Engagement Metrics

What is Engagement?

Engagement in a broad sense is described as user interacting with an ad in any number of ways. All of the following can be described as user engaging with an online ad:

² taking a poll

² playing around with a Flash game for more than 30 seconds

² return visits

² having a brand mentioned in the comments rolling over an ad unit for a specified amount of time

² taking a product tour

² going three pages deep or more on advertiser's website

² responding to a blog post

These forms of user engagement are fast overtaking the reliance on CPC (Cost-per-Click) and CPM (Cost-per-Mille) by the industry. CPE (Cost-per-Engagement) is becoming a widely accepted metric in online advertising.

Technological developments are constantly generating advanced ways to measure engagement. New technology (as of February 2010) has the ability to measure user engagement in terms of advertisement exposure time and mouse-over activity, while also assessing whether an ad is within the viewable portion of a user's screen.

Benefits of CPE Metric

Engagement metrics can benefit both advertisers and publishers. From advertisers' perspective, given that 99.92% of all ads do not get clicked, measuring consumer engagement with an ad beyond click-through rate gives a better understanding of effectiveness of ad impressions. If engagement metrics are observed wisely, the more advertisers are able to understand consumers' thoughts, interest and intentions, and the more accurately they can target them.

From publishers' perspective, engagement metrics are used as justification as to why advertisers should pay more for their inventory. If an advertisement does not get clicked, it does not imply it had no effect. For instance, visitors might see the ad on several websites and then decide to click on only one of them. Although it cannot be controlled, publishers (e.g NYTimes.com, MarthaStewart.com, Facebook and Myspace) have been losing credits because their site is not where a consumer sees the last ad. Therefore, measuring engagements to evaluate advertisement's brand building effects in addition to direct responses (i.e. clicks on an ad) is important to accurately assess advertising effectiveness and pay publishers for their inventory fairly.

Concerns regarding CPE Metric

Experts have mixed opinions about what should actually be counted as 'viewer engagement' when evaluating ad effectiveness. Due to the vagueness of the term, many online publishers are concerned that this allows brands to define the success of an ad in their own ways, as opposed to using the unambiguous click as the metric. This can disadvantage publishers considering the fact that online advertisers generally have higher bargaining powers than the publishers.

Conclusion

It is important to keep in mind that advertisers are not trying to achieve a higher CTR or a high number of impressions, but rather increased sales or change in brand perception. This is what ad effectiveness and the price of ad inventory should be measured against. Even though there are still discrepancies within the industry regarding the accuracy and validity of CPE payment model, more research and technological advancements are likely to make engagement the dominant metric in online advertising industry in the foreseeable future.

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