Online advertisers are paying for a parade that nobody is watching

alexx cassBrands are wasting millions of dollars on buying online ads that nobody sees, argues SAY Media’s Alexx Cass.

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

Comments


  1. Drew
    16 Aug 12
    11:47 am

  2. I suspect if you compared ads served online compared to ads on television, newspaper and magazine that online would still not only come up trumps in regards to being seen by the user, but also dominate the others in cost per view, cost per transaction and every other item. As the old saying goes, you get what you pay for. Bid higher and you will be shown in a 728×90 Leaderboard or the FIRST 300×250 MREC on a page. An argument for direct relationship marketing and not putting your faith in the ever increasing pool of ‘excess inventory’ networks.

  3. Hugo
    16 Aug 12
    12:37 pm

  4. You’ve covered as couple of types of “non-viewers” of online adds but one growing group was missed – people who can competently configure their browser to avoid adds.

  5. Alexx
    16 Aug 12
    1:11 pm

  6. Hugo, good point. Also add to that the growing problem of certain browser plugins replacing a website’s ads with their own ads. The intended ad can still be counted by the ad server but a rogue ad is served instead. Media hijacking!

    http://www.admonsters.com/foru.....acking-ads

  7. WatchingTheWatchdogs
    16 Aug 12
    1:13 pm

  8. 1. Alexx chairs the Audit Bureaux of Australia’s digital watchdog committee

    2. Alexx writes an inflammatory article claiming millions of dollars are being wasted in online advertising. As the chair of a digital watchdog committee his claim appears to carry weight.

    3. Alexx is also the media development manager at “Say Media”

    4. Alexx helpfully mentions in paragraph seven that “a new cost-per-exposure (CPX) pricing model was launched in the US” as a way to solve this problem

    5. Alexx conveniently fails to mention that this new model is a product developed by HIS company. Yes, you read that right. “Say Media” is the company in the US that launched the product in April that Alexx is spruiking via Mumbrella.
    http://saydaily.com/2012/04/sa.....-seen.html

    This unhappy conflict of interest gives rise to five questions

    1. Do the Mumbrella staff not have that new Google site on their computery-thingos?

    2. Do they think no one else does?

    3. Will Alexx do the right thing by apologising for this sleight of hand and resign from chairing the digital watchdog committee?

    4. Where do you sign up to join a watchdog committee that watches watchdogs?

    5. Will Mumbrella publish this comment or really fan the flames of deceit by trying to brush it under the carpet

  9. mumbrella
    16 Aug 12
    1:25 pm

  10. Hi Watching the Watchdogs,

    To point number 2, The piece was offered to us by Say Media. I chose to add the background that he chairs that committee as I considered it relevant – they didn’t ask us to. I just looked it up on his LinkedIn profile. Alexx also previously wrote guest pieces for us when he worked at the Audit Bureaux.

    To point number 5, the Say product is not mentioned in the piece because I asked them not to – the issue is an interesting one to raise, but this isn’t an ad, so it isn’t the place to spruik their products. The product plug was removed at my request.

    Just because somebody happens to offer a service in a sector does not remove their right to raise an issue – if it’s interesting enough.

    To your questions:

    1. Please tell me more. It sounds exciting.
    2. See above.
    3. Calm down.
    4. Go for your life. You should definitely start it.
    5. Not sure that the metaphor really works, but here’s your comment….

    Cheers,

    Tim – Mumbrella

  11. Shamma
    16 Aug 12
    1:49 pm

  12. “fan the flames of deceit”

    A+ for drama

  13. Shamma
    16 Aug 12
    1:51 pm

  14. btw this issue is still being ignored. even prominent ppl on the ABA committee ignore it when it suits them.

    most advertisers service providers are in the business of spending money not investing it … until this changes accountability in ad spend is a topic restricted to conference halls.

  15. the real issue
    16 Aug 12
    2:10 pm

  16. Does Alexx know his name has two ‘x’?

  17. Golum
    16 Aug 12
    2:13 pm

  18. when can we expect the apology from Watching the Watchdogs?

    nicely played, Tim – esp. the point “Just because somebody happens to offer a service in a sector does not remove their right to raise an issue – if it’s interesting enough”.

  19. Alexx
    16 Aug 12
    2:14 pm

  20. For the record, I have been transitioning away as Chair and handing that role back to the ABA. My LinkedIn profile was slightly out of date and was not a part of the original article submission. As Tim said, this was submitted entirely as a SAY piece, not an ABA piece.

    Very proud to be working for SAY and glad we offer real solutions to industry issues instead of just talking in theory about what would help to protect advertisers.

  21. Peter Bray
    16 Aug 12
    2:15 pm

  22. Alex,

    I am a fan of pay per engagement rather than impression, but your article is flawed.

    Firstly, it pays to attribute your source so people can interpret the information themselves. For those interested, the white paper on the research can be found at http://www.comscore.com/Press_.....dvertising

    Your extrapolation is based on a misinterpretation of the information. Just dividing the Australian spend by a third to then guess what spend is wasted is a misrepresentation of the findings.

    What the findings make very clear (and it is based on a relatively small sample set) is that there is a massive variance in the quality of the viewable impressions. Some sites rated as poorly as 7% viewability, but some were up to 100%.

    The answer is not to throw out one model with another, but rather that media buyers, and brands, need to continue to pay attention to where on a site a display banner is sitting. Which makes sense! And that some sites are better than others when it comes to viewing percentage. Which also makes sense.

    The learning is simply that not all display media is equal. The good media agencies out there already know this.

    In terms of changing the game, a lot of media agencies are smarter than you think, as are marketing directors, and if they aren’t getting results with pay per impression, they will vote with their dollars. The most effective model will win.

    The more accountability for spend the better, for all of us, but your article is misrepresenting the intent of the research.

    Cheers,
    Peter

  23. willemrt
    16 Aug 12
    2:27 pm

  24. How about,

    Display ads are rubbish, they always have been. So are ad exchanges. Unless you want to reach EVERYONE!

    Targeted campaigns and integrated marketing into content will be the way to go. Whatever happened to live reads on TV anyway.

    Back to the future perhaps?

  25. mattt
    16 Aug 12
    2:33 pm

  26. One major point not raised is that many below the fold and non-viewed ads are products of CPC/CPA buys sold by the publisher, or onto the publishers site via an ad network. In this case, there is absolutely zero wasted money because without clicks or post click acquisitions, the advertiser isnt charged a sausage. And the first half of the blog, which makes a crude correlation between total digital spend and % of non viewed ads to equating to a wasted $$ figure, is very flawed as it assumes southern or below the fold media is bought at the same rate as premium or above the fold media; obviously, it isnt.

  27. Brandon
    16 Aug 12
    2:36 pm

  28. It doesn’t really matter anyway, online advertising will be reduntant soon and it has been proven not to work anyway. Try advertising something exclusively online and see the response it gets you. In fact advertising in general doesn’t work at all, the industry just gives hipsters something to do between shopping for skinny jeans avoiding being mainstream.

  29. zeya
    16 Aug 12
    2:45 pm

  30. Alexx might have two x’s but he seems to be missing a spine. Very foolish words.

  31. Shamma
    16 Aug 12
    2:52 pm

  32. Peter – you are giving the media agencies a lot of credit. Truth is a large % of the rubbish inventory is being bought and sold by them. Hard to be part of the solution when you’re a big part of the problem (and that problem keeps the parent very financially happy)

  33. Rob Wong
    16 Aug 12
    3:12 pm

  34. There is still alot of wild west in the online advertising world. but the fundamentals are that more and more people are using the Internet everyday across web, mobile and tablet devices. The reach model certainly has some flaws, but it does get results – but engagement is a much better model.

    We’ve built our business on the retail sector on the cost/engagment model. It’s powerful, because the risk shared. We don’t get the engagement we are aming for and we don’t get paid as much. We are delivering real results for clients that are changing their traditional advertising mix substantially becuase they are seeing the business results. In our latest campaign for Bedpost in NZ 10% of calls to stores were specifically the result of an engagement campaign being run by iNC Network consistently for three months.

    The problem with most online advertising models is that very few try to understand and be accountable for what result they are delivering to the client. What’s the increase in awareness? How many people engaged and then did something like visit a store, think about visiting a store or bought something online? How did the online campaign contribute to a change in the positioning of the brand. This is what online publishers and ad networks should be aiming to achieve for clients, rather than charging for CPM’s regardless of what then do for a client’s business. It’s like the American dollar the more you print the less value it is.

    More work to be done online advertising industry…accountability needs to go beyond impressions. Do this and we’ll gain more budget and more respect.

    Cheers Rob Wong.

  35. Hugo
    16 Aug 12
    3:24 pm

  36. Thanks for the extra infor Alexx – wasn’t aware of there being hijacker browser’s out there previously.

  37. Frank C
    16 Aug 12
    3:30 pm

  38. When I studied advertising the percentage of ‘ignored’ messages was 87% or 12 out of 13. If online ads are only being ignored 2 out of 3 times (67%) they’re doing much better than any other medium!!

  39. Ted Haggard
    16 Aug 12
    4:18 pm

  40. Just because 1/3 of ads are not seen does not mean 1/3 of the revenue is wasted.

    There can’t be too many people foolish enough to pay the same rate for above the fold and below the fold placements.

    I think the biggest rort is post view CPA, that is just a complete scam… But agencies like it cause it makes the campaign look like it performs better, and publishers obviously do cause they get paid.

    @Alexx – Does your CPX technology work when the ad is served via an iframe? I didn’t think it was possible to get this info due to cross domain security!

  41. Tom S
    16 Aug 12
    4:36 pm

  42. I have spent a long time working across online display and just wanted to say that Mattt is spot on. It amazes me that people seem to forget that CPM isn’t the only way that display is bought when they write these articles.

  43. Joseph
    16 Aug 12
    5:16 pm

  44. pay per click
    thats the answer

  45. Researcher
    16 Aug 12
    9:26 pm

  46. I think ‘Watching the watchdogs’ makes a very valid point. There is a responsibility on the editorial team to insist on some form of transparency. It isn’t enough to just ask the contributor to move a reference to a product and then allow them to shamelessly promote the products features and benefits. It should have been made clear upfront that there was a commercial conflict that brought into question the objectivity of the piece.

    A nicely worded and trite reply from the editor put the commenter in their place but fails to address a genuine issue with the editorial credibility. I am even more concerned when the editor was aware of the conflict prior to publication but chose to address it in a cack handed way.

    My main comment about this piece and it is a usual refrain is all the online metrics produced are dubious. None of the research suppliers using the same basic techniques is able to replicate other supplier figures or even produce figures demonstrating an adequate level of relativity. The reason there is a flight to the bottom and payment for performance or click is because no one trusts any of the metrics that are being produced whether they be site centric or user centric.

  47. Oh dear
    19 Aug 12
    5:00 pm

  48. What a silly article. Next time can you please just call it a sponsored link.

  49. WatchingtheWatchdoggers
    20 Aug 12
    2:53 pm

  50. Tim,

    Thanks for the response. I appreciated the sense of humour and sparkling repartee.

    You’ve been a journalist for a long time, I admire the way you frequently stick your head above the parapet and are not afraid to take on the established players.

    However this is not your finest moment. You’ve heard of a disclosure right? It’s not always fun putting one in but in this case it would have saved you a lot of trouble. It also tells the readers in no uncertain terms that you take the integrity of this publication seriously.

    Unfortunately you’ve now revealed a more worrying issue.

    As confirmed by your response you knowingly published a post from a company that was little more than press release to spruik their own product.

    You took out the direct link to that product but you left the product in. Alexx’s credibility has taken a hit (Peter Bray shone a light on Alexx’s snake oil salesman methodology) but worse than that the readers now know that you actively contributed to Alexx’s misery in an attempt to save face. You then attempted to use a popularist obfuscation to discredit the genuine concern I raised. Only a sycophantic dullard like Golum would fall for something as transparently obvious as that.

    No one said that industry figures don’t have a right to raise an issue. They have every right to do just that.

    They also have a right to include a disclaimer when doing so. That’s what disclaimers are for.

    Mumbrella is at a cross roads. It is feverishly attempting to get the page views up and as a result the quality is going down and questionable posts are becoming more frequent.

    Congratulations on the increase in circulation but everyone in this industry knows that it takes tens of thousands of UB’s to make up for the lost revenue of just ten people pulling out of the Mumbrella 360 conference. Encore is circling the drain and CPM’s are racing towards zero. Now is not the time to risk a boycott of your events for a few cheap page impressions. Fairfax is buzzing with talk of your light coverage of News Limited’s layoffs whilst they are an advertiser on Mumbrella.

    I believe you are jeopardising the future of a publication that I value highly with crappy posts like this. It’s simply not worth it.

    There are some really great signs for Mumbrella. Robin’s move to Melbourne is excellent and no one doubts your work rate or commitment. Mumbrella has been a raging success but sloppy copy, too frequent typos, poor research and dubious ‘guest’ posts are not the way to cement a position you’ve lost four years of sleep creating.

    The frequency of posts is not the problem.

    The quality slips, questionable guest posts, constant snarking at competitors, inconsistent staff posts, unattributed posts and clumsy tech implementations are.

    Best of luck in the future,
    WatchingtheWatchdoggers@gmail.com
    (changed the name to get the gmail address)

    Shamma – why thank you, that’s exactly what I was going for *curtseys*

  51. mumbrella
    20 Aug 12
    4:39 pm

  52. Hi WtW,

    Thanks for your follow-up comment.

    I think we may have to agree to disagree on disclosure. This is a business website – pretty much every single person who writes a piece for us is in business, and commenting on their area of expertise. The rule is simple – you can’t plug your product. A note at the end mentioning that Say happens to produce a product in this space feels like a plug to me.

    Say is not as far as I know currently an advertiser of ours – that’s when I think it is most important to disclose links. FYI, we also run a disclosure list of interests, gifts and hospitality – you can find it here: http://mumbrella.com.au/about/.....ality-2012

    And I’ll bite on the comment re Encore: I disagree. As a product, I’ve never felt prouder of Encore than I do right now. I’d encourage you to take a look. CPMs: Nonsense. That may be the case in non-specialist media, but it’s not something that we are experiencing.

    But the feedback and debate is genuinely welcomed. Please keep it coming.

    Cheers,

    Tim – Mumbrella

  53. Oscar
    21 Aug 12
    9:31 pm

  54. Does anyone actually see advertising online? Everyone I know uses Adblock Plus with Firefox – no ads, ever. And I’m ancient and not particularly net-savvy. I’d expect kids of, say, 35 and under, to have worked that out. Who are you advertising to? Only grandparents stick with the unmodified default browser, surely?

  55. Craig
    22 Aug 12
    12:38 pm

  56. There are ads on the internet?

    I haven’t seen one for five years.

    They do get to my browser though – so still get counted in the metrics.

    I remember the good old days when companies sold ads online by hits.

    To increase the number of hits to your site you’d just add some more 1x1pixel images, because every file request to a server counts as a hit. Voila! Bigger hit count, charge more for ads.

    I’m glad to see that most people have learnt better now…. sort of. I know of at least 8 ways in which major websites still inflate their view counts.

  57. Stuart Pike
    3 Sep 12
    4:21 pm

  58. To all those saying online advertising doesn’t work I’d point out that in over 300 Market Mix Modelling studies that Nielsen have done we have seen online rank as #1 for ROI versus other media, slightly ahead of TV. Obviously that doesn’t mean online is #1 for every campaign or product but across the board this is what we have seen. Yes this is painting in very broad brush strokes but the data is pretty compelling and includes all those paid for but never seen ads (which to be fair are present in any medium).

    Do I think this will change in future? Definitely. Savvy marketers are constantly identifying which medium (or tragetting opportunity) is currently undervalued and putting their marketing $ there. This lasts until everyone else catches up and the prices being asked no longer deliver the desired ROI. The key to success surely is to stay ahead of the pack in identifying which forms of media are currently undervalued.

    Disclaimer: I work for Nielsen (that’s why I am aware of these figures I quote).
    Double Disclaimer: I am not claiming that Market Mix Modelling in isolation is proof of anything – just that it is another piece of (what I personally consider) compelling evidence against the online knockers.