The PostView: Is Cutting Supply Really The Answer To The Current Malaise In Display Advertising?

The PostView is a new column written by senior execs working in the European online advertising industry.

There have been a lot of pieces recently putting forward the argument that reducing the volume of ads on a page could help salvage/preserve the growth of the online display advertising industry. While it would seem the most logical strategy, the issue might actually be more deep-rooted than that.
We exist in a digital world now where the overwhelming volume of ads are directly proportional to the overwhelming volume of content being created. In 2010, Eric Schmidt stated that we create as much information in two days as we have done since the dawn of man through to 2003. Schmidt might have been throwing another baseless fact out to the digieratti, but he was making an interesting point about the current content overload.
We Are Becoming Overwhelmed By Content, Not Ads

The stats coming from the web’s biggest publisher are pointing to a serious content glut. Huffington Post is now publishing over 1,000 stories per day, and Tumblr creates 15 billion impressions per month (source: gigaom).
Not all of these impression-generating machines are monetised with standard advertising, but that’s not the point. They are creating an incredible amount of content that users feel compelled to consume. Like most ExchangeWire readers, I would not consider myself the average consumer or user of the internet. My line of work means I have to be immersed in every new piece of information that is produced from the Ad Tech information channel.
Due to the amount of information we are trying to consume on a daily basis, we are now getting into a habit of just scanning content. And not even scanning pages anymore but literally squarely focused on scanning the actual content. Consumption habits have changed to the extent that we now need sophisticated news aggregators and algo-powered content curation. Feed readers apps, like Pulse, now enable us to literally get snippets of information all day every day.
Advertising Created This Problem

The ad-funded model has meant that publishers were remunerated on the basis of how many impressions and eyeballs they could sell. More eyeballs meant more cash. More content meant more eyeballs and so it continued. All the while, across certain content owners, eCPMs are falling. So we feel inclined to create even more content in the hope it will create another page view, perhaps even adding another ad format for good measure.
As consumers, the problem we have now is an addiction to digital news and information presented by the web (across different devices and screens). This proliferation of content means advertising becomes less effective. We become less receptive to it – to the point where our engagement with individual pieces of content is declining.
Kill The CPM

What would happen if we killed the CPM model and didn’t trade impressions anymore – but traded user sessions?
What if we start placing more emphasis on creating deeper user engagement? Publishers would then focus less on the volume of eyeballs being created or the link-bait worthy content headlines that seems to infect the social media channels. Creating deeper user engagement would place more strategic focus on user understanding and user acquisition – and ultimately place less importance on the one hit wonders from social referrals.
The cost of a user sessions would depend on session length, but would enable marketers to start telling stories, using creative sequencing more intelligently. We might even get advertising back to what it should be about.
This doesn’t mean we have to take a departure from leveraging the innovations within data and technology that are available to all of us. We can still ensure we are engaging with our desired audience. Content overload is not healthy and perhaps even damaging to display advertising’s long-term future.
So to answer the recent question posed by senior industry observers: will cutting supply solve the inherent problems with display? The answer is no. We need to cut content, and look at the fundamentals of how we price display. Only then will publishers and advertisers be able to reap the true benefits.