Make ours hours: Is the CPM dead in the water?

Nicola Riches
By Nicola Riches | 2 June 2015

Conversation around a move to an alternative metric to monitor and charge for online inventory has been circulating for some time, but was catapulted into headlines last week when UK newspaper The Financial Times (FT) released out of beta its long-touted cost-per-hour charging model.

The offering is relatively simple and was explained in detail in a white paper authored by the FT: advertisers are charged cost-per-hour, by aggregate. The tech and data analysis, handled by US firm Chartbeat, allows the FT to determine with 100% accuracy the time spent on its site – and guarantee a level of viewability far beyond the global 46% benchmark for online display ads that was estimated by Comscore in its most recent study.

The FT, which also became part of the Pangaea private programmatic exchange alongside The Guardian, CNN, Reuters and The Economist in March, hasn’t ditched its CPM model entirely, but is clearly on a march to divorce itself, and otherplayers, from what now looks to be a tired and outdated metric.

“The CPM model,” says the FT, “does not take into account the engagement or participation that loyal readers produce.”

The FT joins a mass of publishers and advertisers in rallying for a new metric, but to date, particularly in Australia, it remains undecided what a new measurement or industry standard would look like, despite this foray into a world of “cost-per-hour”.

Mention the idea to most people working in the advertising sphere and they will admit to toying with the concept of the “attention economy” and issues surrounding “viewability”, but so far firm plans haven’t been locked down.

What is most certainly starting to happen is the optimisation of systems and reporting to factor in content engagement on leading Aus/NZ digital offerings.

M&C Saatchi digital strategy director Michael Sinclair admits that there’s no shortage of conversation relating to viewability, “but it seems to remain just that – conversation,” he says, adding, “the FT would be well ahead of the curve.”

While chatter continues to bubble under, streaming service Pandora flew in its global vice president of product management, Jack Krawczyk, last week to instigate discussions about charging for attention.
ZenithOptimedia head of digital Ros Allison explained that her agency is quickly optimising its systems towards viewability metrics. “The fact you have just served a video isn’t that interesting,” she says. “What our clients want to know is: ‘Who has watched the whole thing? What are the view-throughs? On what kind of site was the viewer when they watched it?’.”

She maintains that the actual mechanics, that is, the charging, is done on a CPM basis, but it is “optimised in the system to a cost-per-view”; only a small step away from the aggregate collection of data that could potentially lead the agency to roll out payment on an “attention” basis.

While agencies are moving in this direction, so, too, are some of the leading, independent publishers in Australia. Sound Alliance CEO Neil Ackland – who is responsible for heading up popular culture and political sites Junkee and FasterLouder – says that he would like to see an economy which moves beyond the “click” as an indicator of engagement.

“It’s important to remember that not all clicks are created equal,” he stresses. “A click-through where someone goes on to read a piece of content for 15 minutes is far more valuable to them than landing on a page and going straight back out again.”

He reveals that he is starting to report back on “dwell time” and “scroll-depths” to his advertisers and partners and that the company is most certainly “all for a model which goes beyond page impressions as currency”.

The FT white paper makes a point of suggesting that its cost-per-hour metric could also be applied to native. Locally, Sound Alliance is demonstrating that, too. It has recently produced campaigns for Contiki and Heineken where the online experience eschewed multiple click-throughs and page impressions, in favour of a stream of “scroll-down” content enhanced by detailed journalism, bold photography and selected video highlights. Ackland revealed that the Heineken campaign, in particular, resulted in total time spent of 157 days.

Larger publishers in Australia have been reluctant to come forward and nail their colours to the mast on this issue. However, Fairfax digital advertising development director Tereza Alexandratos has told AdNews that her company is “exploring methods to improve viewability” and that will in turn “create new cost models for advertisers”.

One of the main hindrances preventing a switch to a new charging model appears to be the sheer resources that it would take to effectively manage and analyse all of the relating data. The FT readily admits that, “cost-per-hour has been created at a time when publishers are scaling back on the fixed costs of housing large direct sales and operational teams. Without complete automation, it becomes a resource-intensive task.”

And herein lies the rub. The bottom line is that a switch of this magnitude requires not only the eradication of the familiar, but also the establishment of an industry standard and a large-scale programmatic platform which can handle the data crunching.

Maybe it won’t be too long before all of those associated with the launch of Pangaea, and its mooted second-tier later this year, will all shift to a cost-per-hour mechanism. Conjecture, yes, but certainly not out of the realm of possibility.

Email Nicola at nicolariches@yaffa.com.au.

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