Will Viewable Impressions Ever Become Online Advertising’s Currency?

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

Today’s column is written by Marcus Pratt, director of insights and technology at Mediasmith.

The industry has been talking about moving to viewable impressions for years.

With more than half of display ads never in view, according to comScore statistics, many believe it is only a matter of time before buyers will only pay for viewed impressions. That would have them pay on a vCPM, rather than CPM, which is the current standard, but there are many hurdles for this new currency, casting doubt on whether the vCPM will ever become the standard.

Numerous vendors offer measurement of viewable impressions, with five accredited by the Media Rating Council (MRC) and more under review. That is great, but the MRC issued an advisory that recommends against transacting on viewable impressions because of the challenge most vendors face in consistently measuring impressions. The MRC hopes to lift this advisory at the end of the year.

With the deadline fast approaching, what are some of the biggest hurdles we need to overcome?

Selling By vCPM Won’t Immediately Benefit Buyers And Sellers

I often hear arguments made that quality publishers will increase revenue by charging more for impressions that are in-view, more than making up for the lost revenue on nonviewed impressions. On the flip side, buyers will benefit by eliminating the wasted dollars spent on out-of-sight ads. Logic dictates that these claims can’t both be true.

For more detail, Joshua Koran provides a great overview of the math involved in viewable impressions.

However you slice it, buyers will see the price of some inventory increase with a guarantee of viewability. Publishers may have to sell fewer impressions if they do away with nonviewed inventory. In the short term, publishers do not want to risk a revenue hit from decreased volume, and most buyers are opposed to price increases of any sort.

Billing On Viewable Impressions Will Create Large-Scale Headaches

Anyone in ad operations will tell you there are always discrepancies in tracking impressions and clicks between different ad servers. Typically these are under 10%, and most standard contracts address how to deal with these discrepancies when it comes to billing. It is generally accepted to bill off of counts from a third-party ad server. The Interactive Advertising Bureau and the American Association of Advertising Agencies detail this process in their standard guidelines.

If a publisher bills on viewed impressions, the advertiser and publisher need to agree on the terms and name a vendor to be used for proof-of-performance and billing purposes, rather than the ad server. Unlike tracking impressions, discrepancies between firms measuring viewability are often much higher than 10% on the same sources of inventory. Publishers selling on a vCPM will not always accept counts from an advertiser’s preferred vendor. Whereas a media buyer can expect almost any seller to accept impression counts from Doubleclick, Atlas or MediaMind, there are no universally accepted vendors when it comes to viewable impressions.

Google’s ActiveView, for example, works solely on Google Inventory and allows for billing off Google numbers only. An advertiser who wants to measure viewability with comScore, Doubleverify or any other measurement will still need to pay based on Google’s counts, regardless of what the third-party viewability vendor reports.

RTB Is Not Equipped For vCPM Bidding

Ad exchange inventory is priced on a CPM, where the winning bidder’s ad is served. That winner pays the exchange, and the exchange pays the publisher. It isn’t possible to completely avoid bidding on ads that will not be seen because the buyer cannot control whether users will scroll down or quickly leave the site after the page loads. Thus, buyers are always going to win auctions for ads that are not seen.

Some companies that arbitrage RTB impressions can sell on a vCPM but they are still buying from the exchanges on a standard CPM. Other companies tout prebid integration on a viewable basis, which often means they are predicting which ads are more likely to be in view so they can bid more aggressively on those while avoiding the ads less likely to be viewed. This tactic may increase the percentage of viewable impressions delivered, but will never achieve 100% viewability. Unfortunately, this isn’t as simple as buying above the fold inventory, either. Above-the-fold ads may be more likely to be in-view, but research indicates this is not always the case, according to The Washington Post.

In order to truly buy exchange media on a vCPM, exchange bidders need to be able to retract winning bids for ads that have already served, but were never viewed. This means the ad will load onto a page and be counted as an impression by a standard ad server, but if the ad is determined to be not viewable, the buyer does not pay the exchange. This is going to require a change to the relationship between the bidder and the addition of an agreed-upon viewability provider to report on all transactions between the exchange and buying platform.

Additionally, getting the exchanges to sell on a vCPM will require changing the terms between the ad exchangers and their publishers. Even then, some questions would still need to be answered. Could an exchange accept bids from buyers purchasing on an old-fashioned CPM basis, as well as a vCPM? How do you account for that? Which party would pay for the use of a viewability-measurement tool?

Many of these issues are being discussed, but don’t expect these to be addressed in early 2014. With Magna Global forecasting that RTB will account for 52% of display transactions by 2017, getting viewability right in RTB is going to be necessary in order to shift the display advertising currency.

Looking Ahead To 2014

Whether the MRC lifts the “do-not-transact” advisory at the end of 2013, one thing is certain: Advertisers don’t want to pay for ads that are not seen now, and they still won’t want to in 2014. Some position viewable impressions as an issue that concerns only brand marketers, but the shift to viewable impressions impacts anyone with a display media budget. If we can make this shift as an industry, direct-response advertisers will see better sales, while brands will undoubtedly track higher engagement and recall rates.

Importantly, transacting on a vCPM will bring an element of trust back to digital media, resulting in larger budgets and continued innovation in digital advertising. Publishers and advertisers will benefit in the long run with more trust and more money in the marketplace.

The issues above are solvable. We just need to make them a priority.

Follow Mediasmith (@MediasmithInc), Marcus Pratt (@mawkus) and AdExchanger (@adexchanger) on Twitter.

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  1. Hi Marcus, nice summary. I also think you can summarize the problem like this:

    Too many parties (publishers and the middle men) make too much money in the status quo to risk it all for the sake of viewability and make less (even in the short term). there is simply no incentive. Therefore there will never be a big enough behavioral shift to truly make viewability go mainstream let alone become an accepted currency. The same macro economics can be applied to fraud. That’s here to stay too, as an inherent risk attached to online advertising because the incentives to keep it alive are too big.

    No other channel can guarantee an ad is viewed. Even if an ad is ‘in view’ doesn’t mean it’s viewed. TV’s dealt with it for years (toilet break during the Superbowl anyone?). So why such a need to pay for only viewable impressions when it can’t be compared to any other channel?

    Sorry, bit of a rant….Many, many years from now things may change when the incentives are more clear cut, but not any time soon.

    • Marcus Pratt

      Olivia – agreed – many parties lack the incentive to make these changes. But I’m hoping that the industry can see the bigger picture and start to tackle some of the big issues that threaten continued growth in digital ad spend. Fraud is one of these, and viewability is a close cousin.

      I don’t think anyone is asking for a guarantee that ads will be viewed, just that they have a fighting chance. If your superbowl spot doesn’t air in half of households watching the game (yet you paid full price), that’s a far more serious concern than the toilet break.

      It may take many years, but I’d hope we can speed things up a bit!

  2. olanmills

    Olivia, I think asking, “So why such a need to pay for only viewable impressions when it can’t be compared to any other channel?” would be like asking why do we try to directly measure every view and click? Why do we try to measure whether someone expanded an ad or paused the video halfway through, etc?

    These are also measurements which are difficult to do in other channels, but we do them today in digital advertising. With digital advertising, some of these kinds of measurements are more readily doable than they are with other channels.

    If you believe these kinds of measurements will make advertising more valuable and effective for advertisers, and result in better ads for everyone, well then, that’s why you would want to do it. We may not “need” to do it, but then, why should we be satisfied to stop with “good enough, kinda maybe”?

    I agree with the points made in the article that there are practical, technical, and “political” reasons that would make changing the status quo difficult.

  3. Great job, Marcus. You nailed it. The trust issue is the elephant in the room for display. And it’s not going away until we get the right measurement in place. Until we do, good RTB inventory will be artifically cheap–and great premium inventory won’t be able to realize the prices it should be getting.