Embrace The Click – Taking Advanced Video/TV Ads Beyond CPM


This past week I moderated a panel at ITVT’s TV of Tomorrow Show. The panel was on broadband video advertising and featured an excellent set of panelists (thanks to them for participating):

(In my opinion, the TV of Tomorrow Show is the premier conference focused on advanced and interactive TV/video. The panels are excellent, as is the quality of the attendees.)

On our panel, one of the top of mind topics was ad metrics and currencies.  The panel discussed moving away from CPMs towards engagement currencies (for example time spent), those better reflecting the ad capabilities digital tech affords.

Viewers using new video platforms are not tolerant of the 32 units per hour or more in linear TV (DVR owners certainly are not).  Combine fewer units with CPMs linked to TV (even with a premium) and it will be difficult for programming on new platforms to match, let alone surpass, today’s revenue production of TV on a per episode viewed or per hour basis.

On other panels, the desire to move towards engagement pricing was reinforced.  But, several content providers voiced a strong aversion to using clicks as currency – clicks seen as not being a true indicator of engagement and not reflective of the branding power of new video platforms. As I heard this, informed both by my time in advanced video/TV and the past seven (coincident) years as Chief Keyword Marketing Officer of Cat Faeries – my significant other Gail’s cat product retail site (note cross-enterprise synergistic brand integration here) – I kept thinking…

"Embrace The Click…"

I do believe engagement currencies for advanced video ads should be brought forward.  But so far, we have no definitions or standards for engagement online.  In fact, there’s been no agreement on defining engagement for other media including linear TV (the Advertising Research Foundation tried in 2005/2006 to come up with a pan-media definition and effectively didn’t, they restarted the initiative in 2008). Trials, tests, and pair-wise deals should and will be done, but it seems likely there’s not going be any broadly accepted engagement currencies online or on TV coming soon.

There’s an expression in retail – "sell what you’ve got on the shelf." And what’s on the ad currency shelf right now is CPM (in both Internet and TV) and cost per click (on the Net).  (For the moment we’ll postpone discussion of other types of "CPX" such as per conversion or acquired customer.)

Towards evidence clicks can be a viable source of ad revenue, a company called Google has done pretty well with cost per click advertising on Web pages (seems their market cap is larger than CBS, Viacom, Disney, News Corporation and Time Warner combined).

Google is making the bulk of its large profits from clicks and some of the money is coming from major brands that do a lot of TV advertising.  One would think that video and TV content providers would like to have some of that "Google money."

Comparing TV CPMs to online click prices… let’s say major brand TV advertisers are paying about 3.5 cents per impression in top rated primetime broadcast shows for 18-49s (the most widely used currency), assuming a nominal CPM of $35.  Online today (using data from Google AdWords Traffic Estimator tool) major brand TV advertisers are paying 100X, 200X, even 400X that 3.5 cents for a click through to their web sites (regardless of age cohort as well).

Here are some examples:


Google AdWords Traffic Estimator Estimated Average Cost Per Click to Appear in Positions 1-3 (3/13/09)

Brands With Ads in Positions 1-3 on Google Search (3/13/09)


$3.63 – $4.61

GM, Jeep, Nissan


$8.66 – $11.68

Fidelity, T. Rowe Price, Scottrade

car insurance

$11.86 – $16.73

Progressive, AAA, Geico

(How accurate is the Traffic Estimator on cost per click for top positions? While feline marketing is not the same as automotive, financial or insurance marketing, I find the Estimator is on average getting it correct on CPC range for the keywords I’m buying.  Also, on Google, position is determined by not only bid price but ad Quality Score, and the Estimator cannot know in advance what that will be.)

Keep in mind, I’m not advocating video advertising moves exclusively to placement by keyword algorithms sold on a per click basis – the human-based sales process should not go away – branding will continue to be important and valuable.  And there are real world issues to be established for advanced video clicks such as typical viewer click rates and advertiser perceived value.

Plus, the people running today’s keyword efforts for major brands do start with an unfair advantage relative to TV – automatic hyper-targeting provided by the user’s search query.  But past that it’s a challenging landscape.  The ad canvas is all of 130 text characters and it’s presented on a web page with up to 10 similar units from direct competitors.

Compare that to an advanced video advertising unit available online – in this case units supported by the full episode video players of ABC.com or NBC.com.  The canvas is a 1000 x 550 pixel Flash ad.  It’s not only the only ad unit on screen it’s fundamentally the only thing on screen. It’s held on screen for a fixed time (in most cases 30 seconds), although viewers can still ad avoid the old-fashioned ways – doing something else (like checking email) and/or hitting mute.  Viewers can click within the ad to interact with it, or they can click through to the sponsor’s web site.  Sounds like a good environment to lift branding metrics while generating clicks (or engagement for that matter).

Of course, TV platforms are going to take a while to have the capabilities of today’s online video players. And engagement may have been defined and standardized by then.  But in the initial days of EBIF and tru2way based ads, clicks will probably still be the only broadly accepted option to CPMs.

What’s the value of a "TV click" or a click within an online video player Flash ad?  The market will determine those just as it does for every other form of advertising – but markets aren’t established in the lab, they’re established in the field, as are the rates at which users click.  Google saw the market take its revenue per click from their initial across the board 5 cents (if memory serves) up to today’s double digit dollars for some keywords.

Combine advanced video/TV ad units with capable targeting plus granular reporting and we might find a click-based revenue model that breaks out of the CPM box while providing better ROI for all (content providers, advertisers and even viewers).  Between 3.5 cents per impression and up to $17 per click, there’s a lot of room to experiment.

3 Responses to “Embrace The Click – Taking Advanced Video/TV Ads Beyond CPM”

  1. [...] your operator owned DVR and you’ll see).  As I discussed in my previous newsletter (Embrace The Click – Taking Advanced Video/TV Ads Beyond CPM), major TV brands are paying significant cost per click rates for the targeted trackable [...]

  2. [...] the possibility of much better revenue generation than simple linear 30 second commercials (see this past Niemeyer Review newsletter for more).  But in order to provide the "dual" revenues that currently support cable [...]

  3. [...] and there’s been a strong fear of its supposed commoditization of TV ads (see my newsletter “Embrace The Click – Taking Advanced Video/TV Ads Beyond CPM”). But there’s a company in Mountain View, founded 13 years ago, that has done pretty well [...]

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