Back to Basics: Advertising Rates and Metrics

With the move toward ad networks that serve up streaming video content, including newer pay-as-you-go and do-it-yourself ad delivery engines, the terms that are tossed around can be confusing. This Back to Basics explores some of the key terms our readers might hear when considering the use of streaming media advertising.

CPM (Cost Per Thousand). This term actually comes from TV and print, so it could better be termed "number of eyeballs divided by 2" or number of views. Typically it's a price per banner ad plus a guaranteed number of views. A website that charges $15,000 per banner and guarantees 600,000 impressions has a CPM of $25 ($15,000 divided by 600).

These days CPM has fallen dramatically to the $1 range or below for non-targeted static ads on social media websites, although rich or dynamic media ads command a much higher CPM, as do static banners on highly targeted sites.

CTR (Click-Through Rate). This term refers to the number of times a viewer actually clicks on an advertisement. While it is often referred to as "conversion rate" that term also implies a viewer not only clicks on an ad, but also takes action on the product or service offered.

Hit. This term used to be a popular way to measure traffic, but as today's sites have a significant number of elements (with some images sliced into 10-15 pieces) it's fallen out of favor. Each time a web server sends a file to a browser, the server log file records a hit, so hits are generated for every single element that is delivered.

While webmasters use hits to measure their server's workload, the validation of content is very difficult in terms of advertising. As such, a few variations of hits were attempted, such as valid hits (hits that deliver all information on a "page" to a user, but excluding redirects, bots/crawlers for search engines, and error messages) and page views (the number of times a user requests a page). The latter has its own issues, as the assumption that viewing of a page containing an ad means that the ad was actually viewed, which may not be the case if a user is on an older mobile device or using a slimmed-down browser for speed browsing.

Interstitials. Everyone seems to know what pre-roll content (short commercials played before the streaming media) and post-roll content is, but the term interstitial is one that is often heard but mis-understood. In traditional online advertising, an interstitial is a page that pops up between pages, which is now often shown as advertisement on top of the next page. In the streaming media world, though, it simply means video ads or commercials placed in the middle of the streaming video, in much the same way that commercials are placed in the middle of a television show.

Impressions. The CPM can also be referred to as Impressions Per Thousand, since an impression is a single time that an ad is seen by the viewer. However, given caching in the browser, most static media content appearing on multiple pages within the "visit" time may be served from the cache rather than from the server. So, while traditional advertising in print uses multiple impressions to raise awareness (think of those ads that appear on multiple adjacent pages) the downside of multiple static media views is that the ad server may provide a lower number of ads served versus the number of impressions.

Rich media, by comparison, often is large enough or has limitations on its caching. Streaming media, in particular, can be easily measured not only for the number of times it is viewed but also the point at which the content stops being served. For instance, Microsoft divides its Smooth Streaming files into "chunks" of two seconds apiece, and serves the content up via HTTP streaming, which potentially allows for a very discrete accounting of full or partial content delivery.

Visits/Visitors. To better capture the behavioral patterns of viewers, the concept of visits was created to establish both the number of times a particular viewer views different pages on a site within a set period of time (often limited to 30 minutes).

The concept, then, is that unique visitors can be counted to measure both CPM and stickiness—the length of time the unique visitor stays on the site. The number of unique visitors who visit a site or view content, within a specific time period, often relies on some form of user registration or identification system, including cookies. For rich media in general, and streaming in particular, identification of visits can be challenging if the measurement system is handling long-form content (or even short-form content that is rapidly abandoned).

Why Does It Matter? Behavioral patterns are especially of interest in rich media, once the problems of user experience, delivery confirmation and number of views were addressed. Akamai has recently acquired Acerno, a company that measures behavioral patterns via shopping and purchase data, branding the new offering as Akamai's Advertising Decision Solutions. Why is this behavioral measurement relevant? According to the blog MediaMuse, a recent drop in ad revenues at social media sites may be indicative of more than just economic slowdown. The blog notes that PubMatic’s AdPrice Index has found a significant drop of up to 47% over the course of just one to two months, starting back in April.

"Ironically social media is such a rich source of information in terms of describing an audience and their affinities," the blog notes. "Yet it's so undervalued by advertisers, since social media sites don’t segment their audience into concise targeting parameters."