The pageview economy — enough already

At the recent SXSW gathering of techies in Austin, Texas, one discussion didn’t get a lot of attention from the press. It’s a touchy subject — the turd in the punchbowl of online revenue — so most people look the other way and pretend it doesn’t exist. I’m talking about what’s known as “pageview billing,” which along with its companion, the CPM, is the central component of Madison Avenue’s way of counting the value of online ads. It’s killing media companies, and we need to do something about it.

The advertising industry believes it has an inherent right to interrupt or clutter the lives of everyday people (who ceased long ago to actually be human — to Madison Avenue, we’re “consumers”). Web publishers are complicit in this myth, and if you don’t think so, take a look at what Lost Remote’s Cory Bergman found when looking for breaking news from the paper in Charleston, West Virginia:

home page and story page of the Gazette online, from Cory Bergman post 'This advertising brought to you by breaking news'

No serious purveyor of news and information could possibly believe this is the right way to present things, but this is vastly more commonplace than we could imagine. How did we get here? The pageview.

John Gruber and Jim Coudal at the SXSW panel 'Losing the Race to the Bottom' courtesy Joel Housman, FLICKRThe SXSW panel featured just two people, John Gruber of Daring Fireball and Jim Coudal of Coudal Partners and The Deck Network. Gruber is a highly regarded Philadelphia blogger and Apple pundit. Coudal’s Deck Network is an innovative ad network for select publishers, one of whom is Gruber. The Deck violates all the Madison Avenue rules and yet is very successful.

In the early days of the Web, media companies needed something similar to what they sold in their traditional media models. For print, that’s circulation. For television, it’s ratings. The essential problem for either is that they are not Web native, but rather than learn about the Web from the people that made it, we decided to pursue our traditional revenue models, and so was born the CPM method of counting pageviews, multiplying that number by the number of ads per page and divided by 1,000 to establish rates. An oversight group was created — the Interactive Advertising Bureau (IAB) — because we needed “standards” in order to maintain an “eyeball is an eyeball” paradigm for advertisers.

Modern culture is obsessed with formulasIn this way, Madison Avenue controls the value of Web properties, not those who run the sites themselves.

Two things happened, neither of them good for publishers or the users of their sites. One, banner ads became a commodity, because the value was with the pageview math and not with the environment in which the ads were presented (despite the hue and cry of publishers). Eyeballs are eyeballs, after all. Two, publishers turned to tactics that increased the number of pageviews, because it was the logical (and easy) way to grow revenue. These things have combined to cripple media company efforts to shift emphasis away from our traditional products and onto the Web, because they work to interfere with the way customers interact with content. This is a bigger deal than you might think.

The Deck overcomes all of this by establishing one unique ad size and providing one ad per page. This establishes scarcity and allows for pricing that is only in part impression-based. The value is set by The Deck, and advertisers can take it or leave it. Given the techie niche that it serves, the network has been very successful, and the advertisers are quite happy to be the only ad on a page of relevant content.

When asked if media companies such as CNN could learn anything from this, Coudal honestly responded, “I don’t know.”

It was important for The Deck early to get to a certain level of traffic, so that we could be invited to discuss advertising budgets with large advertisers…We had to get to a certain scale in order to have conversations with advertisers, but once we sort of got to that, the cost per thousand thing really doesn’t make much difference to us, because we don’t pay the affiliates based on pages or clicks and we don’t charge the advertiser based on impressions or clicks. Certainly, if our ads aren’t being shown, the network doesn’t work at all, but once CPM is out of the equation then a lot of this rigamarole that’s come along with online advertising becomes sort of silly and unnecessary.

Gruber responded that traffic counts and is important, but “it’s not a number that you multiply another number by to get the check that you write.”

There are three people involved in the online advertising equation: the reader, the publisher and the advertiser, and, as Coudal pointed out, that which has passed for “innovation” from the industry over the last five years has ignored the first two.” One of the big consequences of the CPM system is that publishers must try to game it in order to show growth. In a later blog entry, Gruber was more colorful, calling it a “scam.”

Publishers game it with sensational link-bait articles and bullshit tricks like breaking articles into multiple “pages”. Advertisers get stuck paying for valueless impressions. Readers get stuck with the sensational bullshit articles, the tricks…and suffer through too many annoying ads surrounding actual content.

The topic has long been a source of discussion among members of the tech press.

TechCrunch writer MG Siegler, writing on his own blog, says it’s not publishers’ fault. “Pageviews,” he notes, “remain the metric by which we’re all graded at the end of the day because, right or wrong, that’s all advertisers currently care about in the online world.”

If sites don’t hit pageview numbers, they start losing advertisers. If advertisers are lost, money stops flowing in. If money stops flowing in, people need to be let go. It’s that simple. So pageviews remain crucial.

The problem with that model is that it means pageviews have to keep going up. That means that new pageviews must come from somewhere.

And where they come from is a series of tactics that insult the very people they’re trying to reach, the audience.

Marco Arment, developer of popular applications Tumblr and Instapaper, writes that pageview billing “incentivizes publishers to distract you while you’re reading.”

So they take every possible opportunity to try to get you to read their stories, and then, once you try to do exactly that, they try to get you to abandon what you’re reading before you’ve gotten very far so you can go view something else before abandoning it and continuing the cycle.

You’re not readers to them. You’re “eyeballs.”

You’re not customers. You’re the product.

And that may be the biggest problem of all. Arment offers this illustration of a recent Time article on the iPad:

Arment highlights the distractions

He notes that publishers are actually saying to readers (without realizing it) that “We don’t respect you, and we’re trying to aggravate you as much as possible, but not quite enough that you’ll stop coming.”

What he’s talking about is commonly known as the “price of interaction” that users must pay in order to participate in the process of consuming what the site has to offer. Publishers try to find a right balance, but the demand of the pageview is relentless, and so we compromise. In so doing, we’re killing any chance at making serious money through our core products, and this has ramifications beyond just the bottom line.

The nut of the issue here is that old bugaboo, copying instead of innovating. Media companies have been guilty of this from the beginning, choosing to bolt everything about the industry onto the Web instead of asking the people who built the thing how to do it. We present content, for example, in the same ways we’ve always presented it. The geeks created blog software and presentation. We present and sell ads in the same ways we do it offline, and now techies like John Gruber and Jim Coudal are proving there’s another way.

Pureplays take the lion's share of local ad dollarsThis is also why Web pureplay companies are gobbling up local ad spending in record numbers. Companies like Yodel, Local.com, Reach Local, MerchEngines, Yelp and many, many more are putting advertisers together with consumers (and potential consumers) using methods and techniques built on the logic of the Web instead of insisting that things be done some preset, traditional way.

The pageview billing model isn’t going anywhere soon, because there’s just too much money at stake with the advertisers, agencies, and networks. But that doesn’t mean we shouldn’t be experimenting — at least at the local level — with new concepts that make sense for everybody, including the audience and the publishers.

(Originally published in AR&D’s Media 2.0 Newsletter)

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