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.

Is TiVo Missing The Point?

TiVo recently released some new data that indicates which kinds of commercials stop people from zapping through ads. What the TiVo data indicates is that the bare-bones, direct-response model works well, as does the high-production value approach, also known as movie trailers.

Two opposite ends of the spectrum, indeed.

According to Todd Juenger, VP-General Manager of TiVo Audience Research and Management, "there are no obvious winning strategies."

I'm afraid to ask, Todd, but does this mean that there are only losing strategies? Not a good selling point if what one is trying to sell is advertising space.

But what I found to be the most interesting quote from the TiVo camp was this - "I'm sure creative has an important role, but it's the relevance of the message to the audience that could be the deciding factor".

Relevance, huh?

So what if the most irrelevant (and irritating) thing about advertising is the way that it interrupts the programming that we are watching?

Could we make advertising more relevant by making it less intrusive?

What if we placed commercials adjacent to the programming, waiting to be activated only by those viewers who find the product or category to be relevant to their particular needs?

Once viewers click-in to a commercial that they have determined to be relevant, then something very interesting happens. The creative becomes a greater factor, if not the only factor, that determines time-spent with the commercial.

This user-activated way of watching commercials appears to be the way the web is going. A few cable operators, Insight, in particular, are also treating their viewers with more respect by letting them determine relevance.

The problem with user-activated advertising is that only the interested will click-in, which will require a new way to buy and sell advertising.

The CPM model will not work effectively. After all, CPM is based on waste. Allowing viewers to click-in to commercials of interest means that waste only occurs when the viewer clicks-out before watching the entire spot.

What does become a more valuable metric with user-activated advertising is time-spent with the message. Fortunately, time-spent data is available not just through TiVo, but also through many online platforms today.

There are many in the industry who feel that second-by-second data will lead to a complete breakdown in the way that advertising is bought and sold.

And, I would have to agree.

But it won't break down in the way that most are expecting. As everyone seems to be trying to determine what will replace CPM from a media perspective, I feel a bigger MindChange, or perspective-shift is needed.

One that can understand and accept that time-spent with the message is not a media issue at all, but rather, a creative one.

And that in the Digital Marketplace, the ad agencies that can create more time-spent will make more money than those that create less time-spent.

Yes, the role of the media agency will still be to target relevance.

But, by no means, should they be accountable for creating it.

Becoming Fluent In The Language Of Time Spent Economics

The Nielsen Net/Ratings announcement this week that they have stopped ranking web sites by page views and will instead rank them by 'time spent', appears to further the argument that the currency of the Digital Economy is changing.

While we used to buy and sell impressions, and talk in terms of reach and frequency and GRPs, we will soon all need to become fluent in the new language of time spent economics.

The value of time spent lies in the fact that time is finite. Throughout history, economies have been based on what is most scarce. In regards to the creation and running of commercials in the Digital Marketplace, this has enormous implications.

Because time is finite, the more time a consumer spends with one brand's messaging, the less time they will have available to spend with the competitor's messaging. If the messaging is indeed persuasive, the consumer will also find less need to spend time with the competitor's messaging.

As time spent is measurable, ad agencies will be able to be paid after the fact - based on how well they created time spent - rather than how much time they spent creating the work itself.

What this translates to is an evolution from labor-based fees regardless of results, to results-based (time spent) fees regardless of labor.

The question that was, up to now, being vigorously debated, was the value of an engaged viewer. A study released by OMD earlier this week seemed to shed some light on this. According to the study, an engaged viewer is eight times more valuable to an advertiser than a non-engaged viewer.

What's more, the study also indicated that 'engaged time spent' increases measurable advertising return on investment by 15% to 20% over models that only factor in GRPs.

Which means that a Return on Involvement does indeed start to provide advertisers with a healthy Return on Investment. One ROI leads to the other.

And why as this new currency of time spent - arguably the Currency of Creative - continues to evolve, so to will the language in which we will need to communicate. Already 'how many' is being replaced by 'how long'. The meaning of the word 'reach' has changed from a media term to a creative term. Did you reach them now means did you engage them?

The learning curve will be steep for many.

Translators will, no doubt, be in high demand.

An Investment In Involvement

In a recent research study completed by Omnicom Group's OMD, it was determined that a viewer's engagement with a commercial had a much greater impact on ROI than a viewer's engagement with the program in which the commercial ran.

In other words, the more attention paid to the commercial itself, rather than just to the program that housed the commercial, the greater the chance of selling something to someone.

While this seems like a fairly straightforward observation, its importance should not be overlooked for two reasons.

The first being that it starts to clearly delineate the role of media from the role of creative. The current discussion around engagement has been muddied by the disagreement over who creates it - the program that carries the commercial. Or, the commercial itself.

As the OMD study indicates, while both are a factor, engagement in the commercial carries much more weight than engagement in the program.

The second reason why this study is important is that it starts to show a direct correlation between a return on investment to the advertiser and a return on involvement in the commercial.

According to OMD, factoring in engagement increased an advertiser's return on investment by 15% to 20% over models that factor in GRPs alone.

Advertisers, you would think, would be quite interested in learning how they can best measure a return on involvement. OMD used copy-testing results to measure a viewers' involvement in the commercials.

Fortunately, the digital marketplace offers a more accountable way to measure involvement - time spent with the commercial. Time spent can be measured on a per use basis. And, to the second.

As it has now seemingly been verified that time spent with a commercial offers value, it's only a matter of time before time spent is monetized so that advertisers can pay more to agencies that deliver better value than agencies that don't.

After all, the Digital Economy, unlike the mass media economy, isn't about size.

The Digital Economy is about relationships.

And relationships are about time spent.

Need proof?

Go ask your spouse.

What If Scale Doesn't Scale?

I was fortunate enough to be invited to be a panelist at OMMA Video last week in New York.

It offered me the opportunity to see a lot of the new online options for displaying video, including commercials. Of particular interest were Vibrant Media and eyewonder.

As the different ad insertion companies presented their capabilities throughout the day, it became clear that, outside of the two mentioned above, there were more similarities than differences.

Success for each company was dependent, for the most part, on the same thing.

Scale.

And I started to wonder what happens in this new Digital Economy if the concept of scale itself, doesn't scale?

The traditional advertising economy has been based on scale, or size. We bought and sold size in the form of impressions, usually on a CPM basis.

Many of these new ad insertion companies are also selling advertising space based on a CPM basis. The concern is the fragmentation of the viewing audience.

With only 24 hours in a day, and so many more options as to where one can spend their time, will scale still be able to scale?

Perhaps what we need to do is to stop thinking only about how many come to the site, or the advertising message itself, and also start to think about how long a viewer interacts with the message.

View duration data is available from most (not all) of the companies I chatted with.

Incorporating time spent data with impression or click-through rates would offer a new definition of scale based on the relationship formed with the brand versus just the number of people who come to the site.

The traditional advertising model was based on size, so the currency was impressions.

The Digital Economy is based on relationships. Relationships are about time spent.

A few of the companies seemed more cognizant of this than others. Not surprisingly, I see them as being first to the future.