What does it cost to persuade someone?
Or, to put it another way, what does it cost to create a great commercial? Some will argue that the most we can hope for from a commercial these days is to create awareness. That persuasion is a talent that died out with the likes of Bernbach and Riney. But I think that’s giving short-shift to the talents of those in today’s most creative agencies.
Besides, in my opinion, the job of creating awareness really falls in the lap of media. After all, awareness is about how many. Persuasion, on the other hand, is all about how long. The reason being that commercials come with something called “view duration.”
There is a time element to a commercial.
In other words, commercials don’t just accrue eyeballs. Commercials also accrue time-spent. Or, not.
If someone watches just five seconds of a commercial, chances are they will be as equally aware of the product as if they watched all thirty seconds. But, by no means, as equally persuaded.
If awareness is the objective, five-second spots should suffice.
But with thirty seconds, or sixty seconds, or even longer, the objective is something beyond awareness.
A sale, perhaps?
Ultimately, yes. But most advertising serves as a guidepost on the road to a sale. Unless it’s a form of direct marketing, the advertising is usually not designed to be the end of the road itself.
I had one creative person, one of the two that I respect in the business, tell me that the purpose of each second in a commercial is to make the sure that viewers want to watch the next second.
After all, if a commercial has any chance of persuading anyone of anything, logic seems to indicate that it will more successful if more of it is watched rather than less.
So, back to the original question. What does it cost to persuade someone? First, we need to break persuasion into its component parts: Manufacturing and distribution.
While it seems anyone and everyone is talking about distribution costs, little is mentioned regarding the cost of manufacturing. True, people are talking about how digital technology is making it much cheaper to physically create thirty seconds of content.
But the physical cost of creating thirty seconds of content, and, actually creating persuasion, are two very different things.
As the viewing audience continues to fragment, or self-select what they want to watch, advertisers are hoping to reduce the physical cost of creating commercials for those smaller viewing audiences. It’s difficult to justify a $500,000 production budget for only 200,000 actual viewers.
But, at the same time, advertisers should not assume that the cost of creating persuasion comes down as well.
In fact, it could be argued that it should go up.
You see, persuasion is an opportunity cost. Viewers today can self-select the product and brand, and therefore the commercials, that they’re interested in.
So when someone clicks in to watch your commercial, the opportunity to convince them to head further down the road to purchase is enormous. After all, they wouldn’t have clicked in if they were initially interested.
In other words, it is their intent that is moving the process forward, rather than the advertiser’s.
Important? You bet.
How do advertisers know if their commercials are actually persuading anyone? They don’t, really. All they know is that the odds increase as more of the spot is watched.
And, perhaps that is where advertisers should start. By rewarding their agencies based on how well they create viewer time-spent with the commercial.
Ultimately, the agency will be sacked if sales don’t increase. And, rightly so. But that’s a long-term adjustment.
Short-term, digital view-duration data allows advertisers to reward those agencies that seem to be better at taking advantage of the opportunity presented to them.
Don’t get me wrong. I’m not saying that just because a commercial is watched, sales will increase.
But, I would say, a watched commercial certainly improve the odds over a commercial that isn’t watched.
Wouldn’t you?
Tuesday, July 29, 2008
Sunday, July 27, 2008
If It's Not Social Media, Is It Anti-Social Media?
My hat’s off to whomever came up with the term “social media. ”After all, by name alone, it starts to immediately position all other media as “anti-social.”
If you can reposition your competition with just your name, then, chances are, it’s a pretty good name.
But exactly what is the definition of social media? It seems to include a variety of different platforms—Facebook, MySpace, LinkedIn, Imeem, Microsoft’s Windows Live Spaces, YouTube, Flickr, Twitter—all very different, to be certain.
So maybe social media is best defined by what it isn’t, rather than by what it is.
What it isn’t is media that intrudes. Or, from the user’s perspective, it’s media that they have complete control over.
But to be social, media needs to have a “social” aspect to it. I guess this means that more than one person can be using it at the same time. Or, that two-way conversations can take place in real time. Which means that the first social media platform was probably the telephone.
Maybe what is meant by social media is that it’s media that is more polite or respectful to the user in the way that it offers up advertising. In other words, the advertising doesn’t intrude or interrupt. Rather, it lets users approach it on their own terms.
I’ve often said that intrusive advertising was developed to serve the intent of the advertiser. Their intent is to interrupt what viewers are enjoying and, hopefully, capture their attention and interest.
That few advertising messages actually achieve this objective has not seemed to stop advertisers from pursuing the practice. Wasting money on the uninterested is apparently a necessary evil on the road to brand riches.
The fact is no one really enjoys being interrupted. And yet, the preponderance of media dollars are spent to do just that.
It has always amazed me that advertisers would do exactly what people don’t want, before attempting to sell them something that they do want.
Then again, maybe I’ve completely missed the boat here. Maybe social media means that we’re now supposed to create advertising that doesn’t try to sell people things. As if the act of selling, is, in itself, anti-social.
There was an interesting study conducted in New Zealand recently that showed that when people saw advertising for something that they were interested in, they didn’t consider it to be advertising. If they were interested in the product being advertised, the advertising was perceived as information.
What this seems to imply is that people define “advertising” as the practice of selling them things that they are not interested in.
Which indicates that it’s not so much advertising that people don’t like, but advertising about products that they are not interested in.
If you want to know what works and what doesn’t work in social media, may I suggest the following. At the next social event you’re at, where the conversation is flowing as rapidly as the cocktails, interrupt everyone when they’re in the middle of whatever story they are telling. You know, just butt in. Just like how most advertising still works today.
Take note of the reactions.
What you’ll see is that being social rather than anti-social isn’t so much a mystery as it is common sense.
Whether you’re talking about behavior at a party.
Or, in media.
If you can reposition your competition with just your name, then, chances are, it’s a pretty good name.
But exactly what is the definition of social media? It seems to include a variety of different platforms—Facebook, MySpace, LinkedIn, Imeem, Microsoft’s Windows Live Spaces, YouTube, Flickr, Twitter—all very different, to be certain.
So maybe social media is best defined by what it isn’t, rather than by what it is.
What it isn’t is media that intrudes. Or, from the user’s perspective, it’s media that they have complete control over.
But to be social, media needs to have a “social” aspect to it. I guess this means that more than one person can be using it at the same time. Or, that two-way conversations can take place in real time. Which means that the first social media platform was probably the telephone.
Maybe what is meant by social media is that it’s media that is more polite or respectful to the user in the way that it offers up advertising. In other words, the advertising doesn’t intrude or interrupt. Rather, it lets users approach it on their own terms.
I’ve often said that intrusive advertising was developed to serve the intent of the advertiser. Their intent is to interrupt what viewers are enjoying and, hopefully, capture their attention and interest.
That few advertising messages actually achieve this objective has not seemed to stop advertisers from pursuing the practice. Wasting money on the uninterested is apparently a necessary evil on the road to brand riches.
The fact is no one really enjoys being interrupted. And yet, the preponderance of media dollars are spent to do just that.
It has always amazed me that advertisers would do exactly what people don’t want, before attempting to sell them something that they do want.
Then again, maybe I’ve completely missed the boat here. Maybe social media means that we’re now supposed to create advertising that doesn’t try to sell people things. As if the act of selling, is, in itself, anti-social.
There was an interesting study conducted in New Zealand recently that showed that when people saw advertising for something that they were interested in, they didn’t consider it to be advertising. If they were interested in the product being advertised, the advertising was perceived as information.
What this seems to imply is that people define “advertising” as the practice of selling them things that they are not interested in.
Which indicates that it’s not so much advertising that people don’t like, but advertising about products that they are not interested in.
If you want to know what works and what doesn’t work in social media, may I suggest the following. At the next social event you’re at, where the conversation is flowing as rapidly as the cocktails, interrupt everyone when they’re in the middle of whatever story they are telling. You know, just butt in. Just like how most advertising still works today.
Take note of the reactions.
What you’ll see is that being social rather than anti-social isn’t so much a mystery as it is common sense.
Whether you’re talking about behavior at a party.
Or, in media.
Wednesday, July 23, 2008
EPO Hits Advertising
If you’ve been following the Tour de France, you know about the EPO scandal. EPO is a performance-booster that riders are taking to enable them ride stronger, longer.
In the world of advertising, EPO is starting to take on a meaning all its own - Engagement Per Opportunity. Every time an advertiser runs a commercial, that commercial registers a certain EPO. If it's a thirty-second spot, the maximum EPO would be thirty seconds. For a sixty-second spot, the maximum EPO would be sixty seconds.
Unlike the riders on the Tour, advertisers are looking for a high EPO from those that click-in to watch their ads. A low EPO means that the advertising wasn’t very involving.
In other words, a lost opportunity.
The question that’s now starting to be asked is who’s responsible for EPO? Is it the platform on which the advertising runs? Or, the programming content, which the advertising is running alongside or in? Or, a third option, the agency that created the advertising?
It is my contention that the platform is only accountable for offering viewers the opportunity to click-in to the advertising. In other words, the platform gives the viewer control. But by no means are platforms responsible for how long the advertising engages those that decide to click-in.
The programming content makes sure that those who might be interested in the advertising message are there in sufficient numbers to click-in to the advertising. But they, too, are not responsible for how long the advertising engages the viewer.
Which leaves only the agency that created the advertising responsible for EPO.
You can’t really measure the EPO of advertising that intrudes – pre-roll or in-stream. EPO can only be accurately measured with advertising that viewers can start when they want. And, stop when they want.
Maybe some day the ad industry will be able to measure the EPO of intrusive advertising. That could happen now if viewers were allowed to fast-forward or opt-out of intrusive advertising. But, in most instances, that just isn’t the case.
The reason is simple and well known by those that sell advertising space. The EPO of intrusive advertising would be quite low if viewers were allowed to leave when they wanted. Which in turn would make selling that space more difficult.
Of course, forced-viewing does offer its own form of EPO, but it’s more along the lines of Entrapment Per Opportunity rather than Engagement Per Opportunity. Which, when you think about it, makes it a form of cheating, not unlike those caught using EPO on the Tour.
At least the Tour is saying, “Enough is enough,” and is diligently trying to clean up its act, before fans abandon the race forever.
Which is a lot more than we can say for the ad business.
In the world of advertising, EPO is starting to take on a meaning all its own - Engagement Per Opportunity. Every time an advertiser runs a commercial, that commercial registers a certain EPO. If it's a thirty-second spot, the maximum EPO would be thirty seconds. For a sixty-second spot, the maximum EPO would be sixty seconds.
Unlike the riders on the Tour, advertisers are looking for a high EPO from those that click-in to watch their ads. A low EPO means that the advertising wasn’t very involving.
In other words, a lost opportunity.
The question that’s now starting to be asked is who’s responsible for EPO? Is it the platform on which the advertising runs? Or, the programming content, which the advertising is running alongside or in? Or, a third option, the agency that created the advertising?
It is my contention that the platform is only accountable for offering viewers the opportunity to click-in to the advertising. In other words, the platform gives the viewer control. But by no means are platforms responsible for how long the advertising engages those that decide to click-in.
The programming content makes sure that those who might be interested in the advertising message are there in sufficient numbers to click-in to the advertising. But they, too, are not responsible for how long the advertising engages the viewer.
Which leaves only the agency that created the advertising responsible for EPO.
You can’t really measure the EPO of advertising that intrudes – pre-roll or in-stream. EPO can only be accurately measured with advertising that viewers can start when they want. And, stop when they want.
Maybe some day the ad industry will be able to measure the EPO of intrusive advertising. That could happen now if viewers were allowed to fast-forward or opt-out of intrusive advertising. But, in most instances, that just isn’t the case.
The reason is simple and well known by those that sell advertising space. The EPO of intrusive advertising would be quite low if viewers were allowed to leave when they wanted. Which in turn would make selling that space more difficult.
Of course, forced-viewing does offer its own form of EPO, but it’s more along the lines of Entrapment Per Opportunity rather than Engagement Per Opportunity. Which, when you think about it, makes it a form of cheating, not unlike those caught using EPO on the Tour.
At least the Tour is saying, “Enough is enough,” and is diligently trying to clean up its act, before fans abandon the race forever.
Which is a lot more than we can say for the ad business.
Monday, July 21, 2008
If Scale Goes, What Do We Aggregate?
Don’t know if you saw Joe Marchese’s recent article. In it he quoted Dr. Augustine Fou, senior vice president/digital strategist, MRM Worldwide. Dr. Fou was giving a talk focusing on understanding social media’s implications for the agency business.
In the talk, Dr. Fou went so far as to say the following, “But ‘scale’ is not necessarily as important as it once was. Advertisers coming from a world where ‘reach and frequency’ was a success metric need to realize that in this new world, scale is out and impact is in.”
“In other words,” Dr. Fou continued, “buying billions of impressions online—where click-throughs amount to no more than a rounding error, and the number of people who recall seeing the ad, let alone remember the message in the ad, can hardly be measured on a logarithmic scale—is not impactful.”
Thank-you, Dr. Fou. Truer words were never spoken.
So, the question becomes, how do we start to aggregate impact?
According to the statistics, the amount of time that people spend in front of screens is increasing, while the number in front of any particular piece of content at one particular time is decreasing.
The industry’s established models were designed to aggregate what is becoming a rapidly decreasing base.
What is needed are models designed to aggregate what is increasing – time-spent in front of screens.
Screen time is replacing a show’s time as something that advertisers should be targeting.
If we start to aggregate that, then perhaps we can start to aggregate impact.
In the talk, Dr. Fou went so far as to say the following, “But ‘scale’ is not necessarily as important as it once was. Advertisers coming from a world where ‘reach and frequency’ was a success metric need to realize that in this new world, scale is out and impact is in.”
“In other words,” Dr. Fou continued, “buying billions of impressions online—where click-throughs amount to no more than a rounding error, and the number of people who recall seeing the ad, let alone remember the message in the ad, can hardly be measured on a logarithmic scale—is not impactful.”
Thank-you, Dr. Fou. Truer words were never spoken.
So, the question becomes, how do we start to aggregate impact?
According to the statistics, the amount of time that people spend in front of screens is increasing, while the number in front of any particular piece of content at one particular time is decreasing.
The industry’s established models were designed to aggregate what is becoming a rapidly decreasing base.
What is needed are models designed to aggregate what is increasing – time-spent in front of screens.
Screen time is replacing a show’s time as something that advertisers should be targeting.
If we start to aggregate that, then perhaps we can start to aggregate impact.
Wednesday, July 16, 2008
Creative 3.0
It was a high-level meeting. In attendance from the client side, the three C’s—CEO, CMO and CFO. Across the table, from the agency side, sat the president and the Executive Creative Director.
Five people. Small. Intimate. The size a meeting should be if things stand a chance of getting done.
The topic of discussion centered around two “C” words—compensation and creative.
The CEO requested the meeting after reading the recent ANA survey on accountability between agencies and marketers. Or, lack thereof.
He led off with what I found to be a surprising statement. “Let’s be clear,” he said to the president. “I want nothing more than for your agency to make an enormous amount of money.”
You could see the president of the agency visibly relax. Usually, meetings regarding compensation, start off on a much less positive note.
“That said,” the CEO continued, “I need you to earn it. Not through the amount of effort that you expend. I truly have no interest in how hard you work. Where my interest lies is in how well your work ends up working for me.”
“You’re talking about sales,” the agency president nodded, in anticipation of the answer.
“No,” the CMO interjected. “I’m accountable for sales. What we’re talking about is something that we’re calling “Creative 3.0.”
For the first time, the Executive Creative Director looked awake. “Creative 3.0?” he said. “Excellent. You know, we’ve been meaning to talk to you about gaming.”
The CFO, strictly an observer until now, shook his head. “Creative 3.0 isn’t about the type of creative that you do. Rather, it’s about how you’re paid for it.”
“There seems to be two schools of thought floating around,” said the CMO. “The first is that we continue to attempt to aggregate eyeballs. This is our media agency’s answer. But with the fragmentation of the audience and the addressable targeting techniques now available, we feel that’s a losing proposition. The second is to accept the fact that the digital marketplace is less about how many people see your messaging and more about how much time they spend with your messaging.”
“We feel,” added the CEO, “that the more time consumers spend with our brand, the more likely they are to buy our product. It’s a theory, granted. But one that we’re willing to invest in.”
“Which means,” the CFO joined in, “we’d like to pay you in direct correlation to how well you involve viewers in the messages that you make for us.”
Silence.
“Obviously,” the CMO interjected, “we’re only talking about the video messaging that you create and that we run on digital platforms. The view duration metrics that we’re already accumulating let us know how well the work is working at holding viewers’ interest and attention.”
“Well, if that’s the case, it certainly sounds like gaming would be the way to go,” the ECD said, hopefully.
“Yes, it could be a game,” the CMO replied. “But most likely, not. Don’t forget that you’re in the persuasion business. A lot of agencies have started to believe that presence, putting the product in a game, for instance, is the new persuasion. We’re not buying that. We hired you to create involving stories about our brand that persuade people to consider our product. That’s what you’re good at. We thought you’d be happy if we paid you based on what you’re good at.”
“But persuasion isn’t, well, it isn’t exactly easy. Especially in thirty seconds,” said the ECD.
“Yes, we know,” was the CMO’s reply. “The good news is that, on the digital platform, you can take as long as you want to persuade someone.”
“So, we could take like three to four minutes?” asked the president.
“Absolutely,” replied the CFO. “But please remember that part of your pay will be contingent on how well you maintain a viewer’s interest for those three to four minutes.”
“If you do maintain interest,” said the CEO, “and, as I mentioned at the start of this meeting, we will pay you very well indeed. If you don’t, well…we receive little value, hence you receive little value.”
“Ouch,” said the agency president.
“Welcome to the new world of digital realities,” said the CFO.
“In essence, you want to pay us based on how good we are at involving viewers in our stories,” said the ECD.
“Correct.”
“And if sales don’t go up?” inquired the president.
“If you have come up with what we all feel is a persuasive story, and we then let you create it in the way that you feel it should be done, and the data says that people did indeed watch it, then you’ve done what we’re paying you to do. Sales are not your responsibility anymore,” said the CMO. “They’re mine.”
“Creative 3.0 is about paying for your creative efforts based on viewer time-spent with your creative outcome,” said the CFO.
“You realize that it’s going to change the way that we create what we create,” said the ECD.
“We certainly hope so,” said the CMO. “The digital platform needs new ad models and new thinking. By changing the way you’re compensated, we’re hoping to change the way that you approach the platform.”
“Which,” added the CEO, “is better than changing agencies. Wouldn’t you agree?”
“Oh, yes,” said the agency president. “Oh, yes.”
Five people. Small. Intimate. The size a meeting should be if things stand a chance of getting done.
The topic of discussion centered around two “C” words—compensation and creative.
The CEO requested the meeting after reading the recent ANA survey on accountability between agencies and marketers. Or, lack thereof.
He led off with what I found to be a surprising statement. “Let’s be clear,” he said to the president. “I want nothing more than for your agency to make an enormous amount of money.”
You could see the president of the agency visibly relax. Usually, meetings regarding compensation, start off on a much less positive note.
“That said,” the CEO continued, “I need you to earn it. Not through the amount of effort that you expend. I truly have no interest in how hard you work. Where my interest lies is in how well your work ends up working for me.”
“You’re talking about sales,” the agency president nodded, in anticipation of the answer.
“No,” the CMO interjected. “I’m accountable for sales. What we’re talking about is something that we’re calling “Creative 3.0.”
For the first time, the Executive Creative Director looked awake. “Creative 3.0?” he said. “Excellent. You know, we’ve been meaning to talk to you about gaming.”
The CFO, strictly an observer until now, shook his head. “Creative 3.0 isn’t about the type of creative that you do. Rather, it’s about how you’re paid for it.”
“There seems to be two schools of thought floating around,” said the CMO. “The first is that we continue to attempt to aggregate eyeballs. This is our media agency’s answer. But with the fragmentation of the audience and the addressable targeting techniques now available, we feel that’s a losing proposition. The second is to accept the fact that the digital marketplace is less about how many people see your messaging and more about how much time they spend with your messaging.”
“We feel,” added the CEO, “that the more time consumers spend with our brand, the more likely they are to buy our product. It’s a theory, granted. But one that we’re willing to invest in.”
“Which means,” the CFO joined in, “we’d like to pay you in direct correlation to how well you involve viewers in the messages that you make for us.”
Silence.
“Obviously,” the CMO interjected, “we’re only talking about the video messaging that you create and that we run on digital platforms. The view duration metrics that we’re already accumulating let us know how well the work is working at holding viewers’ interest and attention.”
“Well, if that’s the case, it certainly sounds like gaming would be the way to go,” the ECD said, hopefully.
“Yes, it could be a game,” the CMO replied. “But most likely, not. Don’t forget that you’re in the persuasion business. A lot of agencies have started to believe that presence, putting the product in a game, for instance, is the new persuasion. We’re not buying that. We hired you to create involving stories about our brand that persuade people to consider our product. That’s what you’re good at. We thought you’d be happy if we paid you based on what you’re good at.”
“But persuasion isn’t, well, it isn’t exactly easy. Especially in thirty seconds,” said the ECD.
“Yes, we know,” was the CMO’s reply. “The good news is that, on the digital platform, you can take as long as you want to persuade someone.”
“So, we could take like three to four minutes?” asked the president.
“Absolutely,” replied the CFO. “But please remember that part of your pay will be contingent on how well you maintain a viewer’s interest for those three to four minutes.”
“If you do maintain interest,” said the CEO, “and, as I mentioned at the start of this meeting, we will pay you very well indeed. If you don’t, well…we receive little value, hence you receive little value.”
“Ouch,” said the agency president.
“Welcome to the new world of digital realities,” said the CFO.
“In essence, you want to pay us based on how good we are at involving viewers in our stories,” said the ECD.
“Correct.”
“And if sales don’t go up?” inquired the president.
“If you have come up with what we all feel is a persuasive story, and we then let you create it in the way that you feel it should be done, and the data says that people did indeed watch it, then you’ve done what we’re paying you to do. Sales are not your responsibility anymore,” said the CMO. “They’re mine.”
“Creative 3.0 is about paying for your creative efforts based on viewer time-spent with your creative outcome,” said the CFO.
“You realize that it’s going to change the way that we create what we create,” said the ECD.
“We certainly hope so,” said the CMO. “The digital platform needs new ad models and new thinking. By changing the way you’re compensated, we’re hoping to change the way that you approach the platform.”
“Which,” added the CEO, “is better than changing agencies. Wouldn’t you agree?”
“Oh, yes,” said the agency president. “Oh, yes.”
Wednesday, July 09, 2008
Relevancy Versus Reach? The Question That Is Changing The Business.
The report last week that Google is tailoring the advertising it shows users based on past queries seemed to raise little concern in the advertising world. It appears that most have accepted the fact that as targeting becomes more precise through technology, relevancy is quickly becoming the new frequency.
Google is making this change in order to make even more money. As it stands now, Google gets paid each time a user clicks on a sponsored link. According to recent reports, 95% of Google’s search advertising inventory never gets clicked on.
Obviously, the more relevant the ad, the more likely it is that a user will click on it. Even if this leads to just 5% more of their sponsored links being clicked on, it should come close to doubling Google's revenue.
Once again, Google is far ahead of everyone else in the advertising business. One reason why is that Google has never been too worried about reach. They have always attracted advertisers through results. An advertiser pays only if their ad is clicked on. Exposure is worth nothing to Google. Engagement, on the other hand, seems to be worth billions.
Now if this follows the typical pattern, relevancy will quickly become the mantra of many other media platforms. Nothing wrong with that on the surface. But if you dig a little deeper, you’ll see the cracks that have formed in the advertising monetization infrastructure are becoming even larger.
Reach, after all, is what modern advertising’s foundation is built on. Mass media, exposure, impressions, how many, how many, how many, were all that we were ever really concerned about. Whether anyone actually paid any attention to the ad in question was not measurable, so it was deemed irrelevant.
As engagement replaces exposure as the gold metric, it means that media will no longer be paid well for wasting an advertiser’s dollars. For most advertising platforms, and those that profit from them, it has always been far more lucrative to be paid for the possibility of success than it was to be paid for the actuality of results.
Damn that Google for monetizing the actuality of results. Obviously, they have little interest on what side the bread is buttered for most in this business.
This will have an enormous impact on how media is bought and paid for. As it will in regards to how creative is bought and paid for.
As targeting becomes more relevant, audience size has no choice but to become smaller. The term now being bandied about—“relevant reach”—is just a fancier way of saying "tiny viewing audience."
As relevancy replaces reach, mass media becomes unmass media. Agencies know how to justify large production budgets for the mass media. They will be at a loss as to how to do it for the unmass media.
Is the answer smaller production budgets and creative fees? For many, unfortunately, yes. But it doesn’t make sense to me.
We have finally figured out a way to stop paying for those that aren’t interested in what we are selling. For advertisers to now reduce what they’ll pay for creating the work, in other words, lessening its impact, seems ludicrous.
But that’s what is going on in boardrooms across the country.
“I can justify $800,000 for production if I know 20 million might see it,” the marketing manager might say. “But I can’t justify $800,000 if only 2 million might see it. How about $80,000?"
While some will argue, the fact is that production budgets, in the past, were bought and sold based on reach. Production budgets in the future will need to be bought and sold based on results.
It’s a Digital MindChange that will not come quickly to most.
If ever.
Google is making this change in order to make even more money. As it stands now, Google gets paid each time a user clicks on a sponsored link. According to recent reports, 95% of Google’s search advertising inventory never gets clicked on.
Obviously, the more relevant the ad, the more likely it is that a user will click on it. Even if this leads to just 5% more of their sponsored links being clicked on, it should come close to doubling Google's revenue.
Once again, Google is far ahead of everyone else in the advertising business. One reason why is that Google has never been too worried about reach. They have always attracted advertisers through results. An advertiser pays only if their ad is clicked on. Exposure is worth nothing to Google. Engagement, on the other hand, seems to be worth billions.
Now if this follows the typical pattern, relevancy will quickly become the mantra of many other media platforms. Nothing wrong with that on the surface. But if you dig a little deeper, you’ll see the cracks that have formed in the advertising monetization infrastructure are becoming even larger.
Reach, after all, is what modern advertising’s foundation is built on. Mass media, exposure, impressions, how many, how many, how many, were all that we were ever really concerned about. Whether anyone actually paid any attention to the ad in question was not measurable, so it was deemed irrelevant.
As engagement replaces exposure as the gold metric, it means that media will no longer be paid well for wasting an advertiser’s dollars. For most advertising platforms, and those that profit from them, it has always been far more lucrative to be paid for the possibility of success than it was to be paid for the actuality of results.
Damn that Google for monetizing the actuality of results. Obviously, they have little interest on what side the bread is buttered for most in this business.
This will have an enormous impact on how media is bought and paid for. As it will in regards to how creative is bought and paid for.
As targeting becomes more relevant, audience size has no choice but to become smaller. The term now being bandied about—“relevant reach”—is just a fancier way of saying "tiny viewing audience."
As relevancy replaces reach, mass media becomes unmass media. Agencies know how to justify large production budgets for the mass media. They will be at a loss as to how to do it for the unmass media.
Is the answer smaller production budgets and creative fees? For many, unfortunately, yes. But it doesn’t make sense to me.
We have finally figured out a way to stop paying for those that aren’t interested in what we are selling. For advertisers to now reduce what they’ll pay for creating the work, in other words, lessening its impact, seems ludicrous.
But that’s what is going on in boardrooms across the country.
“I can justify $800,000 for production if I know 20 million might see it,” the marketing manager might say. “But I can’t justify $800,000 if only 2 million might see it. How about $80,000?"
While some will argue, the fact is that production budgets, in the past, were bought and sold based on reach. Production budgets in the future will need to be bought and sold based on results.
It’s a Digital MindChange that will not come quickly to most.
If ever.
Tuesday, July 01, 2008
The Creative ROI
In reading the trades these days, you can’t help but notice that there is an enormous amount of attention being given to quantifiable metrics.
Like it or not, one of those quantifiable metrics is time-spent with a commercial message.
Many like to argue that time-spent is irrelevant, that all that really matters is sales. I agree with half of that. Bottom line, sales are what matters most. But that doesn’t, in and of itself, make time-spent irrelevant.
The reason is this. As a marketer, you create messages of a certain length. In other words you create a certain amount of time that people can spend with your message. On the linear platform, time was available in fifteen, thirty or sixty-second increments. This time was determined by the networks.
On the digital platform, the time you have in which to present your message is yours to decide. The length of time you need in which to persuade the viewer why your product or brand is worthy of consideration is no longer pre-determined.
Say you and your agency decide you need a minute and twelve seconds. Which means you, as a marketer, will pay to have a minute and twelve seconds created.
All things being equal, it generally costs more to have a minute and twelve seconds created than it does to have five seconds created. This “cost of creation,” which includes agency time, production, editorial, music, talent, etc, is a hard cost that you incur, regardless of sales.
Initial value is returned on this hard cost in the form of viewer time-spent, measured in seconds, for dollars spent to create each of those seconds.
In other words, time-spent is a quantifiable measure on the return of the cost required to create that time in the first place. We call it a Return on Involvement, or the Creative ROI.
What it comes down to is that you pay for “x” amount of seconds, not just to be created, but to be watched. How many were? Time-spent is a measure of accountability on the cost of creative dollars invested. Not on the overall return on the marketing dollars invested.
You don’t need to hold your agencies accountable for how well they deliver time-spent in the messages they create for you. But, the fact is, the data is now available for you to do so if you wish to do so.
To determine whether or not you should, ask yourself two questions.
1. When you pay to have “x” amount of seconds created, does it matter to you how many of those seconds are actually watched (consumed) by the viewer?
2. Do you, as a marketer, believe that there is a direct correlation between the number of seconds watched and the persuasiveness of your message?
If the answer to the latter question is “no”, then you have to ask yourself, why are you paying to have unneeded seconds created in the first place?
Like it or not, one of those quantifiable metrics is time-spent with a commercial message.
Many like to argue that time-spent is irrelevant, that all that really matters is sales. I agree with half of that. Bottom line, sales are what matters most. But that doesn’t, in and of itself, make time-spent irrelevant.
The reason is this. As a marketer, you create messages of a certain length. In other words you create a certain amount of time that people can spend with your message. On the linear platform, time was available in fifteen, thirty or sixty-second increments. This time was determined by the networks.
On the digital platform, the time you have in which to present your message is yours to decide. The length of time you need in which to persuade the viewer why your product or brand is worthy of consideration is no longer pre-determined.
Say you and your agency decide you need a minute and twelve seconds. Which means you, as a marketer, will pay to have a minute and twelve seconds created.
All things being equal, it generally costs more to have a minute and twelve seconds created than it does to have five seconds created. This “cost of creation,” which includes agency time, production, editorial, music, talent, etc, is a hard cost that you incur, regardless of sales.
Initial value is returned on this hard cost in the form of viewer time-spent, measured in seconds, for dollars spent to create each of those seconds.
In other words, time-spent is a quantifiable measure on the return of the cost required to create that time in the first place. We call it a Return on Involvement, or the Creative ROI.
What it comes down to is that you pay for “x” amount of seconds, not just to be created, but to be watched. How many were? Time-spent is a measure of accountability on the cost of creative dollars invested. Not on the overall return on the marketing dollars invested.
You don’t need to hold your agencies accountable for how well they deliver time-spent in the messages they create for you. But, the fact is, the data is now available for you to do so if you wish to do so.
To determine whether or not you should, ask yourself two questions.
1. When you pay to have “x” amount of seconds created, does it matter to you how many of those seconds are actually watched (consumed) by the viewer?
2. Do you, as a marketer, believe that there is a direct correlation between the number of seconds watched and the persuasiveness of your message?
If the answer to the latter question is “no”, then you have to ask yourself, why are you paying to have unneeded seconds created in the first place?
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