A Modest Proposal For Fixing One of CPM's Big Shortcomings

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Finally, 20 years into the digital-advertising era, a growing number of industry voices are cautiously starting to question the long-term viability of pricing and measuring media on a cost-per-thousand, or CPM, basis.

In recent months, both publishers and advertisers seem to be openly looking for a new standard that addresses one of the CPM's critical shortcomings -- namely that not all "Ms. are the same. Some consumers are more engaged with the content compared with others, and these numbers may be smaller than we want to admit given the pressures to scale an audience in an age of infinite supply and smaller screens.

That's not to say that the CPM is going away soon. A report from eMarketer on digital CPMs, which is based on nearly a dozen interviews with agency, brand, publisher and advertising-technology-industry professionals, concluded that the CPM will remain the dominant pricing structure. But the report also made it clear that all involved are on the hunt for suitable alternatives.

The report seems to hint that the CPM's two logical heirs -- CPA (cost per action) and CPE (cost per engagement) -- aren't quite mature enough to assume to the throne as a standard. That said, eMarketer also notes that Twitter, Facebook and Google's ability to sell advertisers both broad awareness and direct response gives them a formidable advantage over most publishers.

What the report discounts, however, is that publishers have their own reasons to be highly motivated to make a new metric work. Thanks to programmatic buying, CPMs are already dropping. And publishers are increasingly pitching sponsored content/native advertising -- units presumably big on engagement -- as a premium offering for advertisers.

There is an interim step here, however, that can help evolve the CPM. Specifically, if publishers start to separate those who are fully engaged with their content from those who are less engaged, we can add the dimension of time to the equation so that the CPM becomes the CPQM. The Q stands for quality.

First, time is a truly universal metric. It can be tracked across every publisher, platform and device in every country and aggregated accordingly. It allows us to compare similar content that appears in vastly different contexts.

Second, time is a true measure of quality. The more time an individual spends with a unit of content like an article or a video, the more they are clearly paying attention. It's a true measure of interest in what someone has to say.

Third, time is a bridge between pure reach/awareness and the ultimate prize of direct response. It may not be the ultimate solution, but like a temporary tooth it will hold us until the root canal is complete.

So how might this play out? Look to the publishers first. They have the most to gain from moving the CPM toward a metric they can help influence and one that separates them from the game that Twitter, Facebook and Google are playing.

Already more than 70% of U.S. publishers offer native-advertising solutions, according to the Online Publishers Association. A lot of it, though, is priced on a CPM basis. This won't be enough to make it tip with advertisers. But the strength of native advertising isn't simple views, it's that readers spend actual time with the content.

So it's in publishers' best interests to add in the element of time as a measure of quality of attention to the CPM. At the very least, the CPQM to hold us over until new standards emerge.

Whether this will happen is anyone's guess. But the publishers have the most to gain by evolving the CPM on their own terms. If they don't take control of the situation, other parties will -- and publishers might not like the result.

Steve Rubel is chief content strategist at Edelman.
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