Why we built an Engagement Exchange
- Thursday, January 10th, 2019
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Over the next couple of weeks, were running content from our recently-published Programmatic Handbook. Here, Prash Naidu, CEO and founder of Rezonence, explains how and why the company built a platform enabling engagements, as opposed to impressions, to be traded programmatically.
Before we answer the question in the title of the article, let’s run through a brief history of why we chose engagement as the currency for human attention. Advertising is essentially a transaction for a person’s attention; a media owner captures attention, which is then sold on to the advertiser. In the pre-digital era, it was impossible to precisely quantify how much attention was captured, and therefore a multitude of methods were invented as a proxy for measuring human attention.
However, even with the advent of the digital age, human attention is still transacted in a manner that is essentially no different to how print or billboard space is transacted – on an impression basis. Even if we can now work out whether the banner was in view and on the screen, we can’t determine if somebody actually saw the ad and, most importantly, paid attention – which is what the advertiser is really after.
Engagement, by definition, means that the user engaged with the ad, and if the engagement is well constructed, it also means that the user paid attention. This simple fact means that we can finally use engagement to transact human attention in a precise and attributable manner.
The benefits of being able to do so are immense, not just for advertisers, but for publishers and readers too. Engagement-based advertising can lead to higher revenues for publishers, but only if their content is of sufficient quality to generate an engagement from the user. This has a beneficial impact on the whole ecosystem, because high-quality content will derive more revenue, while poor-quality content will be starved of revenue. This will put an end to the proliferation of clickbait and fake news, while funding quality journalism. Furthermore, engagement-based advertising is more impactful than simple banners, which means fewer impressions are required, ultimately leading to users getting a less ad-cluttered web experience.
We designed FreeWall® to capture human attention in a clear and well-defined manner: a user is deemed to have engaged when they answer a simple quiz or survey. Since the reader has to pay attention to answer the question, we know that an engagement has captured the required amount of human attention.
It’s great if you have a commodity that people want to buy, but it’s not much use if you can’t sell it into the marketplace in a manner that they want. This is the position we found ourselves in; we had a great product, but the market was increasingly moving towards programmatic trading – and programmatic systems that were available in the market only effectively operated on a CPM (cost per thousand) basis.
We therefore had a choice to make: go programmatic but transact on a CPM basis, or stay in an IO world, because trading on a CPE (cost per engagement) basis was more important to us. Neither option was satisfactory; we wanted to be able to trade on a CPE basis programmatically. So we decided to back our ability and give ourselves a challenge – to build a programmatic engagement exchange.
The problem we faced was that most DSPs in the market could only transact on a CPM basis and we couldn’t ask our clients to change their DSP purely on our account. We therefore had to find a way to deliver CPE through a CPM platform. To achieve this, we built what we call M2E – a CPM-to-CPE converter – meaning we can now set up a PMP with any DSP.
For example: If we’ve agreed a 20p CPE and £1,000 is spent on a CPM basis, our system will ensure you get 5,000 engagements, thus backing out to the agreed 20p CPE; the floor price of the PMP is set to an arbitrary amount.
It took about six months of hard work and many iterations, but we were eventually successful. Now, nearly a year after going live, we’re glad to report that our clients are increasingly buying FreeWall® programmatically on an engagement basis.
This has been a hugely important step in our development, meaning that we can continue to trade in engagement as the currency of human attention – but at scale, and most importantly, with the simplicity that the market demanded.
So as programmatic continues to gather steam, we hope to see more and more of you trading through our engagement exchange. You’ll benefit from the clear advantages of trading in human engagement – while at the same benefiting the whole ecosystem.
You can read the entire Programmatic Handbook online here.