Yesterday, NielsenWire featured an article written by Jon Gibs, which presented some powerful ideas about audience-targeting, and discusses the relationship between exposure to, and frequency of advertisements vs. "dwell time".

Summary:

"Why do advertisers still debate the value of online advertising? Because no precise measure of online audience delivery exists. The missing factor? Who—as in who is viewing your ads, not just how many ads were served. Does online advertising deliver the target audience? With current evaluation methods, it’s difficult to tell. What’s needed is a shift in metrics for audience targeting from impressions to dwell time, increasing the cost per thousand in the process."

In this article, Gibs defines targeting in the Internet world as, "...any form of online advertising that is not run-of-site, run- of-network or content section-specific." He argues that, "...even contextual, content section-specific ads are targeted." But one key difference and great advantage for online advertising, in contrast to traditional media, is that the targeting happens not just in planning, but in the execution. The first step in any online advertising campaign will reflect traditional media. A schedule is created of the sites, portals or ad networks that provide the desired target audience. The difference at this stage is that online media buyers have the option to buy specifically-targeted audience segments, "...based on elements like geo-coded inventory through a reverse IP look-up, modeled segmentation based on cookie or panel data, off-line sales data, registered user data." And, as this form of targeting gains popularity, the conventional census-based reports will most likely be less useful as the data they show are narrowly focused on raw server counts of impressions and don't give publishers the ability to reach their promised targets.

Traditionally, impressions have acted as the metric for online advertising - monitoring reach, exposure, frequency - in quantitative terms. Gibs argues that this method of accounting is outdated, and actually contributes to declining CPM rates. One reason being that, since publishers are paid on how many ads are served, many often cram ads on sites. This creates cluttered environments, increasing inventory beyond demand, and consequently reduces the price that can be asked of each ad. To Gibs, This can lead to a vicious cycle with continually more ads being served and, and with the value of individual ad units decreasing as well. For publishers, this cycle can lead to a financial problems as they have few incentives to create a good environment for advertising; rather many attempt to increase monetization by creating more clutter. As a result, the effectiveness of each ad diminishes and in the end, the value of the media itself is reduced.

To quote Gibs, "...because the Internet is the first medium with truly unlimited inventory potential", a model based on impression counts has lead publishers into a dead end where the only way out is to rely on, "...short-term gains at the expense of the long-term health of the industry."

So what's the solution?

Time. To Gibs, "...when it comes to online advertising, time is the x-factor." Research has shown that an ad is more effective the longer a person is exposed to it. This, suggests that time exposure may in fact be more important than impressions. To Gibs, an effective metric would include measuring both the number of impressions and the dwell time on generated by specific ads. Arguably, this would help to adjust to more competitive rates paid to publishers -- especially those sending high quality traffic to advertisers' sites. Plus, since not all click-thrus are equal, these types of measurements would give advertisers important information about user experience post-click.

Some interesting data representations from "Does Online Advertising Deliver the Target Audience":

Via Jon Gibs @ Neilsen