Online advertisers are paying for a parade that nobody is watching
Online ad spend broke the $3bn mark in the last financial year, according to the latest IAB figures released this week. But before we toss the ticker tape, is it time to pause and consider how much of this spend was wasted on ads served but never seen?
In March, a comScore study tracked the online advertising campaigns of 12 major US brand advertisers across 380,000 site domains and found that one third of display ads are never seen.
We can assume results would be similar in Australia, which means advertisers last year wasted roughly $261 million of the $843 million display ad spend – a figure that will grow exponentially until the industry adopts more transparent measures to account for unseen ads.
Unseen ads refer to any served ad impression that did not have at least 50 percent of the ad’s pixels in the user’s focus window for one second or more. An example of this is when a user remains at the top of the page, never scrolling to the bottom where ads have loaded. Another example is when consumers quickly scroll past ads or click away to another page before the ads finish loading.
The comScore study of course aimed to promote industry adoption of more transparent measures that reflect the true delivery of a campaign rather than gross impressions. But it does not mean marketers must stand by and wait for broad industry reform before they take action and make safer media-buying decisions to protect their own budgets. There are choices available to them.
In recent years, some media companies have pioneered new ad models that provide marketers with safer alternatives to CPM (cost per thousand impressions) pricing. The ‘cost-per-engagement’ (CPE) pricing model, introduced around four years ago, is one way the industry has tried to eliminate wasted impressions by only charging for ads that have been seen and actively interacted with by consumers. Unlike conventional CPM measures, which charge for unseen ad impressions, CPE advertisers are charged only when users hover their mouse over the advertisement and hold it there for a visible 3, 2, 1 countdown or click to interact with the ad.
In April this year, a new cost-per-exposure (CPX) pricing model was launched in the US, which provides a halfway point between CPM and CPE models. Based on tracking technology, CPX pricing only charges for ads that are visible within a user’s browser window and is a positive shift away from an impressions-based pricing structure towards a more accountable and transparent model for online brand advertising.
Changing the digital advertising game is no easy feat. It requires many incremental steps forward punctuated by moments of real innovation. But as more advertisers commit a larger share of their advertising budget to digital and expect greater value than every two out of three ads being seen, these issues become more imperative. After all, they are not randomly hurling ticker tape into the digital ether. Measures like CPX pricing help to move the industry forward and at the very least raise awareness of options available to prevent the vast amounts of wastage in digital advertising.
And until we can work together to adopt better industry-wide approaches, they can at least limit the amount of dollars marketers are throwing away on ads falling on a parade no-one is watching.
- Alexx Cass is media development manager at SAY Media and chairs the Audit Bureaux of Australia’s digital watchdog committee