Tuesday, November 18, 2008

A New Monetization Model: When This Stops Moving, You Stop Paying.

The video below is a Coca-Cola commercial. Feel free to play it if you like. But before you do, let me explain that it's not so much the commercial itself that I'm going to be talking about, as it is the progress bar below the commercial. And why the industry needs a new monetization model that allows the advertiser to stop paying once the progress bar stops moving.



If you start the commercial you'll notice that at the end of the progress bar it indicates that the commercial is one minute and thirty-two seconds long. Some of you will watch all of the commercial once you start playing it. Some of you will stop after only a few seconds. After all, for some of you, it will be of interest. For others, not.

According to YouTube, people have already chosen to start to watch this commercial 1,085,581 times. YouTube doesn't reveal what the average view duration has been.

Does YouTube have this information? Sure they do. Have they monetized this information? Not to my knowledge. Makes you wonder why, doesn't it? After all, most would argue that the longer people watch, the more valuable the commercial is to the advertiser. Which means length of view certainly has value.

What's more, this commercial is 90 seconds long. Which means, somebody must have thought 90 seconds were necessary to achieve whatever the objective was that the commercial was attempting to achieve. Otherwise, they would have made the commercial shorter, wouldn't they?

Common sense alone seems to say that the longer people watch, the better the return for the advertiser is in regards to monies spent on producing the commercial. After all, if I were Coke, I'd hate to pay full fare for all 90 seconds if the data came back saying people, on average, only watched ten of those seconds. You'd think the agency that created the commercial should be accountable for some of that. No doubt they were the ones pushing for 90 seconds.

Which brings us back to the monetization model that is based on the philosophy that when the progress bar stops moving, the advertiser should be able to stop paying. Not for media, mind you. The media that the commercial is running in really has nothing to do with how long people decide to watch. (Obviously, this last statement is only true when the viewer is in control. When the distribution platform disables the viewer's ability to stop a commercial when they want, they also disable this monetization model.)

No, who the advertiser should be able to stop paying when the progress bar stops moving is the agency that created the commercial. Currently, most advertisers pay their agency for the amount of time it takes to create the commercial. Doesn't it make it make more sense to pay for the amount of time viewers spent watching it?

Think of it as paying based on viewer time-sheets versus agency time-sheets.

Possible?

Absolutely. It's called Viewer Time-Spent Compensation (VTS for short). And the reason it's important is this.

As fragmentation continues and control increasingly shifts to the viewer, the number of people that will participate in an advertiser's message will become smaller. After all, as advertising becomes more non-intrusive in its delivery, only the interested will start watching in the first place. And, it's exactly because they are interested that the quality of the message, the production values and the emotional impact cannot afford to be lessened by reducing the amount advertisers are willing to pay for production. But that's exactly what will happen if we keep justifying the cost of production based on audience size.

Which means as targeting methods improve, which is just another way of saying the size of the audience will get smaller, we need to start justifying production costs based on something other than impressions. And, at least to me, effectiveness seems to be a pretty smart way to do that. If people start to watch and stop shortly thereafter, then that's a commercial that advertisers will find difficult to justify as being effective.

For a commercial to have any chance of achieving its objective, it at least needs to be viewed. View-duration data tells us whether it was or not. Viewer Time-Spent Compensation lets advertisers pay based on this effectiveness metric. Or, in other words, paid based on view-duration data. The very same data that YouTube and many other online distributors already have.

If agencies were paid based on how long people actually view their commercials, do you think the quality of the commercials would improve?

If your answer is yes, then you're starting to see how accountability can lead to a new creativity.

And how a creative renaissance is indeed not just a possibility, but a necessity, as we move forward.

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