Nielsen, famous for their television measurement service, has announced they will change the way they try to measure audience size on the internet. Previously, they were measuring websites by the number of pages visitors browsed or “page views.” Their new chosen methodology of “time spent” is likely to prove disastrous.
Anybody who browses with several open tabs, or walked away from their computer knows how big a mistake it would be to assume that, just because the website is open, someone is actually paying attention.
Advertising dollars are often based on where Nielsen’s numbers tell advertisers are the “prime” winning picks. If you’re higher up in the ranking, you can charge more for your ad inventory; just like Super Bowl ads and American Idol’s ads command a premium. The stock market analysis website Seeking Alpha asks:
What happens to ad dollars in this new environment? Who gets more and who gets less? Will this new approach chip away at Google’s ability to drive prices higher for search advertising keywords? Will it allow Yahoo and AOL to boost revenue by charging more for placement of banner ads?
The problem all these audience metrics have, whether you’re talking about an online website’s visitors, a magazine’s circulations numbers, or a television program’s gross rating points, is that none of them are actually reflective of how many people actually saw, listened to, or otherwise engaged with your ad.
By “engage” I’m not talking about ads people just love, or that win creative awards, but ads that, when run, consistently drive sales growth. But the people who sell ads love taking these very unscientific, inflated audience numbers and selling ads on a Cost-Per-Audience-size (often called “CPM“) basis.
Just say “no” to fluffy metrics.
Advertisers have been plagued with the issue John Wanamaker so elegantly pointed out about a century ago: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” What Wanamaker was describing, even back then, was how this traditional broadcast model of advertising is inefficient and nearly impossible to accurately measure. Maybe these panel-based metrics Nielsen uses worked when we were a more homogeneous mass culture — but today, we consist of many niches within niches, and a small panel cannot be representative of our diverse interests.
Although it’s easier to collect data online, individual websites have major issues trying to gather accurate metrics, so why would we fantasize that it is possible to measure anything accurately across the entire World Wide Web? The only metrics that can be measured accurately are how much the advertiser spends (expenses) and how much they make (revenue).
Advertisers have always been happy to spend money when they can see people react. It’s why Google (GOOG) has made so much money charging advertisers on a Cost-Per-Click basis. They knew that in a world where advertisers were feeling the effects of customers ignoring their marketing, having a system where advertisers were only charged when people clicked would be best.
Google also understood that the only time people react to an ad is if it’s relevant to them.
We know how hard Google works to continuously refine those results, keeping them as relevant as possible — even punishing publishers who try to manipulate the relevance of the system. They’ve even worked quite hard (not hard enough, in my opinion) to ensure their advertisers’ ads are as relevant as possible.
So, what do media outlets and advertisers do next?
Last month, I had the pleasure of speaking at DART Adapt‘s first anniversary dinner, to a bunch of smart online media publishing outlets. I told them that if they don’t change the way they think of advertisers, and work with them directly, they’ll be tomorrow’s TV stations, radio stations, and newspapers, struggling with shrinking audiences and puny ad budgets. Publishers can’t keep following the rules of yesteryear if they want to continue to be relevant and demand prime ad dollars tomorrow. Einstein’s definition of insanity is “Doing the same thing over and over again and expecting different results.” Such is today’s process of advertising.
The responsibility to deal with these issues ultimately belongs to the media outlet. You can always find another advertiser, but history is full of publishers who’ve lost their audience.
Some of the issues these publishers must address…
1. They must continuously work with their audience to understand its needs and focus on providing relevant content and advertisements.
2. They must work with publishers to help them clearly define what they’re trying to accomplish. They must define key performance metrics (e.g., the actions that will define their success).
3. Work with advertisers so that the ads they produce are contextually relevant to the content they are producing.
4. Make sure advertisers continuously optimize the ads to achieve better results.
5. Constantly be in discussions with the audience so the promises that marketers make are being met (e.g., not pissing off YOUR audience).
Focus on all of these things, then you can go through the same issue Google’s advertisers are going through by trying to compete to get relevant ads in front of a relevant audience (see also: traffic cost inflation). If you’re a publisher, wouldn’t you like to have that problem?
If you’re an advertiser, and aren’t focused on maximizing the integrated experience from the ad (no matter what channel) to your website, then start by understanding what drives persuasive momentum.
Advertisers shouldn’t depend on some easily defined, but fatally flawed, metric to decide where to place ads. For now, I recommend advertisers get their own Web metrics in order, and learn how to tie them to the only reports that matter: P&L, Balance Sheet & Cash Flow.