Finally: Publishers are realizing that viewable ads are good for them, too
By Ryan Christensen, SVP & GM, Publisher Technology Group, AppNexus
At long last, it appears online publishers are ready to embrace the power of the viewable impression.
Though many on the buy-side have for years felt it is inevitable that they will one day make deals consisting entirely of ads people can see, publishers have traditionally resisted on the grounds that viewability eats into their revenues and unfairly burdens them with the task of sorting out vendors with conflicting measurement technologies. However, a recent survey we conducted with Circle Research and WARC revealed a pleasant surprise: Media organizations have begun to change their minds. Of the 292 publishers we surveyed, a resounding 92 percent said they felt that an increased emphasis on viewability would benefit their businesses. While recent conversations with publishers lead us to believe some hesitation remains, this data indicates that publishers are beginning to see a chance to charge brand advertisers and their agencies a premium for the viewable impressions they have always wanted.
This newfound enthusiasm for viewability, unthinkable as recently as a year ago, is indicative of a larger trend playing out across the advertising ecosystem. Increasingly, premium brand advertisers see digital media not as a flash in the pan or a new toy to experiment with, but rather as an integral part of any successful media plan. While direct-response marketers — traditionally the Web’s biggest spenders — are most concerned with whether consumers will click on their content, the household names entering the market have made it clear they don’t want to pay for ads unless people can see them. And with the global digital advertising market — not including search — predicted to grow from $78.6 billion in 2015 to $122 billion by 2019 according to Magna Global and Cowen & Company, publishers now have enough demand that they no longer need to worry that eliminating revenues from non-viewable or otherwise undesirable impressions will cause significant harm to their businesses. They’re learning that they can earn higher CPMs and maximize profits by favoring quality over quantity.
Take, for instance, what happened earlier this year when we introduced AppNexus IQ, a set of policies and products that more strictly enforced our company’s inventory quality standards. While AppNexus IQ caused a noticeable decrease in the number of impressions that were sold on our platform, the reduced quantity and higher quality of that supply caused a spike in demand that allowed publishers to fetch higher prices. Overall, our platform has enjoyed a 175 percent increase in RPM (revenue per thousand impressions) since IQ’s arrival.
Supply and demand may also play into publishers’ hands when it comes to ad-blocking. While some have estimated that this practice could cost publishers upwards of $20 billion in ad revenues this year, its actual effect will likely be much smaller. As articulated here by BuzzFeed’s Alex Kantrowitz, buyers are not just going to hold on to the ad budget that they had planned to spend on blocked impressions. Rather, they are likelier to divert those funds to non-blocked impressions, a commodity that will only become scarcer and more valuable if consumers continue to adopt ad-blocking software. The future of the Web is one in which publishers sell fewer ads, at higher prices, to buyers who know they are getting their money’s worth.
For publishers, this dynamic presents both an opportunity and a challenge when it comes to viewability. If brands make good on their promise to stop buying non-viewable inventory, doing so will make publishers’ viewable impressions that much more valuable. However, publishers will only reap the rewards if they stand firm and raise their prices to reflect the limited availability of premium inventory. For instance, if removing non-viewable impressions from the market reduces a publisher’s inventory by 50 percent, it should increase its CPMs by at least the same amount; in fact, it is conceivable that prices could increase 75 percent to 90 percent or more. Otherwise, bootstrapped publishers are going to find themselves priced out of the market, making it even more difficult for them to continue offering high-quality content for free. On the other hand, advertisers won’t necessarily need to increase their budgets; they’ll purchase fewer viewable impressions instead of wasting dollars on ads out of view.
If publishers stick to their guns and increase CPMs, we expect to see them taking several steps to lock in these gains in the coming months. For starters, more of them will follow in the footsteps of Time.com and Wired by redesigning their websites to feature their ads in locations where they are more likely to be in the reader’s line of sight. And while the Interactive Advertising Bureau currently advises publishers to guarantee that merely 70 percent of the ads they sell to a client will be viewable, media organizations are already striking deals in which they agree to charge certain premium buyers only for impressions that people can actually see. Finally, publishers ramping up their video production will be able to make even more money off this extremely valuable inventory by implementing effective viewability solutions.
While these changes won’t happen overnight, our study indicates that agencies and publishers are finally in alignment on the importance of viewability in the advertising marketplace. Now that everyone is on the same page, we are fast moving toward a world where publishers see viewability across desktop, mobile and video as table stakes rather than a cumbersome add-on, and buyers are comfortable purchasing ads using the VCPM (Cost Per Thousand Viewable) metric. For everyone in the ad-tech ecosystem — from brands and agencies to publishers and vendors — this is all extremely good news.