Leaving an impression, eye contact + making time matter

The self appointed senior deputy official accounters of anytime, anywhere media measurement, Nielsen, announced that they will soon provide data for online TV viewing. This, it is said, will complement their 'people meter'-derived homes data, which currently calls the hits and the misses for traditional tv viewing (i.e., the kind that actually requires a television set). Nielsen release here.

On the surface, Nielsen's claim that it is important to account for online TV viewing seems reasonable. Multiple data sources, including Quantcast, Google, comScore and Nielsen are in violent agreement that more and more of us are watching TV shows on our computer screens. Unfortunately, Nielsen's move to more accurately, er, comprehensively account for tv viewing just isn't that big of a deal.

Say What?

The Nielsen approach attempts to take that which no longer is distinct (the TV) and treat it as if it were. Not to 'dis Nielsen, the same challenge presents itself in the way many traditional media interests have viewed the move online: they've taken the analog vehicle (e.g., TV set, newspaper, album) and tried to move that model online as if it were still distinct. Newspapers, music publishers, books...moving them online integrates video, text, images and audio behind a single, digitally-enabled vehicle...one screen to rule them all...with speakers...and a keyboard.

So the idea that Nielsen's online TV viewing measurement matters much would require that traditional television programming must matter. Of course it does, just not as much as the salad days when we had less to do, with fewer tools to do it. Because now, our friend's silly video of their kid's soccer game matters more than primetime TV. So do our Twitter grunts and Facebook statuses. And we don't like it much when MadMen try to get between us and our context with interruptive, irrelevant advertising online.

So What?

Of course, like healthcare, we all want everything free: free media that is free of advertising and subscription costs. But unlike healthcare, we're willing to pay for ad-free viewing when we upgrade to OnDemand or TiVo-like equipment.

So, let me propose a measure that matters: time spent. It's the common currency that we all share equally...just 24 hours in everyone's bank.

Rather than treat us all as eyeballs and charge for impressions, let's get the best and brightest at Nielsen to track time spent...and where...did we watch 2 videos and read a status on Facebook? Did we watch 10 minutes of The Office on Hulu then 5 minutes of EpicFail?

Each online property can price it's minutes of engagement commensurate with individual's willingness to engage there. Rather than pretending that only 250,000 of us matter when it comes to measuring online media, let's pretend we all do. And rather than pretending that there is 'an audience' let's get content whereever there is one or more audiences.

Spend alot of time commenting on your friend's wall? Sending hundreds of Tweets a day to your sheeps on Twitter? Let your preferred screen sell you based on your time spent...not the number of screens you refresh. You can even let your preferred screen know what you are worth by bidding your time back. Willing to sell your time short? Tell your preferred screen what you are willing to tolerate. I'll tolerate one 60-second ad for every 15 minutes of ad-free experience.

Better yet, give me a bank of earned 'ad-free' time that I accumulate by watching ads...then when I really want to watch a show, visit a site or watch my Friend Feed refresh, without added interruption, I cash out my ad balance by changing my expereince profile to 'ad-free'.

In such a manner, Nielsen doesn't care what show gets billions of eyeballs (because none of them do), they care which sites get millions of minutes...or hundreds of minutes...of attention. And like a utility, sites can price their user's attention individually, variably, and in realtime. The user has a say in how durable a site's demand is by their willingness to accept or cash out ad-free credits.

In the end, the networks matter as either content networks or distribution networks. If the former, you want to be wherever, whenever their is a willing audience on the latter. If the latter, you have to price on what the customer will pay (i.e., your users).

In the end end, Keynes says we're all dead. So as advertisers and consumers let's make the most of the time we spend together rather than being satisfied with mere eye contact.

Cars, banks and ad performance: The Sporting News

The Hollywood Reporter (no, I don't usually visit, but this is research!) has an article about a report on ad spending among financial services firms: down 10% this year through 3 quarters.

Of course that's overall. Ad spending by formerly fat cats like Bank of America (the #3 financial services ad spender), is down 30% this year...shareholders can only wish the stock price was doing as well (BAC down 70%).  Financial Services firms and the other major beleaguered industry, Automakers, represent two of the big three TV advertiser categories (consumer goods being number 3). 

Automakers have reduced TV spending in 12 consecutive quarters. Even supposing they successfully lobby for taxpayer money, it's hard to imagine those funds will be put to use paying advertising bills.   

So what?

Financial services and Autos represent the two biggest spenders in televised sports (10% of all sports advertising according to Steve Lanzano of ad group MPG North America). Should spending on sports wane, then inventory becomes available. And with any commodity whose supply exceeds demand, prices will drop (see here for a take on ad deflation).

It may be that sports sponsorships and advertising will become affordable for second tier advertisers...now defined as those who have cash. 

It might also be that those with now-scarce cash for advertising demand something more for their money than their name on a 'sponsored by' screen: namely, they may demand performance. 

A recession in ad spending may move all industries once and for all toward performance based models of advertising...the kind direct response marketers have lived with for years.  

How many Buicks did GM sell because of Tiger Wood's celebrity? How many leads did the stunning ad during the Master's generate? In the future, one might expect that question to be answered by a marketing executive in front of his shareholders, in front of the campaign...not by a CEO in front of Congress after the money is gone. 

It would be only sporting:  advertisers pay not just to have their ads show up, but like the athletes they are underwriting, for actually performing. That's a game that's not limited to professional sports.

Online advertising: No immunity?

Price Waterhouse Coopers released it's 2008 first quarter online advertising report (here) for the IAB a couple of weeks ago.  It contains some interesting data on the state of the online advertising business:

1. Online advertising continues to grow in double digits (newsflash, I know)

2. Performance-based pricing models (i.e., clicks vs. impressions) now represent a majority of revenues (52%)

3. Display advertising, rich media and other traditional ad formats moved online are flat or on the decline...search remains the growth story.

chart via PWC 

So what?

As we've harped on previously regarding banner blindness, CPM deflation and more, the notion of passive, intrusive ad models online makes little sense in a lean-in, user controlled experience. The data from the report would indicate that search, which melds the user's defintion of relevance with pay for performance pricing, is looking like the most sustainable model of online advertising. Relevance remains a challenge for search marketers though lesser than CPM/Intrusive models.

The economy affects everyone of course. The economic downturn can be expected to exert even more pressure on CPM pricing. If and when search revenue tracks flat or turns down, expect display and rich media to have paved the way by many months.

Beggar's banquet

Seth Godin is an insightful commentator on marketing. He had a post that made me laugh, though perhaps not for the right reason.

You can read it here, but essentially, he advocates clicking online ads as if you were dropping a few cents into a tip jar. More an acknowledgement of the content provider's efforts than an interest in what's being advertised. That's a funny way to think about advertising's role...and yet it perfectly points out how transparent the online world makes things.

On the one hand, online display advertising is having difficulty sustaining CPM rates (as previously posted here)...if all you are selling is attention, then dropping a few cents into a tip jar is hardly the kind of attention an advertiser is willing to pay top dollar for. They are buying awareness, perception and, even sales online. If the intent in clicking is the equivalent of dropping loose change in a jar--a nearly thoughtless activity--one can wonder if that's what an advertiser is banking on. It isn't exactly attention.

On the other hand, if someone allows ads on their site, then presumably they are reaping a share of the revenue associated with a click...in this case, the advertiser's needs are still unserved, though of course the content provider's are at the expense of the advertiser. If the content provider receives compensation for a page view (as in a CPM model), then the advertiser has already paid for the content with your impression...tip included...no click required.

When advertising online is reduced to the equivalent of a charitable contribution, the economics of the enterprise resemble Robin Hood, where the contribution one makes with their click is paid with someone else's money. When advertising an action with the needs of the advertiser, the content provider, AND the one doing the clicking, the economics look more like search marketing...and more like a business.

Ad inventory: an attention deficit disorder

Inflation, deflation, arbitrage, and debt.

No, I won't be posting on the causes of the next two years' economic de-leveraging. But these terms do have an analogy in online advertising which, despite what some say some of the time, can have an economic impact.

First, inventory inflation: Ad sellers rely on ad inventory to define pricing...tighter inventory usually means higher prices. Online, of course, the potential inventory of ad space is ever expanding as ad networks encompass more and more sites in their network...and people like you and me create more and more sites for narrowly targetted friends, aquaintances and peers. The potential inventory of impressions is, essentially, infinite. When supply of something moves toward infinity and beyond, you get...deflation.

Price deflation: Pricing on a cost per thousand impression (CPM) basis has been the norm for offline and online display advertising. CPM rates will, expectedly, suffer pricing pressures as inventory exceeds demand. Here's an early example of the cheap revolution in display ads...Lookery sells several billion ads a month and they are struggling to make money at 12.5 cents CPM...how many advertisers have paid 7.5 cents CPM lately? A lot more may be soon.

Ad Arbitrage: You know those annoying pages that sometimes show up when you click a sponsored link and it's just another page full of links? That's arbitrage. Someone has bid on a word with a low cost per click or CPM price and sent users to a page full of links with higher CPM or cost per click links. They may be annoying, but they did serve a purpose in leveraging inefficiencies in the market to someone's advantage. These sites have become less visible though because Google has limited the market pricing mechanisms for their network using minimum bids. A preset minimum is not market driven. Think of Google as the Federal Reserve setting interest rates at the consumer level. What you would get is a non-market driven influence on prices...forcing people to pay more or spend nothing. Forcing others to pay less than they willingly would. Eventually any market prices the external influence in--or out--of its assets...in this case, the asset for online advertisers is inventory and the pricing unit is CPM.

Debt: In a pattern at play in the larger economy, the artificial pricing being propped up by Google with its minimum bids means that an imbalance is building in the market for online ad inventory. A deficit in demand if you will. Because a few networks are artificially creating a floor for CPM values, an external downturn in advertiser spending might be the impetus for driving inventory levels even higher. At some point, the inability to fill inventory requires that prices be lowered...and when that happens, you'll want to be the buyer, not the seller. If you are Google, you may not be be able to fill inventory if the market pricing can't support demand.

And when cost per click and other performance models deflate, you can bet the cost per impression models will already have beaten the deflationary path ahed of them. The only way to hold value is to earn it...from the end user...and the end user alone. Impressions can't do that. Attention is paid to relevant, engaging experiences. Only the end user gets to decide what those terms mean online. It's the difference between buying impressions and earning attention (see prior post).

Shout out to the following influences for this post

Quinthar
TechCrunch