Online advertising has changed. The ads that get the most attention today are video advertisements followed by native ads. Video ads are commonplace on social networks like Facebook and Instagram, and native ads are pieces of paid content that act like part of a publication but are actually advertisements.
Moat, a startup and Google competitor, is trying to change the way that companies pay to place ads. Instead of charging a standard advertising rate, Moat wants companies to only pay for ads that are seen. By introducing a new metric, Moat aims to completely change the way that ads are placed and paid for.
The Logic Behind Moat
Presently, companies pay for ads based on how many ads are placed on a webpage or social network. Moat’s metric measures how ads are seen and how many people respond to ads, which would lead to the price that companies pay for placing ads. Moat would allow companies to negotiate advertising prices based on ad effectiveness.
While you may not have heard of Moat, the company is already integrated into Facebook. In fact, Moat is the company that currently measures the effectiveness of all Facebook ads, so you might say that Moat is already in the Facebook system. Thanks to Moat’s analytics, Facebook has recently dropped ineffective banner ads, pushing native and video ads.
A Realigning of Advertisements
Consumers are seeking ads that aren’t so obvious. Native ads are a great example of the type of ad that consumers respond to. These ads include relevant information, tell the user something that they want to hear, and don’t solely exist to sell product (although native ads do this indirectly and effectively).
Moat wants to develop the model for digital ad currency. The company compares its model to Nielsen and other rating companies, and while Moat is a direct competitor of Google (and might actually snag much of the Google Ad market), the company does not see itself as a competitor. Rather, the CEO of Moat has told press that the company hopes to work with Google.
A Change in the Ad World
Are consumers really getting smarter? Maybe. Maybe not. What consumers want to see now are ads that inform. Studies have shown that most social media users are rather immune to the standard banner ad, and that these ads don’t get much attention at all (which is why Facebook has done away with the ads, for the most part).
What consumers want to see are ads that inform. Moat has not divulged its exact metric system, but the company did just gain $50 million in funding to further promote its new ad payment system. Clearly, investors believe that Moat has a good thing going.
The question is whether or not companies like Google will try and copy Moat’s new mode of digital ad currency or attempt to work with Moat. Moat also works with YouTube and Twitter on measuring ad effectiveness, so you might say that the company is well poised to compete.