Does current online ad pricing make sense?

22 Dec 2009|Leigh Marinner

Does it make sense that online ad revenue is calculated based on the number of clicks on a site? That is frequency. But doesn’t stickiness on the site make it a more valuable site to advertisers? If a consumer spends 5 minutes on a site rather than 2 seconds, shouldn’t that mean that ad placement is more valuable? I am not an expert on this area, but the current pricing structure apparently doesn’t take the time a consumer spends on the site into account.

Some types of online sites are more sticky than others. Consumers spend more time on social networking, email, and some individually specified pages (e.g. news, traffic, personal blog, etc.) Shouldn’t ads on these pages be more valuable, if consumers tolerate those ads?

Cost per impression or click-through rate models closely resemble television and print advertising methods such as Nielsen TV ratings or print circulation. But those models were built in a world where the amount of time someone spent viewing the ad was difficult to measure.

I predict this frequency-only pricing policy will change. Stickiness is valuable. Increased engagement should result in more click-through, loyalty and eventually more traffic and more recommendation of the site (although these latter two would also show up in increased clicks.)

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