time-based digital ads
Post on 21-May-2015
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A new digital advertising model might
SAVE
premium content on the web
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2012 2013 2014 2015 2016 2017 2018
Bill
ion
s o
f D
olla
rs
TV Spend Digital Spend Print Spend Other Spend
The US advertising market is huge
Source: eMarketer
Advertising on all of those mediums is sold based on
impressions or actions
Why?
It’s really easy to measure
There are 2 impressions in this view*
*AOL sells this rich media ad as one unit and gives the advertiser 100% share of voice at a premium price.
Since it’s easy to measure, it’s easy to price
Number of impressions Total cost x 1000 CPM =
Ad agencies and media companies are used to pricing this way
New York Times Pages 3 – 5, June 11, 1974
8 impressions 1 impression 5 impressions
But there is a huge
PROBLEM
with this model on the web…
What?
5 trillion impressions
In 2013, there were 5 TRILLION impressions served!
$17.6 billion x 1000 $3.52 eCPM = 1
2
1. eMarketer estimate of display ad revenue in the US 2. comScore estimate of US impressions served in 2013
$3.52 eCPM CANNOT
support the traditional media business model
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1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008
Ne
w Y
ork
Tim
es
Ad
Re
ven
ue
(Mill
ion
s o
f D
olla
rs)
To
tal N
ew
spa
pe
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du
stry
Ad
Re
ven
ue
(Bill
ion
s o
f D
olla
rs)
Total Newspaper Industry Ad Revenue NYTimes Ad Revenue
Newspaper ad revenue drop-off has been dramatic
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1,000
2,000
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5,000
6,000
Ad
Re
ven
ue
(Mill
ion
s o
f D
olla
rs)
NYT Ad Revenue McClatchy Ad Revenue Graham Holdings Ad Revenue Gannett Ad Revenue
No large paper has been spared
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Re
ven
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(Mill
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s o
f D
olla
rs)
Ad Revenue Circulation Revenue
For the first time since 1953, the New York Times subscription revenue is greater than its advertising revenue
THE SUPPLY
of impressions is unsustainable
Before the internet impressions were constrained and
SCARCE
CIRCULATION
PAPER
PRINTING
constrained the supply of impressions
Now, an advertiser can buy any audience
CHEAPLY and AUTOMATICALLY via
programmatic buying technology
WE’RE IN TROUBLE IF SOMETHING DOESN’T
CHANGE!
“our print and digital products face increasing competition for audience and advertising from…digital advertising networks and exchanges, real-
time bidding and other programmatic buying channels and other new forms of media.”
Advertisers are
LOSING
too
Why?
When was the last time
YOU
looked at a digital ad?
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
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3.50%
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4.50%
5.00%
Inte
ract
ion
Ra
te P
erc
en
tag
e
The average interaction rate with a display ad is 2.94% 1
1. This is the percentage of ads served on the Double Click network that a viewer interacted with
A lot of money is spent on digital ads that DO NOT work
2012 2013 2014E
Display $14.8 $17.6 $20.6
Search $17.3 $19.6 $21.6
$- $5.0
$10.0 $15.0
$20.0 $25.0 $30.0 $35.0 $40.0 $45.0
US
D (B
illio
ns)
US Digital Advertising Spend
Source: eMarketer
What’s going to
SAVE
premium content?
A NEW ADVERTISING
MODEL
TIME
is the only
SCARCE
asset on the web
In 2014, Americans had a shorter attention span than GOLDFISH 1
1. Nancy Kane, Harvard Business School
Technology has improved – we can measure EVERYTHING
Rising content engagement increases the percentage of ads seen
Pe
rce
nt
of
Ad
s S
ee
n
Engaged Time on Page Source: Chartbeat
As an audience spend MORE TIME reading content with an ad in view, ad RECALL INCREASES
The best content
DEMANDS
our attention, and advertisers will pay for it
Rather than being forced to play tricks, media companies can focus on grabbing
OUR ATTENTION
User experience benefits
Focus on great, attention grabbing content
No need for annoying slideshows
One ad that scrolls with content
1
2
3
4
Eliminate pagination
The Media Ratings Council APPROVED and 2 publishers are now selling time-based ads
Soon, all premium digital ads will be sold based on
ATTENTION
THE WINNERS
Premium publishers 1
The display ad 3
2 Advertisers
THE LOSERS
Digital ad trading desks 1
Programmatic buyers 3
2 Real-Time Bidders
Long-tail publishers 4
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