Sunday, July 29, 2007

The Unspoken Truth

There seems to be a lot of talk these days about measuring results and whether advertising agencies should be more proactive when it comes to finding ways to be accountable for their work.

To date, agencies have been somewhat hesitant. And while the reasons vary, there is one universal truth that goes unspoken. For most agenices, it is far more lucrative to be paid for the possibility of success, than it is for the actuality of results.

The good news is that a new engagement study, recently released by Omnicom Group's OMD, may encourage a few agencies to be more open to the idea of accountability.

What the results from the study indicate is that one engaged viewer is worth eight regular viewers. Not to mention, that for the brands involved, factoring engagement into the equation increased measurable Return On Investment 15% to 20% over models that only factored in GRPs.

Coincidently, Nielsen/NetRatings recently announced that they would start measuring time spent rather than page views.

Why is this important?

Because if 'time spent' is measurable on a page, which it is, then it is also measurable when someone clicks into and out of a commercial on a digital platform. When do they click out? Usually when the commercial becomes less engaging for them.

I know. Many will argue that time spent does not equal engagement. So for now let's just say that time spent does appear to be a fairly good indicator of engagement if the viewers are allowed to activate the commercial and leave when they want to.

Now what would happen if an advertising agency said that instead of receiving a fee for creating a commercial based on hours worked, they would like to be paid based on how long their commercial involved the viewer?

In other words, the more engaging their work, the more the agency would make. The less engaging the work, the less they'd make.

Would advertisers be willing to work this way?

Considering that an engaged viewer is worth eight regular veiwers, and that ROI increases 15% to 20% with engagement, you would think that advertisers would be motivated to take their agencies up on this.

Except for that unspoken truth thing - for most agencies it is far more lucrative to be paid for the possibility of success, than it is for the actuality of results.

Fortunately, most is not all.

And there are a handful of agencies - Crispin, Goodby, Wieden, BBDO - that are, for good reason, confident in the work they create. You would think that they would like nothing more than to be paid based on how well their work engages the viewer.

The fact is, under the current labor-based compensation model, engaging work and non-engaging work are compensated equally. As most agencies are better at the latter than the former, the outcry has been minimal. Failure, has in fact, prove to be quite lucrative for most agencies.

It's only the truly brilliant shops that are leaving money on the table.

Should it remain so now that we can determine engaging commercials from non-engaging commecials on digital platfoms? And especially now that it seems as if engaging commercials are worth more to the advertiser?

The Digital Marketplace and its new measurement capabilties offers the opportunity to liberate advertising from the clutches of mediocrity. And, to let those agencies that are better than the rest, rise even further to the top.

Both in the work that they do.

And, in the way that they're paid for it.

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