Monday, June 11, 2007

The Economics of Creative: Part II

In the world of linear advertising, production dollars are based on large audience size and repeat exposures. Neither of which will be prevalent in the digital world of niche audiences.

So how can advertisers afford to create original content for the smaller viewing audiences inherent in the digital marketplace? Alan Schulman, in a recent column, suggested that the answer is to go lo-fi and to spend less money on production.

The fact is, we may well have no other choice. After all, if we continue to justify the cost of production on impressions, then certainly fewer and fewer dollars will become available for original content on digital platforms.

And lo-fi may even work well for awhile. But today, over half the TV sets sold in America are 50” or larger. And chances are lo-fi will prove woefully inadequate when watched on 50” hi-def screens mounted in living rooms across the country.

But what if the answer isn’t to spend less due to fewer viewers, but to justify our production dollars based on something besides viewers?

Instead of how many, for example, what if we paid for creative based on how long?

Or, in other words, time spent with the message.

Time is, after all, finite. There are only 24 hours in a day. Which means that time spent with one brand’s messaging is time not spent with a competitor’s messaging.

As people seldom buy from strangers, time spent can add up to a competitive marketing advantage.

If time spent is of value to advertisers, should it not also be of value to those that are hired to create it, i.e. the ad agencies and production companies?

How would that work if that were the case?

Today time spent is already being measured on VOD, DVR and online platforms through second-by-second data. But to be able to accurately monetized time spent, one other criteria must be met.

The advertising must be non-intrusive so that viewers can opt-in to watch it when they want to watch it.

Why?

Opting-in measures the intent of the viewer rather than the intent
of the advertiser. Once someone opts-in and triggers the ad,
second-by-second data indicates how long they stayed engaged in the
ad. Aggregate numbers can be delivered saying whether 30% of the
viewers watched, on average, 80% of the spot. Or 10% of the viewers
watched, on average, 20% of the spot.

By allowing the viewer to initiate the interaction with the commercial, it allows time spent to become an accurate measurement of engagement with the commercial.

What’s more, when someone opts-in, chances are they are in the room and in front of the screen when the commercial plays. Not all the time, mind you. But certainly at a more accurate percentage than what Nielsen can offer.

Monetize this second-by-second data in such a way so that the longer viewers are engaged, the more the production company and the ad agency make, and what you are looking at is a new production model for content creation.

A production model based not on how many, but how long.

A production model that encourages advertisers to create original content, even though viewership may be low.

A production model based on where the digital marketplace is going, instead of where the analog marketplace has been.

Attempting to fit our linear production models into nonlinear platforms is creating digital liabilities. What advertisers are looking for today are digital assets.

Yes, time is still money.

But time spent will become gold.

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