Who isn’t tired of a digital advertising model based on pageviews? Crappy ads bombard users. Macedonian teens start fake news sites for the ad revenue. Publishers pass on engaging content for the latest outrage pile-on.
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.
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.