Is Crispin The First To Figure It Out?

We were watching with great interest to see which ad agency would be the first to figure out what advertising's next financial model would be.

We figured the race was between BBDO, Goodby, Crispin, Wieden and TBWA. All extremely creative shops, all confident in their ability. One would certainly take the lead and show the way.

Today's news that Crispin has inked a deal with TiVo to receive second-by-second commercial viewing behavior data seems to make them the winner.

Up to now, it’s been only the media buying companies – Starcom and Interpublic Group – who have inked deals with TiVo to receive the second-by-second data. These companies were using the data to help their clients with their media buys – studying viewer retention rates during breaks, as well as the other general behavior of viewers.

Crispin, on the other hand, appears to be the first ad agency to undergo the MindChange necessary to grasp the fact that second-by-second data is a measurement of how well the creative is working, not how well the media is working.

Media is accountable for bringing viewers to the commercial. But once viewers click-in, the creative is accountable for keeping them there.

By discovering how well their commercials work at involving viewers, Crispin will be in the driver’s seat once advertisers realize that this second-by-second data can be monetized in a way that allows them to hold their ad agencies accountable.

How would a creative accountability model work?

Let’s say Crispin creates a two-minute commercial. The data comes back showing that viewers lost interest after the first ten seconds. That two-minute spot will be worth much less to the advertiser than one in which the viewers were involved for a minute and fifty-five seconds.

Who’s accountable for creating this involvement?

Well, that would be Crispin, wouldn’t it?

Now what if Crispin based part of their fee for creating the commercial on what the spot proves to be worth in the marketplace? In other words, they'd agree to be paid part of their fee after the fact.

The longer viewers watch, the more Crispin makes. The less involving the spot, the less they make.

Advertisers would be on board because a model of this sort allows them to hold their agencies directly and financially accountable for their creative efforts. And we know how much advertisers crave accountability.

Agencies, on the other hand, would see at it as a way for good work to be worth more than bad work. Suffice it to say this would eliminate many agencies from being fans of the model

It takes a confident shop, a talented shop, to directly base part of their fee on their creative ability.

Crispin qualifies. As do the four other shops mentioned earlier.

The interesting thing is that once these agencies start agreeing to base part of their creative fee on viewer time spent, the advertising industry will very quickly divide between those who will and those who won't.

There will be no more hiding. Or, offering of excuses. After all, the worth of a commercial will finally be determined by an objective observer.

The viewer.

(Besides TiVo, second-by-second commercial data can now be measured in over 35M homes offline and in over 59M homes online. Monetization models do exist that allow good work – involving work — to be worth more than bad work. What the industry has been waiting for is a leader, an agency confident enough to bet on their creative ability. It now appears as if it might be Crispin from the agency side. We’ll have to wait and see who steps up from the advertisers' side.)

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.

Ego.

Ego?

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?

Egonomics.

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?

Ego.

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.

Egonomics.

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

At least, not yet.

The Evolution Of User-Generated Advertising

As the idea of consumers spending their precious time making ads for brands loses some of its novelty, marketers have started looking for new ways to offer consumers a feeling of ownership with the brand.

To this end, one company, which will remain nameless, offered consumers the chance to be Chief Marketing Officer for a day.

As the then current CMO put it, “We started by offering consumers the opportunity be writer and art director for the day. And while at first that was plenty, we soon were hearing that they wanted more. Making the ads, while fun, was no longer enough. Consumers wanted to approve which ad would ultimately run. So, we thought, why not, what harm could there be in that?”

Upon hearing of this new trend, one competitor, in an obvious move of one-up-man-ship, offered consumers the chance to be CEO for the day. The response from consumers was that if one day was good, two days would be even better.

And as executive positions started to be held by more consumers through more marketing companies across the country, one marketer decided to forgo positions of power completely and just start paying people directly for using their products.

After all, they argued, if consumers were truly the owners of the brand, then they should make some money off of it.

As this obviously cut into their margins, the company quickly went out of business.

The good news is that both the CEO and CMO, while currently looking for employment, should be able to find new positions quickly.

At least, for a day or two.

The YouTube Dilemma. And Why It Will Affect All Digital Platforms.

Okay, so YouTube has finally found a way that may be acceptable (to most) to put advertising on their platform.

The cost to advertisers: $20 for every thousand viewers of the video. Not of the commercial mind you, but of the video on which the commercial will run as an overlay.

YouTube tells us that the click-in rate to the commercials themselves is anywhere from 2.5% to 5% of viewers of the video.

Let’s take those numbers and for purposes of discussion say that 100,000 watched the video in question. And we’ll take YouTube’s high number of 5% click-in to the commercial. That means that of the 100,000 viewers, 95,000 ignored the commercial. Or, in other words, only 5,000 started watching it.

And yet advertisers are required to pay for all 100,000 viewers, even when they're told by YouTube that only 5,000 will have any interest in their commercial.

As an advertiser, this would tend to stick in my craw. It’s like paying for a six-pack of beer, but knowing that five of the bottles of beer are already empty.

Not a good value.

The CPM model worked fine on broadcast TV because of a lack of data. In many ways, ignorance was bliss. Oh, yes, advertisers would buy 20M viewers knowing that not all were interested in their product or commercial. But advertisers would kid themselves into believing that the interested figure was much higher than 5%.

The best part was that there was no data to confirm how few were actually interested.

Now there is. And for YouTube to ask an advertiser to pay for 95,000 viewers that their data can prove will ignore the advertiser’s commercial is somewhat presumptuous.

So, okay, what’s the alternative? I mean, can’t it be argued that an impression is worth something, even if the viewer does not click-in to the commercial?

Yes. But all impressions are not created equal.

And an Advertiser-Initiated Impression is not worth as much as a User-Activated Impression. After all, a User-Activated Impression means that the user has also determined relevance, not just the advertiser.

Big difference.

So what if YouTube offered a new media metric?

Call it a Cost-Per-Click-Per-Thousand, or CPCPM. Obviously, it would need to make YouTube the same amount of money as a straight $20 CPM does now, but do it in a way that is less insulting than asking advertisers to waste 95% of their budget.

It could work like this.

Say 100,000 viewed the video. A straight $20 CPM would make YouTube $2,000. So, that’s the figure we need to hit.

We know, according to YouTube, that 5% may click-in to the commercial. So what if YouTube charged 1 cent for the 95,000 that didn’t click-in ($10 CPM) and 20 cents for every viewer that did?

Working under this model, YouTube would make $950 on the $10 CPM and $1,000 on the 20 cent cost-per-click. That totals up to $1,950, pretty much the same as the $2,000 they would make under a straight $20 CPM.

The difference is accountability.

Under the CPCPM model, the more people that click-in to the commercial, the more YouTube would make. The reverse would also be true.

In other words, the more targeted YouTube can make their platform, the less waste for the advertiser, the more the advertiser pays. This models also gives more value to a User-Activated Impression than an Advertiser-Initiated Impression, which, in my opinion, is as it should be.

The CPCPM metric could be displayed as a 20/10 CPCPM, with the first number referring to the cost-per-click price in cents and the second number referring to the cost per unviewed thousand in dollars.

Of course, the real issue here is a much larger one. And that is that the digital platform is about data. More of it then the industry’s current business models were designed to handle.

The current advertising financial infrastructure has been designed around waste. Advertisers had to pay for 20M viewers even when they knew, at least in their gut, that maybe only 2M might truly be interested.

It was the best we could do with the data we had.

The digital platform eliminates waste through knowledge. Yes, the commercial viewer numbers will be smaller because they’re actual numbers. But the fact is, it’s truly no different than it was before, except that now we have the data that reveals the truth.

As this data becomes more available, Marketing Managers will no longer be able to hide from the truth. Which means they will no longer be willing to pay for waste.

Nor should they.

On digital platforms we will know exactly how many started to watch the commercials. We should pay a premium for those that do. And much less for those that don’t.

We will also know how long they watch the commercials for. We should pay a premium for agencies that can deliver this viewer involvement. And less for those that can’t.

Agencies and media platforms can no longer hide behind the possibility of success.

They must deal with the actuality of results.

Worth can indeed be measured. And monetized.

Failure will no longer be lucrative.

It should prove interesting.

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.

Time Warner's Confusion

In an article running today in the NY Times, it was reported that Time Warner Cable is about to offer its customers a way to look back at programs they may have missed. This service will come at no charge.

The only catch is that viewers will not be able to zap through the commercials.

The argument put forward by Jeffery L. Bewkes, Time Warner President, is that "People are used to advertising. A good number of people like the advertising."

Mr. Bewkes is correct. A majority of people do like advertising. What Mr. Bewkes failed to mention is that what people don't like is the way that advertising is currently marketed to them. In other words, while they might like advertising, they don't like the way that it intrudes on their programs.

As mentioned previously on these pages, our belief is that people aren't actually skipping advertising. What people are skipping are interruptions. These interruptions just happen to be ads. If the industry would offer a way that advertising could still be presented with the program, but not interruptive to the program, it would prove to be a win/win for both advertiser and viewer.

Time Warner's confusion is not that dissimilar to others in the business who are selling their advertising space under the auspices that if can't be fast-forwarded through, than it must be being watched.

Right.

Just like I'm currently watching all the commercials on linear broadcast when they intrude on my programming.

The surprising thing, at least to me, is that advertisers are buying into this spiel. They must know that forbidding viewers from fast-forwarding doesn't have any correlation to engagement in the commercial.

In could, in fact, prove to be just the opposite. Nobody likes to do what they're forced to do.

The other troubling aspect of this article is that it indicates that the other cable companies - Comcast and Charter were mentioned - will probably be following suit and forbidding viewers from fast-forwarding through commercials.

So much for original thinking.

The future will offer two types of advertising. The first type will be as it is now - interrupting what the viewer is watching and mentally ignored by most. The second type will be more consumer-friendly advertising, where viewers will be allowed to opt-in to commercials that interest them.

As this second type will have a much smaller viewing audience, it will not be sold based on impressions, but rather on time spent with the message.

The sooner the industry starts experimenting with the latter, the faster the VOD platform will grow.

Progress comes from letting go of what was and reaching out for the new.

While Time Warner Cable calls their new service 'progress', it really is taking the cable industry two steps back.

If we're going to get out of this hole the TV industry has dug for itself, we first need to stop making it deeper.

At What Price Accountability?

The last post here - The Unspoken Truth - elicited some interesting reactions. Many were against time spent becoming a new measurement metric. There were some who still thought time spent would be the responsibility of the publisher or network.

Let me clarify that last thought first. Time spent is the responsibility of the agency that created the commercial, not the publisher. The publisher is accountable for how many people are exposed to the commercial. But in no way are they accountable for how long viewers are engaged in the commercial.

This is the most difficult MindChange to grasp. The fact that media data - currently in the hands of the publisher and/or platform operator - could be used for anything other than planning and buying media. That it can, in fact, be used to evaluate creative.

But that is the case. How long someone is engaged in a commercial is data that comes from the media in which the commercial ran. But this data can be used as the basis by which creative is evaluated, and, in my opinion, paid for in the future.

Publishers and platform operators should look at it as data that offers creative accountability, and, in turn, a completely new revenue stream for those who own the data.

Another reader mentioned that no agency would be willing to paid based on engagement if said agency didn't have creative control. It's a wise observation and, the fact is, that the cost of accountability to the advertisers is to give their agency more creative freedom.

Not complete freedom to do whatever they want, mind you. But once a script is approved by the advertiser, then the advertiser has to back off and let the agency produce that script in the way they think will be most engaging.

Does it require a higher level of trust between agency and advertiser?

Absolutely.

But this is something that I have found advertisers are willing to accept. Maybe it's because accountability is so desired by advertisers.

The ones that are dragging their feet are the agencies. It makes one wonder if it's because they don't have enough confidence in their own abilities.

If I was an advertiser, I think I'd challenge my agency.

"Here's the deal," I'd say. "I'll pay you based on how engaging the work is and in return, I'll give you complete creative freedom once I approve the script."

How many agencies do you think would jump on that offer?

Would yours?