Time To Drive New Metrics-Based Valuation

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Networking"Networking" is written by members of the online advertising network community.

Today's column is written by Kirby Winfield is President and CRO of Mpire's AdXpose.

On a recent conference dais, Scott Knoll from Aperture shared a deceptively simple insight in regards to the topic of audience buying.  He pointed out that simply buying an audience without attending to the other variables is foolhardy.  Specifically, he mentioned creative, verified data, and placement as ‘must-address’ items on every impression purchased.

I agree but I think I’d be a bit more forward: placement trumps targeting, data, creative, content, and every other variable being solved for, by each of us in this space.  Without premium placement, or at the very least, placement that is guaranteed to be visible to each user on each impression, there is an exponential waste factor in every online campaign.

In plain English:  Multivariate creative testing, real time bidding, retargeting, brand safety and in-market audience data don’t add much value if your ad is unable to be seen by a human.

Oh, you mean you wanted your ad to be visible to users?

Obviously, not all placements are created equal.  Size, style, and page location matter.  Position within textual content; pre-, mid-, or post-roll in the case of video; leaderboards versus expandables -- all of these influence the level of visibility and likelihood of visual or mouse-over engagement with an ad.

However, the analysis doesn’t need to be that complicated to illustrate one major concern that still plagues our industry, ads are simply not visible within the viewable browser space for a given ad impression – from well known premium publisher sites to third-tier sites on long-tail horizontal networks.  This is the elephant in the room that no one wants to acknowledge, yet it seems to be the issue that perpetuates Wanamaker’s adage about wasted advertising even as we track and report on progressively arcane metrics.

Publishers should be aware when they are serving un-viewable ads, and should realize this will erode eCPM’s over time.  It’s not entirely the publishers’ fault, though.  Standard insertion order language rarely includes specific requests for “viewable impressions only”, and even if it did, today’s ad servers are not equipped to deliver on that promise.

But isn’t this already priced into the model, or, don’t sites with poor placements command lower CPMs? No – the current pricing ignores this data vector.  In many cases, sites with quality placements but low impression volume are punished while similar competitors thrive by stuffing the page with ads.

The media community has spent more than a decade fretting over impression discrepancies while entirely missing the point:  it’s not the ad server or network’s impression count that matters -- it’s the count of which impressions were viewable, and virtually nobody is paying attention to that.

Is data overrated, or is inventory undervalued?

ROI models that attribute performance of any sort (direct response or brand, conversion or click, engagement or view-through) at the publisher, network or channel level without accounting for un-viewable impressions are inherently broken.  A poor CTR is not necessarily symptomatic of poor targeting, stale creative or banner blindness – more often than not, it’s simply a lack of eye contact.

Eye contact almost certainly is excluded from ROI calculations on the newest targeting methods.  I would venture to guess that, while ad networks have been vilified for their supposedly outsized margins and opaque distribution, the true beneficiaries of today’s inefficient display marketplace are the data sellers and re-targeters – after all, advertisers pay a premium for a cookied user regardless of whether that user has a chance to see your ad.  If it’s true that advertisers are paying more for data than for placement, you have a seriously misaligned media valuation paradigm.

Un-viewable, below the fold impressions are further inflated by impressions fraud, ad stuffing, URL spoofing -- all of which serve impressions that never connect with the human eye.  Anyone having trouble comprehending the extent of impression fraud should visit one of the ultra-popular torrent sites and see how many simultaneous video ads for brand name products they can recognize but never see.  How many of those ads are being delivered to the vaunted “in-market travel consumer” at $20 a pop?

Where do we go from here?

It behooves DSP’s, networks and exchanges to actively optimize media purchasing against placement, yet many are not doing so.  The typical response (“our algorithm already accounts for performance, therefore poor placements rarely occur”) rings false when inspecting actual campaign data running today.  The fact is that if advertisers are not clamoring for it, it’s just not that important.  Quite literally, it’s “Out of sight, out of mind.”  But you can bet that when advertisers start to demand it, and there’s money to be made or lost, a sea change will occur.

The Pareto improvement may lie within a new advertiser model -- Cost Per View (CPV) or Cost Per Engagement (CPE).  Advertisers benefit from a CPV model by only paying for viewable impressions, while publishers are incentivized to provide viewable placements to garner the higher CPM that comes with high value impressions.  Certainly brand advertisers, who are concerned with the amount of time their ads are in front of consumers, would champion a CPV model or perhaps even a Cost Per Time In-View (CPTI) model, in which publishers are paid by the time in which ads are displayed.

Cost Per Engagement takes CPV a step further by charging an advertiser only when their ads are engaged through a non-transient, purposeful mouse movement with an ad.  Studies from CPE trailblazers VideoEgg and top CPG network Brand.net have found that online engagement is a key indicator, perhaps even more than clicks, in determining brand lift and  offline conversion.

The technology to support both pricing models is readily available to anyone within the ecosystem, but the process of accurately valuing media based on these metrics is just beginning.  There’s a huge opportunity out there for the players who drive new metrics-based valuation past the tipping point.

Whatever angle you take, it all comes back to placement, the prerequisite to all audience bells and whistles.  We all love the idea of a targeted audience, but without the proper placement even the most precise (and expensive) audience targeting in the world doesn’t amount to much.  Marketers and agencies should track these placement metrics tightly and demand value for their CPM and data-enhanced buys.

Follow AdXpose (@adxpose) and AdExchanger.com (@adexchanger) on Twitter.

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