In an AdWords blog post on December 12th , 2013, Google announced that advertising across the GDN (Google Display Network) is now eligible to be bought on a viewable impression-based CPM model.
About Viewable Impressions
The viewable impression concept is not a completely new one. The IAB (Internet Advertising Bureau), in a joint effort with other industry organizations, has been promoting a “Making Measurement Make Sense” initiative, which is based on a few key digital media metric principles, one of which is shifting from a served impression to a viewable impression. Many of the top ad networks and exchanges have been able to report on viewable impression metrics for some months now.
Historically, impression counts for reporting and billing purposes were based on the concept of a “served” impression. Meaning that if an ad display was triggered, regardless of where on the page it occurred, it was counted. The idea of a “viewable” impression serves to ensure that an impression is only counted if an ad is served and has a chance of being viewed. For example, if an ad is served at the bottom of a web page, but the user to whom it is served never scrolls to the bottom of the page, it won’t be counted, as that user never really had a chance to view the ad message.
While many of the top networks, exchanges, and DSPs have the ability to report on viewable impression metrics, Google, with the latest ability to allow advertisers to “buy” inventory on a viewable metric basis, is helping to pioneer the redefinition of CPM based pricing.
Google will base the viewable impressions measurement on the IAB/3MS standard, which calls for at least 50% of the ad to be visible on the page for 1 second or longer.
The Importance of Viewable Impression Based Pricing
Viewable impression based pricing is yet another way in which traditional display placements have an opportunity to be seen as a performance based vehicle, appealing to advertisers who are comfortable with the cost efficiency of the search channel, and hopeful that other digital media types will allow for scale at similar performance metrics.
The last few years have brought about an evolution in traditional imaged based digital media placement pricing that made them more “search-like” and therefore appealing to direct response advertisers. Examples of such changes include:
- Some ad networks and ad exchanges (GDN included) began to offer display media placements on a CPC or CPA basis.
- For those that stayed with a CPM model, many moved to a dCPM (dynamic CPM), meaning that the rate was no longer fixed, but rather could change based on performance, competition, placement specifics, etc.
- Real Time Bidding (RTB) algorithms were developed by DSPs, which created an auction-based environment in display pricing. Advertisers could place different values on certain impressions based on their performance or reach potential vs. those impressions that were less likely to achieve the desired action or attract the desired target.
The most recent is Google’s move to charge advertisers based on viewable impressions, which will eliminate cost associated with any impressions that are served, but not likely to have the potential to actually be seen.
The New CPM Model vs. CPC
It is important to note that the CPC (cost per click) pricing model will continue to be available via the GDN, and will not be affected by this development.
For many DR oriented advertisers, the CPC cost model may still be the preferred pricing method for the GDN, as it ensures that advertisers are only charged when someone physically interacts with the ad via click. However, being charged only for viewable impressions on a CPM may be a model to test for some initiatives. Some of the considerations in determining whether to try the viewable impression CPM vs. CPC include:
- If the advertiser is looking for a certain volume of impressions/views on their ad, the CPM model would be more likely to ensure certain impression levels based on bid and budget.
- If an advertiser is more concerned about the exposure of a message than getting actual traffic to the site, using the CPM based model would make sense.
- If an advertiser allows for credit given to view through conversions, testing a viewable impression CPM model may make sense.
Other Metrics Affected by Viewable Impressions
The concept of viewable impressions in reporting does have the potential to impact other key metrics of digital display advertising.
The metric most likely to benefit from viewable impressions is CTR (click through rate). For a user to click on an ad, they need to see it. Historically, CTR has been calculated as a percentage derived from clicks/served impressions. If the formula now becomes clicks/viewable impressions, the CTR is likely to increase.
One metric that may see a negative impact is volume of view-through conversions. Historically, a view through was captured if a user was served an ad, and then went back to the site to convert without directly clicking. If a view through is now calculated based on a viewable impression, then the volume of view throughs may decrease, though chances are the conversion rate and CPA would improve.
The move to a viewable impression based pricing model is another step towards more specific metrics for online display media, as well as another way in which display is becoming more performance oriented. We predict that other networks will soon follow in this type of pricing model. The big unknown, however, is whether advertisers will elect to pay a premium (by raising bids in the auction) to ensure the viewable impression.