Tuesday, August 21, 2007

Should The Worth Of A Commercial Affect The Cost Of A Commercial?

Ask advertisers if the worth of a commercial should affect the cost of a commercial and the answer is unanimous. “But, of course,” they say.

Ask the same question of agencies and the response is decidedly mixed. The handful of creative, more confident agencies are excited by the idea. But outside of those three or four, well…

Not surprisingly, both advertisers and agencies ask the same question. How exactly does one go about measuring the “worth” of a commercial?

Let’s say a two-minute commercial runs on a digital platform. The view duration data comes back indicating that, on average, viewers who clicked-in to watch stayed for only the first fourteen seconds of the commercial.

Call this Commercial A.

Now let’s say another two-minute commercial – Commercial B – also runs for the same advertiser on the same digital platform. But this time the view duration data tells us that, on average, viewers watched this commercial for one minute and fifty-five seconds.

Which commercial, A or B, was “worth” more to the advertiser?

As you can see, this isn’t about equating worth to awareness or brand recall or intent to purchase or sales or reach or frequency. No, this is simply about equating worth to viewer time spent with the commercial.

The reason is this.

The average thirty-second TV commercial costs some $12,000 per second to produce. Every second, whether watched or not by viewers, costs the advertiser the same $12,000. By being able to monitor time spent with a commercial, digital data is able to report as to whether or not advertisers are getting their money’s worth, on a second-by-second basis.

If most viewers do not watch seconds 15 - 30, are these seconds still worth $12,000 each to the advertiser? And if not, should the advertiser still be required to pay the same amount for unviewed seconds as for viewed seconds?

Viewer time spent with a commercial is something that we have not, up to now, been able to measure. The digital, on-demand marketplace changes this, both online and offline. And as click-to-play advertising techniques – overlays, bugs, tickers, telescoping and player skins – continue to be introduced as alternatives to pre-roll, viewer time spent will become more of an issue with more advertisers.

As well as an opportunity.

Obviously, any click-to-play solution requires the interested viewer to opt-in, which will limit the actual reach of the message. And reach, to a great degree, has been what has allowed agencies to justify the exorbitant fees that they have been able to charge for production.

Twelve thousand dollars per second is an easier pill to swallow when twenty million viewers are going to be exposed to the spot some 3+ times. But it becomes a cause for concern once advertisers know that only twenty thousand viewers actually clicked-in to view.

As reach is diminished by both control shifting to the viewer and the niche targeting that addressability offers, will advertisers still be able to afford to produce anything that anyone will want to spend time with?

Most are assuming that the quality of production will need to diminish.

Unfortunate, that.

After all, the digital marketplace finally offers the industry a way to have only interested viewers interact with commercials. And we, in turn, are going to provide them with inferior quality goods.

Which in time will only serve to limit their interest in interacting at all.

As for alternatives, while there are not many, there is one.

And that is to have agencies and the production community agree to share some of the risk with advertisers, to be paid a portion of their fee after the fact, based on how well their work engages the viewer.

In return, advertisers will need to agree to give their agencies more creative control.

It’s a trade-off that every advertiser that I have talked with to date is willing to make. They’re ready for change. As are those in the production community.

The holdup?

Three guesses.

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