Marc Guldimann, Parsec Founder & CEO

Those problems can’t be fixed until financial incentives in digital publishing reward quality over quantity. One way that could happen is by changing the metric used to measure an ad’s success. Ad tech company Parsec is working toward that change, and I spoke recently with CEO Marc Guldimann about their progress and the challenges that remain.

Parsec’s business model is to work with publishers to sell mobile display ads on the basis of engaged time — cost per second — instead of impressions. Their algorithm decides which ads to serve, based in part on quality, and they’re presented inline on mobile screens in a gallery format Guldimann describes as “politely interruptive.”*

Guldimann shared his insights on that business model, the benefits of time-based metrics and the pressing need for better digital advertising overall. The interview has been edited for length and clarity.

Q&A

MediaShift: To start with, why does it make more sense to sell ads based on time than on impressions?

Marc Guldimann: It makes sense because time is a more accurate proxy for the asset that the buyer of advertising or media is after: attention. Any time you’re transacting for a good [customer attention], you want the metric that you use to reflect that good as closely as possible.

In the old world of advertising, the analog world, the impression was pretty much as good as you could get. One of the reasons was that on TV and in radio duration was fixed. You knew every impression was 30-seconds long on TV and 15-seconds long on the radio. Analog consumers were accustomed to acquiescing control to a publisher for a certain duration.

Now when we switch from analog to digital, consumers expect to control how long they pay attention to anything, so duration becomes decoupled from the impression. At that point, duration actually becomes much more interesting. It’s just a much more accurate reflection of the amount of attention that’s captured by any piece of media.

MediaShift: How do you measure ad quality? Why is that an important part of the equation?

Guldimann: We think that not only is time a good proxy for the amount of attention and the amount of value extracted by an advertiser, but it’s also a strong indication of quality. The amount of time you choose to spend with something is a really great way to understand relevance and quality.

Publishers are loaning attention to advertisers and it’s really important to understand the quality of message which is being run against that attention. This is really the core of what’s wrong with advertising — it’s a lack of economic incentive for quality. And that’s where we start to build the amount of time that people choose to spend with an ad into our pricing mechanism.

THERE IS NOTHING WRONG WITH THE ADVERTISING EXPERIENCE ON THE INTERNET.
THERE IS NOTHING WRONG WITH THE ADVERTISING EXPERIENCE ON THE IN… pic.twitter.com/nd3SuX5kx5

— Jon Slade (@SladeJon) July 21, 2017

MediaShift: My understanding of your model is that the advertiser actually ends up paying less for high-quality ads that people spend more time with. How does that work?

Guldimann: Advertising is not a zero-sum game. Higher-quality ads delivered in more pleasant formats will increase tolerance for ads. There’s a sort of simple equation for this, which is the quality of the content plus the quality of the advertising factored by the quality of the ad format will dictate somebody’s tolerance for advertising.

The better the ads are and the more seamless the experience is, the more tolerant people will be of advertising, which means that you can lower prices for good advertising while still delivering the amount of revenue that a publisher needs to have a sustainable business.

MediaShift: Do you have data that show more time spent with an ad leads to better outcomes for the advertiser?

Guldimann: Yes, we do. We’ve done brand lift research over the past year that shows that the amount of time that someone spends with an ad is directly correlated with their recall, their affinity, their purchase intent and all the brand metrics that you might want.

So we are well on the way to proving that out — just logically though, it makes a lot of sense.

MediaShift: How do you know that time spent isn’t serving as a proxy for unwanted distraction rather than positive attention?

Guldimann: That comes down to the polite interruption. We want to minimize as much as possible the noise created by the format. We want to get to the point where we’re something like a full-page print ad or a TV ad where it’s behaviorally native.

Behaviorally native is a quality shared by all good formats. For example, you watch a TV show and you watch the TV ads; you flip through magazine content and you flip through magazine ads; you scroll through digital content and you scroll through an ad. That’s behaviorally native, and that is required in order for an efficient transfer of attention back and forth from a publisher to an advertiser.

MediaShift: Do you see time-based sales spreading more broadly among premium publishers? And do you see this spreading beyond premium publishers at some point?

Guldimann: I think it will spread to every type of media where the consumer is in control of the experience. At first, the premium publishers and the premium advertisers will flock to this because it will allow a premium publisher to more accurately represent the value that they’re providing to an advertiser, and it will allow a premium advertiser to actually command a price which takes into account the quality of their creative.

I think it will extend into the long tail of advertising and publishing to a certain extent, but in the long run there are people that will lose with time-based metrics, and those are the people that have low-quality content and low-quality ads. And if you think about it, that’s in everybody’s best interest.

MediaShift: In the long run, do time-based sales help build a more sustainable media environment? Will this help publishers compete with the Facebook-Google duopoly for ad revenue?

Guldimann: 100 percent. I think one of the biggest problems in digital today is that the creative and formats are so bad that a publisher cannot support a high enough ad load to sufficiently monetize their offerings.

Impressions incentivize publishers to litter their pages with lots of tiny ads, which you can never build up to the density that’s needed in order to properly monetize an audience.

In order for digital advertising to flourish we need to get to a point where the quality of the format and the quality of the creative is high enough that the audience will tolerate a load that is required for proper monetization.

MediaShift: What else about time-based sales is it important that we pay attention to?

Guldimann: The big thing is really that advertising is not a zero-sum game. The better your ads are and the more pleasant the experience is, the more advertising people will tolerate, and potentially even enjoy.

It’s possible to make good advertising, you just need a system which creates an economic incentive for it and a structure to capture data around the quality of ads and do it at scale. That is the endgame here — to help advertisers create ads that consumers like and to help publishers show those ads to the right consumer at the right time such that everybody extracts more value.

* Correction: We had this quoted as “politely disruptive” in an earlier version of this story but it’s now been corrected to “politely interruptive.”

Brent Merritt is an independent consultant at Metric Communications, where he helps clients use strategic communication and digital media analytics to reach their organization’s broader goals. He’s a close observer of innovation in all types of digital media. Brent also wrote about his research on attention analytics for MetricShift in July. Follow him on Twitter @brentmerritt.

The post Can Engaged Time Metrics Help Fix Mobile Ads? appeared first on MediaShift.

Advertisers are concerned by an opaque supply chain, low viewability and high levels of fraud. Publishers are stuck competing with Facebook and Google in an ad economy based on selling impressions, which by definition rewards scale over quality. Professionals on both sides of the equation are looking for better ways to buy and sell ads.

Brent Merritt

One intriguing alternative to the status quo is selling display ads based on time. In this approach, publishers use attention currencies such as cost-per-hour to sell big blocks of users’ time (measured by active engaged time metrics), instead of selling bundles of impressions.

In the course of researching a new white paper about attention analytics, I got to talk to smart practitioners about this trend, and some key insights from the report are below. The most important takeaway is that while time-based ad sales may not reshape the entire ad economy, they hold real potential for certain publishers as they fight for the ad dollars the duopoly leaves behind.

Read the Full Whitepaper

Where the demand comes from

The idea behind time-based ad sales started circulating in 2013 when an advertising director at the Financial Times proposed that time could be used as a currency to trade. Over the intervening years, awareness of the concept has spread and a small group of publishers, including the FT and the Economist, has actually begun selling ads this way.

The appeal for higher-end publishers is clear. Selling ads based on impressions rewards a high volume of visitors (even if they’re bots), but selling based on time assigns higher value to a more engaged audience. By extension, this rewards higher-quality content, and it provides a foothold to compete for ad dollars on the basis of content quality and audience engagement rather than fighting a losing battle for massive scale.

From the advertiser perspective, purchasing based on time can help address concerns about the efficacy of ad buys. The attention currencies used for time-based sales guarantee greater viewability than the Media Rating Council’s viewable impression standard, and because they’re based on real-time monitoring of user actions, they can help reduce fraud. And while more empirical research is needed, reports from the FT indicate that more time in view does increase a display ad’s impact.

Asked about the growing interest in time-based ad sales, Brendan Spain, FT vice president of advertising for the Americas reported, “The MRC viewability mandate has made publishers think about attention metrics and has resulted in a lot of questions around optimization for and selling on attention. We’re hearing other pubs talk about getting their ducks in a row to sell on time.”

Sounds great. What’s the holdup?

So if time-based sales hold such potential, what accounts for their relatively limited adoption thus far? One of the key points I heard repeatedly in my research is that significant barriers remain.

Stephanie Layser, director of advertising technology at News Corp, pointed out that a major hurdle is simply inertia. She observed that it would be difficult for an attention currency to spread because “the industry as a whole and the technology that it takes to achieve these goals are so deeply ingrained in the CPM model.”

Another roadblock is the current lack of demand for time-based sales from advertising agencies. Since their business models and technology are built around trading on impressions, introducing an entirely new currency is not a simple proposition. Similarly, mixing and matching currencies could create headaches for publishers. Layser explained that introducing a time-based currency would require significant changes to the ways that publishers’ ad servers function.

In assessing how likely time-based attention currencies are to spread more broadly despite these barriers, the people I spoke with offered a broad range of opinions. Some believe it’s improbable while others think it’s likely.

Jill Nicholson, head of product education at the analytics firm Chartbeat observed that the industry would have to reach “a tipping point where the early successes are so attractive to publishers, and the monetary benefits, the revenue benefits, of selling a new way are so attractive to publishers that it will overcome the difficulties. … I think the industry is really hoping for a new way to transact, it’s just a scary change to make.”

via Chartbeat

Who wins in an attention economy

If trading on time spreads more broadly, as some predict, it would stand to reward premium publishers above all. Their quality content and highly engaged audiences made up of desirable advertising demographics make them prime candidates to benefit from this approach.

On the other hand, publishers who chase scale without regard for engagement, especially those who do so using clickbait and misleading headlines are likely to lose out since they generate a lot more clicks than engaged time.

How much impact could time-based sales actually have for the winners? The FT’s Spain predicted, “I think what we’ll see is a much more sustainable business model for pubs who aren’t top ten or top five sites. You take Facebook, Google and a few others out of the top, and I think you start to see a sustainable business model for the top 1000 publishers instead of the top 100 publishers.”

In a marketplace where many publishers are fighting for survival, a shift of that magnitude would be an important step toward sustaining top-tier digital publishing and journalism. It remains to be seen how big the “attention economy” of time-based ad sales grows, but any tool that can help publishers compete certainly warrants ongoing attention and further exploration.

Brent Merritt recently completed a graduate fellowship at the George Washington University’s School of Media and Public Affairs. His work there focused on how digital technologies are changing the future of news media and strategic communications. He’s now an independent communications consultant at Metric Communications, where he helps organizations develop smart messaging and analytics. Follow him on Twitter, @brentmerritt.

The post Sell Ads On Engaged Time Metrics? Publishers Still Weighing Promise And Risk appeared first on MediaShift.