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A couple of years ago, Advertising Age, a magazine for the advertising industry, tried to answered a fundamental advertising question: why do people click on banner advertisements?
What was surprising for this study was the fact that they bought 500,000 banner advertisments and displayed no banners at all. They intentionally left the banner space blank. With that white box, they got a click-through rate of 0.08 percent and those who clicked on the blank spot were sent to a poll asking why.
“Half the clickers told us they were curious,” said McConnel. “The other half admitted to a mistaken click.”
"At a minimum, the data suggest that if you think a click-through rate of 0.04 percent is an indication of anything in particular, you might be stone-cold wrong," said McConnell.
Clearly, not the sort of performance the advertising industry is looking for. What the study showed, and numerous studies have shown since, is that banner advertising suffer from serious performance issues.
That point is not lost on Santa Monica-based startup true[x] Media.
“Today consumers hate advertising,” said David Levy, co-founder and COO of true[x] Media. “Consumers ignore it.”
And the metric for measuring banner advertisements on the Internet seems to tacitly admit this. The prices of online banner advertisements have been plummeting for decades.
“The CPM prices are supremely depressed because there is so much waste,” said Levy. “99 percent of rich media is charged on CPM. It’s all about driving the lowest level of affirmation that they value your content. But this has nothing to do with a consumer paying attention to the ad.”
CPMs are usually charged based on page or video-loads not on actual viewable impressions. Advertisements at the bottom of a webpage may never be seen, yet if that webpage loads the advertiser will still be charged. What's more, many viewers have developed a habit of tuning out advertisements.
true[x]’s solution focuses on viewer attention. In order to ensure, a baseline of engagement the company serves interactive advertisements before video content and only charges if the viewer’s interactions pass a certain threshold.
In fact, they have a formula for attention: consumer initiation, full screen experience, minimum of 30 seconds and consumer interaction. “Anything up to that point we wouldn’t charge them at all,” said Levy.
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What that means is a viewer is given a choice at the beginning of a video. They can watch the content with the typical advertising experience, usually 30 to 40 advertising spots, slotted throughout the show, or they can choose a smaller number of advertisements, usually just six to eight.
“Everything is about consumer choice,” said Levy.
The advertisements are interactive in nature; something true[x] also believes deepens a consumer’s valuation of their time spent with a brand. For example, in one campaign sited by true[x] viewers engage with AT&T U-verse, a television provider, by being asked to guess the names of popular HBO shows being described by a stranger. The effect is a charades style commercial break that quickly passes the time until the desired content returns.
Because the true[x] experience gives viewers a choice and engages them, the company believes it is more likely to influence the consumer. The model also builds trust upfront, by clearly setting out the amount of attention a consumer will have to pay to advertising before watching content.
The advertiser essentially tells the viewer, “You can get a better viewing experience if you actually spend time on this ad,” said Levy.
“We have to find a better way to give users power and choice,” said Levy.
And the industry is reluctantly if not tacitly agreeing with him. YouTube in recent years has started offering pre-roll video advertisements that can be skipped by viewers and only charge advertisers after a certain amount of time viewing. Many in the advertising industry are also advocating for a new key performance indicator called viewable cost per thousand impressions, or vCPM, to ensure that advertisements actually appear on a viewer’s screen. The rise of native advertising is also an acknowledgment that quality, natural looking content is more likely to engage a consumer.
“The next form of advertising is not just what’s viewable, but the quality of that view,” said Levy. “Consumer attention is worth something.”
