Tuesday, December 02, 2008

Addressing What’s Important About Addressable Advertising

There is an emerging school of thought that posits that consumers won't want to fast-forward through ads for products and services they really need or in which they have a deep interest.

Hence the push for addressable advertising – the ability to send cat food commercials to cat food owners and not to dog food owners.

Some are saying that addressable advertising will lead to the renaissance of the TV business. Usually the ones saying that are those that will make a ton of money if addressable advertising proves to be successful.

Canoe Ventures is currently talking a lot about addressable advertising. And they have a hell of a good talker in David Verklin. Having seen David spin his magic web of words, I think he could sell shoes to a legless man.

We’ll soon find out, as it appears television is looking for some legs to stand on.

Those disagreeing with David’s way of thinking, of which I am one, will argue that tests have not proven that relevancy defeats the urge to channel surf or fast-forward through the commercials on DVRs. Tom Rogers, the head of TiVo, has stated that relevancy has little impact on fast-forwarding. He should know, as TiVo is the company that really introduced fast-forwarding.

Mr. Rogers sounded the death-knell for intrusive advertising at his talk at the ANA conference in October. Not surprisingly, TiVo offers a non-intrusive advertising alternative.

Fortunately, facts do exist and they look a little like this. In the next two to three years, 50 to 60 million homes will have DVRs. When folks watch programming on a DVR, they fast-forward through 60% of the commercials.

If you happen to have a DVR at home, examine your own behavior. Do you stop at each commercial in the five-spot block of commercials to see if it’s relevant to you? Or, do you zap through all five commercials to get back to your program in around eight seconds?

I know in my case, it's the latter.

Oh, I do watch commercials. But on my own terms – not when they interrupt my programs. TiVo will tell you that the opt-in rate on their Showcase (their non-intrusive advertising alternative) is around 5%. VideoEgg claims a 2 - 9% opt-in rate on their overlays ads. I think we can forgive both companies for exaggerating. After all, they do have to make a living.

But what is true is that people do opt-in to ads. And that is where the relevancy of addressable advertising will prove its worth. Sending dog food ads to dog owners and cat food ads to cat owners in a non-intrusive format, should increase the number of people opting in. What it won’t do is decrease the numbers that are opting-out if the ads continue to intrude.

What would make the number of those opting in even larger is if they knew that they could also leave a commercial when they want to. What we have found is that people don’t mind investing time when they – not the advertiser - control the time invested.

But that’s the difficult part for advertisers to accept. This whole idea of giving complete control to the viewer. Letting them leave when they want. Of course, advertisers don’t want viewers to leave, period. So they punish them by taking away control.

Whom the advertisers should be punishing are the creative agencies that could not maintain the interest of someone who opted-in in the first place. My God, if a viewer opts-in, they’ve initiated the interaction with the brand. They’re a viable lead. If they opt-out at say, five seconds, then I would argue that the agency did the advertiser a huge disservice.

When the agency does a poor job, it's they that should be punished, not the viewer.

On the other hand, if the agency engaged the viewers enough to stay for the whole spot, well, then they should be rewarded.

In my opinion, both punishment and reward should be financially based.

Giving the consumer complete control over how much of a commercial they watch and paying the creative agency on that basis, is what will lead to a creative renaissance.

All this talk about addressability is nice, but it misses what’s important. Yes, you can lead a consumer to a commercial, but involving them in the commercial is another story.

And, in my opinion, that’s what the industry needs to start addressing.

1 comment:

  1. Hey.. it's Troy Young from VideoEgg. I could not agree with you more. I call it advertising in the Demand Age and i think it is so fundamental that it will shake the foundation of media economics and ad experience / creative development.

    Happy to talk about this more if you are interested. Our business is build around the concept and i have a very good sense of the math behind it.