Views Need to Replace Impression-Based CPMs

Programmatic digital advertising was supposed to deliver a new level of accountability: Narrower targeting to drive more tailored messages, and performance metrics that inform what’s working and what’s not. But the promise of programmatic is rendered moot if ads are not viewed by human beings.

The economic framework of digital advertising on the open internet is still defined by impressions rather than views. Beyond Facebook and Google, there are thousands of quality domains and apps out there that offer superior, brand-safe content. For marketers to reach those audiences with full confidence, it is critical for programmatic technology to shift from impressions to views, with buyers paying if, and only if, their ads are viewed.

Indeed, for more than 20 years, digital advertising has been bought and sold based on CPMs. By definition, then, this universal digital currency values the number of impressions served rather than audience time and engagement, and the digital media economy has developed accordingly. Publishers are rewarded for quantity and scale—not the quality—of ad units.

Low CPMs and poor user experience

In 2011, according to an article on Adobe’s Digital Marketing Blog, CPMs declined a jaw-dropping 31 percent year over year, despite a corresponding 271 percent increase in the number of impressions served. “The key driver for CPM declines appears to be a wider play for less expensive inventory,” the author noted.

As CPMs for display ads decreased over time, publishers had to achieve scale to deliver enough impressions to preserve monetization across their digital channels, and media buyers and traders had to buy more impressions to spend their clients’ budgets. It’s easy to see how clickbait, ad farms, pops and other low-quality tactics thrived on the internet. These business models were rewarded, even as the user experience was degraded.

It’s also easy to see why consumers adopt ad blockers to avoid the barrage of unwanted ads. Or why they turn to their Facebook News Feeds to consume their preferred media in an environment designed to balance curated information with relevant marketer messages. In addition to this engaged audience, Facebook offers another critical advantage to marketers: It only charges for ads that scroll into view.

Until now, marketers have faced a stark choice: Spend their advertising budgets on Facebook, with the guarantee their ads would be viewed, or use programmatic on the open internet where perhaps half of those units are viewable.

The need for viewabiity standards

Brands and agencies are rightfully demanding viewability standards on the open internet. But most technology has not yet caught up. As eMarketer reported last year, many media agencies don’t even have line items in their systems to support anything other than CPM-based media buys. This leads to a manual reconciliation process, which adds one more task to a media trader’s already long list of tedious to-dos.

Technology companies that support a free and open internet have an opportunity to meet and exceed these marketer demands. For the past three years, AppNexus has been investing in machine learning-driven technology to help traders buy on a 100-percent-viewable basis, even when publishers are still defaulting to sell on CPMs. On each impression, AppNexus automatically predicts the likelihood of a view and pays the publisher per impression based on that prediction. The buyer only pays for impressions that are viewable.

Outcomes-based buying

Meeting the viewability standard is just the first step in achieving better economic incentives and measurement for digital ad effectiveness. The future will bring additional outcomes-based buying solutions that allow marketers and agencies to buy on the basis of tangible and verifiable results like video completion.

Automated outcomes-based buying will enable media traders to spend their time gaining a competitive advantage for their clients. Indeed, there is no one-size-fits-all strategy or metric for user engagement. Attention and engagement differ across channels (desktop, mobile) and formats (display, video, audio, native). Traders’ roles, in turn, will shift to delivering strategic outcomes as opposed to blanket impressions.

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Video Is Not Display, So Publishers Should Stop Using Display CPM Strategies

– by Yoav Naveh

The concept of online advertising has long been associated with the standard banner ad – the square unit that consumers breeze past as they scroll down a page.

That’s changing rapidly, though, as video viewership grows and introduces more opportunities for engaging video ads. As a result, video ad spending is predicted to grow by 12% this year while traditional banner spending shrinks, according to JP Morgan.

Publishers have long relied on display as their primary revenue source. As a result, many of the publisher-focused technology solutions have addressed display ad selling. But video isn’t sold or served in the exact same way as display advertising, which means that established tactics aren’t necessarily transferable.

For instance, when publishers try to optimize toward the highest CPM with video, as they do with display, they run the risk of inconsistent fill rates and long load times. Rather than trying to mimic display strategies, publishers need to look for a strategy that leads to the same desired outcome, rather than a direct technological equivalent. In video, that means optimizing toward overall ad revenue rather than CPMs.

Video advertising is far more technologically intense than display. VPAID tags can take 10 seconds or more to fire and actually load an ad, and some ad calls time out, resulting in no actual payment to the publisher. With all this heavy lifting, publishers want to maximize the chances they’ll get paid for every potential video impression. As a result, many are loading up on video ad networks to get the highest CPMs possible.

Unfortunately, this focus on CPM has a downside. Adding more networks means adding more tags, which means even longer load times. To make matters worse, the entity that wins a video ad auction may not always pay for the impression. This may be attributable to technological errors at times, but a delinquent buyer is most likely rooted in video’s archaic arbitrage practice, where even prominent supply-side platforms own seats on demand-side platforms and bid for impressions.

These attempts to buy up inventory and resell it for a higher fee have created a mess of a consumer experience and set up a very dangerous house of cards for publishers. A buyer trying to resell an impression can push the load time toward 20 seconds or more. These excruciatingly long load times lead to user abandonment, which can cause traffic to crater, thereby bringing fewer ad impressions and ultimately resulting in no business at all for the publisher. Maxing out on ad networks in an attempt to optimize for CPMs in this way is not optimizing for revenue, especially if it has the potential to destroy revenue and the online user experience altogether.

What are publishers to do if they want to maximize return in the increasingly competitive video market? Rather than optimize impressions around the highest CPM, publishers need to take the longer view toward revenue, which is part and parcel with understanding fill rates and load time.

The first step is shifting the focus toward revenue per thousand page views, or RPM, rather than the CPMs from auctions. Simple A/B testing should provide a clearer understanding of this metric. Publishers may find a new partner can generate $20,000 RPM, which is great. But if that source is potentially taking $25,000 away from another bidder, then that’s a net loss of $5,000 per thousand page views. Getting the highest CPM for each impression might provide a real-time rush for the publisher, but careful analysis needs to be done to ensure that a quick thrill won’t negatively impact long-term revenue success.

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The Video Monetization’s Holy Grail – Yuval Fisher

As we all know by now, television has been evolving toward a more personalized experience. Recently, the ability to view high-quality content on devices attached to a broadband Internet connection has obliterated place and device limitations and further hastened the multicast-to-unicast transformation of video consumption.

As these alternatives to the traditional video-consumption model increase in availability, quality and ease of use, so does the advertising inventory and monetization potential for video service providers and broadcasters who manage them. As a result, the media broadcast industry has been on a quest for the “holy grail” of video monetization: Dynamic Ad Insertion (DAI), or the ability to deliver fresh, relevant and targeted ads to smartphones, PCs, tablets, connected TVs and virtually any device that receives live or on-demand video programming. The good news is that the industry has come some way in this journey and demand for DAI for linear and on demand content is growing.

Rather than broadly broadcasting loosely targeted ads whose value is diluted by crudely matching regional demographics with audience demographics, video service providers can now deliver targeted, relevant and current advertisements on an individual and/or device level. This means more powerful, resonating ads than ones placed en masse on a channel, driving higher Cost Per Thousand (CPM) revenue for service providers while benefiting consumers and marketers alike.

Today, these refreshed ads in linear and on demand content are taken for granted, because the ad decision is made right at the time that the content is watched. But the onslaught of next generation services, such as cloud digital video recorders (cDVRs), which enable users to record linear content and play it back on any device at any time – whether the content aired a second ago, a month ago or years ago – presents new monetization opportunities and technological challenges. For one, ads in time-shifted content go stale in a matter of days, resulting in no payment from advertisers and rendering them unprofitable. They may also have little or no relevance to the audience.

In order to replace a stale national ad with a refreshed, targeted one, you have to first know where in the stream the ad played. This requires sophisticated ad discovery technology that recognizes and finds all ads in the video stream for subsequent replacement. Rather than letting consumers watch stale, irrelevant or unprofitable ads, ad discovery enables service providers to dynamically deliver a relevant ad. Not only does this open new content monetization opportunities, it enables marketers to reach consumers with more relevant information, reducing chances for consumer frustration.

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