Wednesday, February 21, 2007

I'll Show You The Money When You Show Me The Results

A recent article in Ad Age - Web-Video Vaults are Full, Coffers Are Not - listed fragmentation and lack of video created specifically for the web as two factors that are slowly down the growth of the online video advertising market.

My question is what effect do these two factors have on each other?

Impressions, the current basis for underwriting commercial production for television, do fragment online. While the industry is busy trying to find a way to aggregate these impressions so that they can continue to live off the old business models, would another option be to create a new basis for underwriting production?

This new basis would have to be based on what can be measured. Impressions, although the system is flawed on broadcast, did offer some degree of measurement. Creative departments were able to justify the enormous cost of their production budgets on the fact that over 20 million would see it. It's a much more difficult argument to make when only 2 million might see it. (Does this explain why a majority of online video advertising today is re-purposed work?)

So, what can be measured online that is different than what can be measured on broadcast? Time spent with a message, or viewer duration, is one thing. And time spent with a message certainly offers value to an advertiser. The more time spent with a message, the greater the opportunity to persuade someone why that product or service may be better than a competitor's product or service.

So, could a portion of the production fee be based on time spent with a message? Not the direct costs, obviously, but perhaps the profit paid to the production company? Why not the director's fee? After all, they are hired to involve people. Pay them only if they do. And as long as we're at it, why not the fee that advertisers pay the creative department for coming up with the idea? Why should agencies be paid the same whether the idea works or not?

Shouldn't the worth of an ad have some effect on its cost? If worth can now be measured as time spent, then today, it can.

Time spent is an impression in the control of the viewer. By paying for time spent, advertisers will still be paying for impressions. But only those impressions that actually offered some measurable value.

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