One of the big problems facing online publishers is over supply. There are simply far too many online ads out there. In the old days, there were only so many magazines and newspapers, each with a finite amount of inventory to sell. Now, major publishers compete directly against every man and his blog, and supply of available advertising inventory is essentially limitless. The laws of supply and demand would tell us that as supply grows prices fall. And so they have. Through the floor.

This might sound like a good thing for advertisers: digital ads are ten a penny! But such low prices have a high cost. Sure, everything’s cheap, but is any of it any good? The commodification of ad inventory has made it very difficult for buyers to use price to discriminate value. Price discovery is hard when everything costs pretty much nothing.

But here’s where everyone has got it wrong. Inventory does not equal attention. And attention is a rare and finite resource. There may be millions of ads that a consumer could see, but he or she can only look at them one at a time. Engaging with ads eats up their time. Time is the scarce resource that advertising consumes.

When you look at media consumption through the prism of time you realise that there’s no over-supply in the market at all. In fact, there is a positive attention drought at there.  People are brilliant at avoiding advertising: on average, only 18% of viewable ads get looked at at all.

And suddenly, it’s very easy to see a way of distinguishing between good and bad inventory. As you can see from the charts below, the longer an ad is available to be seen, the more likely it is to get noticed at all, and the longer people spend actually looking at the ads. Bigger ads get noticed in a shorter time window than smaller ads – with 970x250 ‘billboards’ massively out performing all other standard formats.

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Sure, there are lots of other factors that lead to ad engagement. Well designed, elegant sites draw more attention to advertising than cluttered sites. Sites that generate concentrated engagement often generate even more attention to the accompanying advertising. Creative is a big deal. But of all the drivers that determine engagement with advertising, viewable time far and away the most important.

The Lumen data suggests that the standard measures of viewability employed by the industry are ludicrous. Ads that have 50% of the pixels viewable for one second (the current MRC benchmark)  are likely to get a tenth of a second of actual viewing, a dwell time that would make even the most ardent proponent of the low involvement processing model of advertising baulk. Advertisers need to get real and start buying inventory that has a chance of being noticed and engaged with. And quality publishers need to push this story themselves. The FT, Economist and Telegraph have all championed a more ‘time based’ approach to ad valuation. Others should follow.

Economics is the study of decisions under conditions of scarcity. The economics of digital advertising is broken because people believe that there is no longer any scarcity: inventory is infinite. But time isn’t – and it’s about time that we took it seriously.

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