Eyeballs vs Engagement: the Struggle of Digital Advertising

TL;DR — The birth of the digital advertising field echoed traditional media, with banner ads being the main format. Advertisers pay media owners for impressions served (eyeballs reach) instead of for engagement, devaluing ad rates, and especially for ads that sit “below the fold”. A shift away from impressions and towards native ads aimed at engagement is already underway but expect this trend to continue. Shifting billing to this model should align the incentives of media owners and advertisers and lead to the emergence of a more sustainable ecosystem for the media industry (although it will not be without casualties).

The Past: Eyeballs

Advertising costs for digital banner-based advertising is going through the floor. Website owners have long since milked that cow, as the supply of ad inventory (ie web pages and page views) increases sigmoidally, dwarfing the growth of digital advertising budgets. Two related but separate problems have caused the worship of the impression and the death of engagement.


Digital advertising has long consisted of banner ads, which are sold typically on a CPM model. CPM stands for cost per mille. Mille is Latin for a thousand so the cost is what you pay for that many impressions. An impression is any instance where an audience sees an ad. Advertiser and agency pressure has caused websites to move ad units towards the top of the page. Let’s look at a couple of examples:

Bloomberg Business, which relaunched recently, has only three visible linked stories when you open the home page, but two banner ads. Considering that the reason for most visits is to read their articles, that is quite drastic, but understandable if you consider that banner ads pay their bills (well, Bloomberg.com is actually subsidised by sales of the lucrative Bloomberg Terminal, but that’s another story).

Another example: The New York Times. Although there is only one banner on the page, it is actually more drastic in terms of space allocated.

Of 1,248 pixels visible on the vertical axis, 615 are devoted to the Apple Watch ad. The full page width is taken up by the ad. That’s 49% of the visible area. Take out the masthead and section headers, and you only have around 30% of the page left for headers and content.

Clearly, the value of banner ads is concentrated towards the top of web pages.

Why is this? Although many website ads are never actually seen by website visitors, website owners are paid their ad dollars when the website “calls” the banner ad creative from the advertiser’s “ad server”. By some sources half of banner ads do not even get viewed for 1 second. This brings to mind the old adage by a famous department store tycoon: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” One expects that even John Wanamaker’s definition of “wasted” didn’t stretch as far as “viewed for less than a second”.

Solution? Any advertiser or agency worth their salt knows to place ads in the visible area of the website. Therefore “above-the-fold” (ie the area that is visible as soon as you open the page without needing to scroll) ads came to charge a premium and the top of the website became valuable real estate.


Running in parallel to this trend is the problem of “clickbait”. As the impression came to be treated as the ultimate success metric for the business side (i.e. for sales teams in advertising), the page view gained ascendancy on the content side (i.e. for journalists in creating content). Upworthy et al sprung up, and we were in the age of clickbait.

When all you need to do to get paid is to get someone to click on your link and open the page, whether they read the content is optional. In such a world, the content needn’t live up to the promise of the headline. The headline becomes everything, and quality of content dips. Just follow the money and this process is inevitable. Contrary to popular sentiment, Buzzfeed is distinct from a business-model standpoint. Ben Thompson of Stratechery believes Buzzfeed to be the most important news organisation in the world for the same reason that I think Outbrain is important: engagement.

Present and Future: Engagement

People have had enough of the “impression uber alles” mentality and its associated race to the bottom in terms of content quality. Last year, Facebook saw fit to cut down on clickbait, demoting sites that don’t drive meaningful engagement post-click. The Financial Times has rolled out “cost per hour advertising”, where an advertiser pays for an audience’s attention per hour, rather than simply per impression. With the business side incentivising the editorial side (the journalists) to keep the audience engaged for longer rather than to get a quick hit (and then hope the audience clicks on another article to register another few more ad impressions). This is likely to result in better content, a more loyal audience, and more subscriptions: a virtuous cycle of sustainable journalism (how replicable this is for other publishers, especially those not aimed at business users, remains to be seen).

Note: Thanks for reading. This was originally written as a background piece to Google Should be Afraid of Outbrain, in which I argue that Outbrain has disrupted Google at various points of the media consumption journey, as well as describing how Facebook, with its new Instant Articles product, in turn endangers Outbrain’s very existence by threatening to kill the browser.