‘Viewable Impression’ Boosters Ignore Simple Math

Data-Driven Thinking“Data-Driven Thinking” is a column written by members of the media community and containing fresh ideas on the digital revolution in media.

Joshua Koran is VP Digital Product Management, Research and Data for AT&T AdWorks

Much has been written about the “viewable impression” metric, which banishes impressions that go unnoticed by consumers. It relies on client-side code to track a user’s interaction with the browser scroll bar, attempting to measure whether below-the-fold ads ever show up on screen during a page impression. (It also looks at whether ads render at all or are obscured by other page elements.) While transparency always helps reduce market inefficiencies (and exposing the ad location helps buyers better evaluate and sellers better differentiate their inventory), this still doesn’t provide direct marketers metrics of success, including increased brand awareness, consumer interaction with the ad, or even click-through or conversion rates.

Many viewable impression tracking companies are urging media buyers to use their metric as currency for paying the media seller. These companies propose that advertisers who purchase inventory according to a viewable cost-per-thousand (i.e. vCPM) will increase their ROI, while publishers who sell inventory according to this new metric will increase their revenue. By charging only for viewable inventory, the publisher can command higher rates than they do today. Unfortunately, these claims ignore simple math.

Imagine a publisher charges $5 to serve 1,000 impressions of an advertiser’s campaign, but only 750 of those impressions are “viewable.” Under a viewable impression billing plan, the advertiser would be charged 75 percent of the normal cost for 1,000 impressions (e.g., $3.75 vCPM). Since the remaining unviewed impressions aren’t worth anything to a media buyer, the publisher would earn just 75 percent of what they received before. Alternatively, the publisher could try charging $6.67 for the viewable impressions to maintain their current revenue, but this model wouldn’t lower costs for media buyers and would only further complicate the transaction process.

While the viewable impression metric does not benefit sellers, the media buyers aren’t any better off either. How is that possible?

Assuming negligible costs to identify which impressions are viewable, it seems that the media buyer would benefit from paying for inventory according to a vCPM model.  However, there is an important aspect of vCPM that viewable tracking companies ignore: risk.

Today, media buyers absorb the risk that their partners will deliver their campaigns to the right audience, at the right time, and in the right context. Being viewable is part of the context portion of the equation. An ad served at the bottom of the page is less likely to be viewed than one at the top of the page. Because the media seller cannot know whether the user will scroll down the page, the price charged to buyers would need to account for the percent of impressions that the seller serves, but the buyer will not pay for. Thus, our original $3.75 vCPM would need to increase to account for the risk of impressions that consumers do not see.

Since predictions are not perfect, media sellers are likely to pad their estimate to cover the margin where they do not guess correctly. This not only reduces the control a media buyer has over risk, but this price increase would also lower the ROI an advertiser earns from their media spend. Accordingly, using viewable impressions as a currency for pricing simultaneously reduces revenues to publisher and ROI to advertisers. Introducing the viewable-impression metric adds both complexity and cost. Given the increased expense to buyers – and decreased revenues to publishers – it would be imprudent for the industry to switch to this metric as the new currency for digital advertising.

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  1. Interesting perspective, but I think it’s off-base.

    Yes publishers would make less money, at least at the start. A pub obviously can’t argue for higher rates just because the agency decided to stop paying for your worthless impressions.

    As a result, publishers will be incentivized to create higher quality, better-performing inventory. The guys (or gals) doing it right will get more dollars, those that have been gaming the system will lose.

    Viewable impressions restore order. It’s not rocket science.

  2. dataguy81

    Great post. Viewable impressions are not cost effective for both parties. I do see value in the technology for analytical purposes for the buyer and seller, but this post is right on stating that it should not become the currency in digital.
    If a particular publisher’s below the fold ad slot never leads to the outcome the marketer desires (click/conversion/viewability,etc)the impression will be worth pennies, and the marketer will not over pay.

  3. Paul Silver

    This conversation seems to overlook that, as per the ‘maths’, it doesn’t change the actual revenue for pubs even if eCPMs increase for viewable imps

    If for instance the 75% is therefore priced at a higher eCPM for being inview, and the 25% not in view becomes worthless, then revenue wise, it equals the same (per $)?

  4. Alan Schanzer

    The math is simple and we will leave that up to the buyer/seller to figure out. The benefit of viewable impressions is control in an industry that is out of control when it comes to long tail “crap” at the bottom of the page or other, cheap, out of view placements. The collective goal should be attribution which is completely off set by long tail cookie bombing practices. Let’s make sure buyers get what they pay for and sellers get fair market value for whatever they choose to supply.

  5. Hey, there is a reason these guys aren’t selling it to publishers. Arguing that publishers will lose money because they will stop getting paid for bad inventory consumers never engage with is a non-winner. Similarly, telling advertisers that they should pay for ads that consumers never see because it is “hard” is the market opportunity. That will never sound fair to an advertiser. Besides good pubs want to encourage the elimination of bad ad units. This is the future.

  6. In display, the industry has been dealing with a surplus of impressions for several years now–many of them very low quality (out of view, not brand safe, contextually irrelevant, totally fraudulent).

    While a viewable impression doesn’t necessarily represent a perfect solution, it’s way better than an out of view one. And buying only viewable impressions (or placements with a high chance of being in view) limits the surplus of display impressions to more quality ones. Additionally, it reduces the discrepancies that dilute CPMs because there will be less transactions.

    It’s tough not to think this drives up both (1) returns on quality inventory and (2) ROI for results driven (product sales instead of cookie bombing) advertisers.

    • Jeff Moore

      Well said, JQ. Bringing a degree of order – albeit imperfect – to a disorderly system is a worthy step in the right direction – possibly a large one if the net-effect is a dynamic shift in perception on both the buy and sell sides. And contrary to a point made in the article about base pricing on non-predictable results, there is a solution consistent with Hulu’s new biz model: pay when seen, not preemptively. Sure there is some resource outlay for reporting and truing up numbers, but that is a small price to pay for a dramatic shift towards efficacy.

  7. Great article Josh, I think you nailed it. “Viewability” has real value in helping buyers better assess risk but not much value as a currency.

  8. A valiant attempt to defend the indefensible.

    I have yet to meet a single advertiser, who once they understand that many ads they pay for are never even displayed, wants to pay for these ads.

    Since a significant number of advertisers value “view through” this is a particularly big issue. They are attributing value to many ads that are never even seen.
    There are two huge issues here:
    1. Publishers with high quality ads often all above the fold, are subsidizing low quality publishers with multiple ads that are never seen
    2. “View through” is a weak measure at the best of times, and if the ad isn’t seen it’s clearly utterly without merit.

    Given both of these issues, I expect there to be a rapid growth in measuring display based on “true views” where it is not based on clicks, given the alignment of interest of premium publishers and all advertisers.

  9. Seems fair to me that the publisher assumes the risk of making sure that the impression is of a good quality, for instance by creating content and design that is interesting enough to make people read the entire page. My experience is that most publishers are 100% ok with this, so long as they get paid for the effort.

  10. With a switch to viewable impressions as the currency, there will be winners and losers. Non-viewable impressions have been eroding the value of viewable impressions. Sites that primaily show above the fold inventory are hurt by competitors who show primarily below the fold inventory via lower CPM prices. With switch to viewable impressions, “good guy” sites will make more money and “bad guy” sites will make less. That’s a good thing for advertisers and the industry.

  11. Another important misunderstanding is that ads served below-the-fold (i.e. requiring the user to scroll to view the content) are put there by “bad guy” or “low quality” publishers.

    The root issue is that the same content is being consumed on vastly different screen resolutions. While a publisher could force the user to read content via pagination for all screen sizes that are too small to view the entire article, most users prefer scrolling. AOL, MSN, NYTimes, Yahoo! all have homepages requiring scrolling on a 1280×1024 monitor. I don’t believe these publishers are considered low quality.

    Hopefully the industry doesn’t move from a scrolling model to a pagination model to introduce the new vCPM metric.

  12. Dan Nagayama (Dennoo Inc.)

    So we at Dennoo continue to believe and advocate the “cost-per-second of viewable time.

    Time should be the currency.