Thursday, November 13, 2008

How Much Is 141 Days Of Engagement Worth To An Advertiser?

Let’s say that an advertiser purchases $10M worth of media at a $20 CPM. That advertiser will know how many impressions their $10M purchased.

What the advertiser won't know is how much time-spent with the brand that same $10M purchased for them. And, curious enough, most aren't asking for this information.

In the industry today, we know how much 50 million impressions will cost, and therefore, are worth to an advertiser. But how much are 141 days of time-spent with the brand worth to the advertiser? And, is more time-spent with the brand worth more to the advertiser than less time-spent with the brand?

All fair questions in the digital space. And, all questions that can now be answered.

Let’s say that a web publisher has 35 million unique vistors to his site every week. Let’s say that this publisher runs an advertiser's user-initiated, 60-second commercial on his site. By user-initiated, we mean that it’s not pre-roll or in-stream. The user needs to activate the commercial for it to play, and then has complete control over the commercial, i.e. users can stop the commercial and leave when they so desire.

Once viewers click into the commercial, or activate it, the digital data starts accumulating. Not only does the publisher know how many clicked-in to the commercial, the publisher also knows the average view duration of those that did.

Let’s say that the click-through rate on a :60 spot on this publisher’s site was 1%. One percent of 35 million is 350,000. (An insignificant number if one is dealing in impressions.) Let’s also say that of those 350,000 who activated the commercial, the average view duration was 35 seconds out of a possible 60 seconds.

In other words, the advertiser’s return on involvement for this commercial was 58%.

Now if we aggregate the time-spent with the commercial, 350,000 people each spending 35 seconds with the brand, total time-spent comes out to 12,250,000 seconds. Which in turn translates to 3,402 hours. Or, 141 days of brand engagement.

It sounds like a lot, doesn’t it? But, if people watched the full 60 seconds, the advertiser would have had 243 days of engagement. For, the same media costs.

In other words, it wasn’t the media, but the creative itself that cost the advertiser 102 days of engagement. Which means those 102 days are the responsibility of the creative agency that created the work.

Should advertisers hold their agencies accountable for this failure? Would you want to if were an advertiser?

Every impression has an element of time-spent that comes along with it. Acknowledging this, the question then becomes, is a 55-second impression more valuable than a 5-second impression?

The answer is that it depends, doesn’t it?

If the spot was sixty seconds long—which means that the opportunity to engage (OTE) was sixty seconds—then I think that most advertisers would argue that 55 seconds of engagement out of a possible 60 is better than 5 seconds out of a possible 60. With the former, they have 5 seconds of waste. With the latter, 55 seconds of waste.

Which is why we feel that it won’t be long before advertisers start aggregating time-sent with the message along with impressions.

Advertisers know how much an impression is worth. Well, at least they know how much an impression costs. After all, a non-engaged impression is really worth very little, isn’t it? But it still costs as much as an engaged impression, at least in media dollars.

In the Digital Marketplace, engagement is where true value lies. Which is why advertisers should at least know how much engagement they are getting.

And, at what price.

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