"How will this impact us?" - Google to charge advertisers only for viewed ads

FT.com

December 12, 2013 2:00 pm

By Emily Steel in New York
©AFP

Google on Thursday became the first major online ad network to charge clients only if their adverts have been seen, in a radical shake-up of pricing that affects more than 2m sites in its display advertising network.

“If you are an advertiser and a human being didn’t see your ad, then frankly nothing else matters,” said Neal Mohan, Google’s vice-president of display advertising products at Google. “If you are a marketer, why pay if a human being did not see the ad?”

It is not rocket science that ads do not work unless somebody has seen them, but it is a problem that has plagued the $117bn global online advertising industry. It is estimated that as many as half of the digital ads that marketers buy are not seen at all, with a large portion only being viewed if a website user scrolls all the way down to the bottom of a web page.

Despite explosive growth rates, digital advertising still only accounts for about a fifth of the overall spend on marketing, and Mr Mohan said helping marketers measure the effectiveness of ad campaigns would secure more spending.

This problem is also shared by television adverts. On TV, marketers can track whether an ad is shown, but it is difficult to find out whether or not someone actually saw a commercial or ran to the kitchen for a snack.

To develop its new product, Google used an emerging industry benchmark that only consider an ad “viewable” if more than 50 per cent of it is visible on the screen for one second or longer. Google developed its own technologies to detect not only whether an ad is visible but also what portion of it is visible.

Even so, Google cannot track whether or not a person actually looked at the ad itself or other portions of a web page.


Google would not comment as to what portion of ads on its networks are not “viewable” but noted that prices are likely to rise as supply of ad inventory is constricted by the ruling out of “non-viewable” ads.

Marketers also face other problems with digital ads, such as a wave of online advertising fraud where hijacked PCs falsify visits to websites and clicks on ads.

Digital ad spending is gaining share on traditional media, such as television and print. Industry forecasts released this week indicated that television’s share of global advertising is expected to peak this year after three decades of growth.

Mr Mohan noted that the “viewability” initiative is the first of several “significant announcements” on brand advertising for Google in the coming months.