Tuesday, August 28, 2007

Egonomics: The Underpinnings Of A New Online Business Model?

It seems as if everyone wants to know what the online business model of the future is going to look like. And while the opinions are many and varied, the one thing that most people agree on is that it won’t be based on impressions.

After all, impressions are quickly becoming devalued due to 1. Unlimited choice. 2. Control shifting to the viewer. 3. More precise targeting through technology.

Unfortunately, most advertisers keep asking for impressions as the basis of their online media buys. A tactic which certainly has a way of slowing down the search for the impression’s ultimate successor.

So in this brief window of time before the impression is reduce to being a minor measurement of advertising effectiveness and before its replacement is proclaimed by the experts among us, permit me to suggest a temporary placeholder.



Yes, ego. We could even go so far as to call it “Egonomics” if that would help make it seem more, well, official.

Consider: If Webster defines “economics” as the science that deals with the production, distribution and consumption of wealth, then “Egonomics” could be the science that deals with the production, distribution and consumption of ego.

Case in point – YouTube.

As you probably know by now, over 65,000 new videos are loaded up on YouTube every day. That’s just short of one every second.

Why do you think this is?


After all, on YouTube, recognition is the only compensation that users get for loading up a video.

I may be wrong, but I would bet that anyone who puts a video up on YouTube constantly checks to see how many people have taken a look at it.

If the video has drawn 2 million viewers, the creator feels much better than if it has only attracted 2 viewers.

If you don’t think YouTube’s a fair example, consider Facebook or MySpace.

Do you think people judge other people on these sites by the number of friends that they have?

What is that besides Egonomics?

All social networks, regardless of the form that they take online, are currently being driven by Egonomics. Most social networking sites are all about being seen. About being recognized. About the self.

In a word, ego.

But back to business models. How exactly does Egonomics fit in as a placeholder between impressions and whatever advertising’s golden metric will be in the future?

First off, we’re talking about advertising here. And if one wanted to pick an industry with inflated egos, they would be hard-pressed to pick one with more hot air than you’ll find residing in most ad guys and gals.

When it comes to ego, advertising is it.

And two, as we leave the sacred ground of impressions - how many saw the ad - and start to measure how long viewers interacted with it, chances are it will be an egoist who will lead us.

Here’s why.

If history has taught us anything it’s that in the ad business, what can be measured will be measured. The reason is that to most advertisers what is measurable is pleasurable. After all, if something can be measured it can be monetized. And once monetized, it becomes accountable.

The little known fact is that how long a viewer is involved with a commercial can already be both measured, and monetized, on digital platforms.

Now it doesn’t require a leap of faith on the part of the client to believe that the longer a person is engaged in their brand message, the greater their branding impact will be on that individual. Which means the chances are good that creative agencies will soon start to be compensated on the basis of how long their commercials engage or involve the viewer.

So let me ask you, what do you think will be the over-riding characteristic of the agency that first agrees to be compensated in this manner? In other words, to be paid based on how involving their creative is.

Talent? Sure.

Confidence? You bet.

Ego? In spades.

Yet while ego will be a part of what pushes the first agency into this new kind of performance compensation, it’s the primary reason others will follow.

For purposes of discussion, consider P&G. They have many agencies, two of which are Saatchi & Saatchi and Wieden & Kennedy.

Now let’s say Wieden creates a commercial for P&G. But instead of being compensated on a pre-determined project fee, they ask P&G to pay them based on how long they involve viewers in the commercial.

The longer their work involves viewers, the more they will make.

P&G says, “Yeah, okay.” I mean, why wouldn’t they? By working this way Wieden is, in effect, carrying some of the risk for the client. If they don’t engage viewers, P&G doesn’t pay them for their efforts.

Commercial runs. Data comes in. Results are tabulated. Wieden makes money. Either a lot. Or, a little.

But what has happened, you see, is that the bar has been set.

A few days later, let’s say P&G has a meeting with Saatchi. And they say to Saatchi, ‘Oh, by the way, Wieden’s willing to be paid based on how involving their work is.

Are you?”

And Saatchi’s response?

I think it’s safe to say that they really only have one response, don’t they?

As will any other agency once word gets out.

The reason?


And there you have it. A new business model starts to be formed. Time spent becomes more official. Standards are developed. Systems put in place.

And ten years from now, people will look back and wonder why advertising was ever bought and paid for with no consideration as to whether the creative itself was of any interest to anyone other than the agency that created it.


No, you won’t find it any dictionary. You will find it on Wikipedia. But not in regards to advertising.

At least, not yet.

1 comment:

  1. Mickael6:15 AM

    Wow, great term! And great deduction!