
Of course, time is a funny thing, and sometimes it works against an advertiser. Branding campaigns that utilize display ads require time with a user to drive recall, but with other, direct-response driven strategies like search engine advertising, the less time spent with the ad, the better. When you search for any product on Google, the advertiser paying for the sponsored results wants you to click on their ad. They are competing with many other advertisers with the knowledge that consumers are only going to click on a limited number of ads. The advertiser wants the consumer to act fast and they want their ad to be viewed for as little time as possible. The goal of a search engine is to provide relevant results, and relevancy reduces time spent on each search. Paid search advertising is consistent with the nature of this activity and when it comes to the role of time is search advertising, less is more.
Time needs to have a more significant role in analyzing and executing digital advertising because it will improve its effectiveness. We just need to figure out how to build it into the ecosystem. How many of you buy or sell with time in mind? It's time for time.