Metrics matter

The decline of the view-based-metric model has not been exaggerated. The quest to find an alternative is difficult. An overview.

The ad-budget crunch is felt across the media / publishing industry. While there are differences between markets, the overall trend is the same: publishers struggle generating enough revenue from the classic ad-based business models.

AdBlock and robots

One aspect of the overall situation is the growing number of AdBlock users. Now the company behind AdBlock Plus is even providing administrators with a solution to install their product across a whole network.

On the other side of the aisle, advertisers have to deal with the fact that a significant number of views on their display advertising is generated by robots and not potential customers. The Financial Times reported about a Mercedes-Benz campaign that had up to 57% of fraudulent impressions.

In a sample of 365,000 ad impressions brokered by Rocket Fuel over three weeks, Telemetry found that 57 per cent were “viewed” by automated computer programs rather than real people.

Current state of affairs

What is required is an industry wide acceptance and adoption of a new metric. Without a clear alternative in place, the view-based metric is creating the following problems:

  • For a few years already, there is a significant inflation in the value of display ads.
  • Ad space becoming cheaper forces publishers without alternative business models / revenue streams to accept ever worsening deals from advertisers and placing more ads on their digital properties.
  • This leads to even more devaluation of display ads.
  • On top of that, this trend aggravates the user experiences and frustrates the editorial side of the business. It destroys both the brand loyalty of the readers and the trustworthiness of the publication.
  • Furthermore, the waining cash reserves slash the chance of those businesses adopting new business models, because that would require substantial investments.

For some, native advertising seems like a natural way to alleviate those pains, but only a few publishers have adopted those into their core product yet. Compared with overall ad budgets, Native is nothing more than a niche in the business and doesn’t provide conclusive data and insights for the industry to adopt at scale. Additionally, most native-ad products are, as of now, far to expensive for most advertisers.

Engagement to the rescue

A new, industry-wide metric is required to stop the devaluation of advertising as a viable (main) business model.

Some publishers are lobbying for an engagement based metric model. Most prominently: the Financial Times, The Economist, Medium and Upworthy (which is radically transforming its business).

upworhty1-700x419 (Source: Upworthy)

Medium has been outspoken about their commitment to engagement-based models. Some authors are no longer being paid on the basis of how many times their articles have been seen, but how long people spent reading them.

For example, some people are now paid not by clicks, but by the total time spent reading in their collection—another experiment that could change as we learn what effects it has on the types of stories it helps produce, and how people find and read them. – Evan Hansen, Editorial Director at Medium

The engagement based metric would also reduces the strong dependency of most publishers on various social platforms and most of all on Facebook as sources for traffic. While receiving referrals will remain important, publishers will have the ability to optimize not only for click-bait, but for quality. Editorial teams will be able to focus again on the actual story.

If you let it, Facebook will take it all

As things are today, news publishing, especially in the US, is very much dependent on services controlled by technology companies. When Google closed down Google News in Spain, the traffic of the publishers who lobbied against the tech giant collapsed. This is a symbolic way of how the publishing industry is trying to cope with their current state. Instead of developing alternatives that would decrease their dependency, the strategic focus is far too often on blaming the tech industry.

Facebook has an unprecedented control over the digital distribution and spread of news, but the social network is far from satisfied being in control of how people discover news. In its everlasting quest to become the internet itself, Mark Zuckerberg’s company has started switching to a model that will reduce publishers to sheer content producers. This can be seen with their push into video. Videos hosted on Facebook perform far better than the ones who are only linked to / embedded.

“What the Shift to Video Means,” theoretically, is that much of the benefit publishers have derived from Facebook over the last three years, which required only occasional and modest adherence to Facebook’s explicit and implicit guidance, will disappear for organizations that are not interested in ceasing to be publishers to become “creators,” or in replicating their operations on another company’s platform just because it’s the momentarily dominant channel on hundreds of millions of new machines with poorly understood potential.

It makes a huge difference, especially on mobile, where Facebook dominance is now even stronger than on the web. On mobile videos hosted on Facebook will start playing (muted) automatically. What sounds like a small difference will create a distorted outcome for businesses that are operating with a view-based metric. Facebook is planing to adopt the same approach to non-video-based content as well. Publishers will be facing the decision of hosting their articles on Facebook itself, thus making it more likely for the content to be seen, but less likely that it will create any lasting value for themselves. A classic case of the middleman becoming rich and powerful enough to take over the whole stack.

Diversified business models are becoming non-optional for the publishing industry. There are alternatives to switching to different metrics or native advertising, but it is now clear that a continuation of the current state can only be considered wishful thinking.

In the end, it all comes down to Campbell’s law.

The more any quantitative social indicator (or even some qualitative indicator) is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.

Author: Igor

Igor likes to connect the dots. As a strategic consultant in an increasingly complex world, he favours broad knowledge over specialisation. In the last five years, he helped shape strategic decisions at large corporations like Deutsche Postbank AG and Deutsche Telekom AG as well as at startups like Amen and refund.me. In his work he is focusing always on finding the appropriate solutions as well as the people who will be executing upon his advice. Beside the consulting work, Igor speaks at international conferences on variety of topics (SXSW, PICNIC, re:publica, etc.).