How to increase value to the ad impression

Last February I attended IAB’s Annual Leadership Meeting in Miami. One of the speakers that held my attention the most was Dr.Magid Abraham, President, CEO and co-founder of comScore. His presentation focused on the how CPMs have never gone up since online advertising began and that with our current model (note the recent talk by many on the death of the page view: AdAge, Mitch Joel and Doug Weaver to name but 3) it is impossible to increase the value of the ad impression as we know it.

Why? Easy economics 101: the demand for online advertising is finite while the supply side of the equation is infinite.

Yes, ad spend online in display and other tactics is increasing very rapidly (double digits) yearly in almost all markets. But the supply side of the equation has no limit. When you reach a limit, you simply add another ad format on your page and voilà, extra inventory to sell.

The only way we’ve managed as an industry to ever increase CPMs what by introducing new bigger ad formats to replace older smaller ones. More ad space commanded overnight a larger CPM, but over time these too shrunk on a regular basis.

It seems there is something to be said about traditional media’s regulatory framework. 12 minutes of commercial airtime per TV-hour (in Canada) for example. This situation creates scarcity. Broadcasters must become ingenious to get clients to go beyond the finite inventory of 30 and 60 second spots with sponsorships and content integration to get more ad revenue than the strict ad inventory allows.

In print, there’s a cost and there are implications to selling more ad than you have space for in any particular issue or a newspaper or magazine. Depending on the format you need to accommodate one double sided page (1 page ad + 1 page of new content for which there often is some “shelved” material) or a full double page (2 pages of ads + 2 pages on content, left and right sides, front and back).

This scarcity allows traditional media to command rate increases on an annual basis. Actually, magazine and newspaper ad rates have yet to come down in recent years despite the slow decline of circulation and readership – you’d imagine they’d be linear, but scarcity allows them to keep these rates up, and higher!

What online needs is its own scarcity, but how can we really go about creating scarcity?

Dr. Magid Abraham proposes we validate online ad impressions to ensure they are

A-     in-view: i.e. seen by the intended user (not by a robot or displayed in an area of the page not seen by a user such as below the fold or bottom of the page)

B-      in-target geography: most advertisers only serve a limited geographical area either because of their own regulatory conditions, or for other reasons. Any exposed user beyond that region’s border has no value to the advertiser.

C-      in a brand-safe environment: if the ad is shown through a blind network against content that actually diminishes or degrades the advertiser by being seen next to it, it not only loses all value, it actually hurts the brand.

D-     Not fraudulent: ads shown against content that encourages or eases piracy of content or copywrited materials in a sense “encourage” the practice. Again this represents zero value for the advertising and actually hurts its brands by seeming to find such environments “acceptable.”

If we can impose these rules, comScore estimates we can on average discount 30% of all counted ad impressions. Actually, the “in-view” rate alone varies from network to network from as low as 7% up to 100%.

Add comment