Commentary

The Online Advertising Conundrum -- More Metrics, Less Meaning

Last week's Metrics Insider, by ComScore Chief Research Officer Josh Chasin, does an excellent job of laying out one of the major issues facing online advertising: the lack of measurement standardization. Time and again it has been a topic discussed in this Spin: you can't build a sustainable, advertising-supported marketplace if you can't establish a meaningful unified currency for exchange. Trying to build a marketplace without a unified currency is like trying to build a house (the Internet) on a poor foundation (advertising). There are many ways to build the house in the short-term (VC, PE and other sources of non-sustainable capital), but the more you try to expand the house, the more likely it will crumble to the ground due to the weak foundation. And I think we all know how the house in our analogy reacts when faced with poor weather (economy).


And the issue goes beyond just a lack of standardization. The greater issue is that, regardless of efforts to standardize measurements, money (advertisers) is still seeking the wrong metrics!

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Let's take a quick look at the lack of standard metrics first. In our house-building analogy (which I promise to beat into the ground over the course of this article), this lack is analogous to trying to build a foundation when every tool you use gives you a different reading.


It's not easy to create unanimously accepted standards when there are five people in a room. I am not sure how we have even come this far given the magnitude of self-interest among the many participants interested in defining online measurement standards.


The larger problem for the entire online eco-system, including advertisers, is that standardization of measurement won't matter if advertisers continue to demand meaningless, and even harmful, metrics. Going back to our housing analogy, building the online advertising marketplace on the "wrong" metrics, is like building our foundation with the wrong materials altogether. Instead of concrete, we're using silly putty -- destined to collapse our house.


I have written before about how creating a market for impressions is corroding the entire Internet eco-system (re: "Advertising's Role In Crippling The Internet As A Medium"). The basic gist is that if money demands impressions, then online publishers (and ad networks) will do what's necessary to generate impressions.


The problem is that, unlike with television, the impression is not an efficient proxy for quality online. Television could only generate impressions by providing value to people, thus the impression-based market facilitated a solid foundation for television's house. Online, there are a number of ways to generate and increase impressions without actually benefiting the people. Worse, most of these unscrupulous methods for achieving impressions make the impressions worthless, or of negative value, to brand advertisers.


So we have a flood of poor quality product in the marketplace, degrading the quality of our foundation and creating a massive misalignment of goals between content viewers and content producers. Even among quality content, not all impressions are worth the same to all advertisers. In the end the advertisers are forced to take an average value of impressions, which accounts for the deceptive methods for generating the metric they demanded and the inability to define which quality impressions will deliver the most value. This average is obviously well below what would be necessary to support quality content producers trying to produce impressions without "cheating," and so our house crumbles.


For the sake of space we won't get into the misalignment among advertisers, publishers and consumers created by utilizing clicks as a foundation metric. I will simply refer you to just a few of my favorite examples of the ads currently polluting the Internet seeking clicks: "Win a free _____" "Shave Britney's Head" "System Error, Click Here." And those are just the ads themselves; I'm not mentioning the various techniques online content publishers use to "trick" visitors into clicking.


My new favorite saying is, "The goal isn't to connect brands to impressions, the goal is to connect brands to people." What's needed is a new system of measurements based on a true and solid "foundation metric" that actually means something to each advertiser, can't be faked by publishers, and won't incentivize the continued pollution of our online eco-system for the people. But how do you measure this? The foundation metric will have to be a proxy for content quality, account for content type and be a measure of volume delivered. Finally, as discussed in the Metrics Insider piece, the foundation metric will have to be standardized for exchange. What are your thoughts on what would be included in a proper "foundation metric"?

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