Advertisers pay per time instead of clicks


The London Financial Times allows advertisers from next month no longer to pay per clicks, but to pay per number of hours that an advertisement is viewed by readers. The London Financial Times thus introduces as first website the cost per hour (CPH) model.

The commercial director of the Financial Times, Jon Slate, said to AdAge that “we just launched a new currency for digital advertising“.

There is a reason for this development. The old media cannot ask too much money anymore because the Pay Per Click market is under pressure by fierce competition by companies like Google, Yahoo and Facebook. These companies determine the market largely and moreover, the increasing use of mobile devices and programmatic advertisements affects the chargeable rates.

More than half of the turnover of the FT comes from subscriptions, two-thirds of them concerns digital subscriptions. In total, the Financial Times has 677,000 subscribers and 12 million unique visitors. It does not have the large numbers of visitors that competitors have, but the FT serves loyal and interested customers. By serving targeted advertisements, the company hopes to attract more premium advertisers.

Time is the only scarcity on the internet

The new pay per hour model comes closer to television advertising than existing models. The TV sector uses this model because the number of slots of 30 seconds during a sitcom is limited and depending on the time, has to be paid an extra fee. However on the Internet, “Time is the only scarcity”. According to Tony Haile, CEO of Chartbeat, a company that monitors the visibility of advertisements.

This new advertisement model could be a disruptive innovation. On the other hand, it could be questioned whether the reading time can really be measured effectively. For instance, is the reader behind his/her PC or went to the toilet? And whether this new model will work new forms of fraud in hand.

What is your opinion; will this new model become an alternative to the existing pay per click?

Sources:

http://adage.com/article/digital/emarketer-raises-programmatic-ad-spend-estimate/245433/

http://www.emerce.nl/nieuws/ft-verklaart-klik-dood-adverteerders-betalen-tijd

http://adage.com/article/media/digital-advertising-ready-ditch-click/295143/

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2 responses to “Advertisers pay per time instead of clicks”

  1. 345791wv says :

    Hi Ruben!

    I think you are making an interesting point about the current popular advertising model.
    I found an article which explains quite detailed what the pros and cons are about the PPC model and the danger if it not properly applied.
    The bad thing they describe is that it is almost developing itself to a sort of concurrency, in which even inflation can arise from high bidding behavior. They also state another two disadvantages, namely that you have no control over the distribution of your listings over the internet and the fact that PPC advertising cannot scale.

    However, they also state some major advantages: it is fast, creates traffic, is nimble,

    They even propose some solutions to make it work:
    – Set a sensible budget
    – Track your conversions (desired actions)
    – Find niche keywords

    Though this explains the working of the PPC model, I also found another concept of advertising:

    Pay per impression: you pay for the number of displays that are shown, agreed and specified trough contractual agreement.

    So I think you’re making a properly statement that the current PPC model will encounter plenty of alternatives, although I still believe that PPC will remain the main thing.

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