Today, the average national thirty-second brand advertisement costs about $380,000 to produce. This according to the AICP.
While this fee could be justified when the viewing audience was 30 million, digital technologies now allow for unprecedented targeting. While it’s true that targeting will serve to improve advertising’s effectiveness through relevancy, the question remains whether advertisers will be able to afford to continue to create brand advertising to reach these niche audiences.
Would you pay $380,000 for a commercial that would be viewed by only 20,000? You see the problem.
Current Solutions
To date, advertisers are doing one of three things.
1. Re-purposing the thirty-second brand spot they’ve created for mass consumption in the hope that it will be equally as effective on a more intimate and personal stage.
2. Informing their agency that they will have to produce work that is just as good with only a quarter of the production budget to work with.
3. Asking the consumer to create the commercial for them.
As all of these solutions seem inadequate at best, we wondered if there wasn’t another way in which advertisers could afford to create great brand advertising for the smaller viewing audiences inherent in the on-demand world.
Now we know that commercials can be, and are being, created for $100.00. And those who create those kinds of commercials believe they work just fine. There will always be someone who will do something for less. But, because it’s affordable doesn’t mean it’s good. And when it comes to good brand advertising, striking an emotional chord is a defining part of what separates the effective from the ineffective. (Just as understanding how emotion works is what separates a good agency’s advertising from something a consumer might create.)
Argue as you will, the fact is, adding emotion to a commercial costs money. Not only to pay for the talent you need to create it, but to add the elements – music, lighting, cinematography, acting, editing – that in the end, makes one spot work on a deeper, and, more effective level, than another.
Great brand advertising doesn’t just happen. Seldom is luck a factor.
So What If Agencies Were Paid For Creating Viewer Time-Spent Rather Than Commercials?
Under the traditional advertiser/agency compensation model, the advertiser pays the agency based on the amount of time spent to create and produce the commercial. It’s an hourly fee plus profit that adds up to a yearly-retainer calculated against projected work load. While certainly not perfect, paying an agency for their time spent working on the business was, deemed by most, to be better than the previous method, the commission system.
In the Digital Marketplace, this all has the chance to change. Advertisers will be able to measure, and therefore, pay their agencies according to how much time the viewer spent watching the commercial, rather than how much time the agency spent making it.
In other words, instead of paying for effort, advertisers will be able to pay for outcome.
Why Time-Spent? Isn't The Outcome I Want Sales?
Yes, it is. But remember, we're talking about brand advertising. Branding is about building a relationship over time. Unlike retail, branding is not about an immediate sale. Branding takes time because relationships are built through time-spent together. So, time is what we're proposing be measured. And, paid for. Not the time that one buys from the media. But the time that an agency creates.
Actually, the logic behind monetizing viewer time-spent, i.e. engagement and/or involvement in the commercial, is surprising straightforward. It doesn’t take a large leap of faith to believe that the longer a person is exposed to a brand message, the greater the branding impact is on that individual. That said, leaps of faith are seldom enough to instigate change in this industry. Which is why we are pleased to see that OMD recently verified the above in a study called “The Value Of An Engaged Viewer.”
According to the OMD study, engagement in a commercial message increases measurable advertising ROI by 15% to 20%. If engaging work is indeed worth more to the advertiser, shouldn’t it then also be worth more to the agency that created it?
Viewer Time-Spent (VTS) Compensation
Viewer time-spent can now be measured in over 35 million homes offline and over 59 million homes online. At the same time, it seems that the better creative agencies are starting to realize that continuing to be compensated on an hourly-fee basis means that they are leaving money on the table. Even when their work is brilliant, they get the paid the same amount as when their work is average. What they have been looking for is a way for good work, i.e. engaging/involving work, to be worth more than bad work.
A viewer time-spent compensation arrangement would offer an agency the chance to finally be paid based on their creative ability.
As for advertisers, who, according to Ad Age, rank holding their agencies accountable as their number one priority, a viewer time-spent compensation arrangement would offer them a way to do just that.
At least in regards to their creative efforts.
Currently, the industry pays for media and for creative based on how many people will have the chance to see something. The entire industry revolves around the concept of possibility. This shouldn’t come as a surprise. After all, it is far more lucrative to be paid for the possibility of success, than it is for the actuality of results.
But today, with the ability to measure both how many saw the commercial and how long they were involved in it for, you would think advertisers would be interested in both sets of metrics. The former for holding media accountable. The latter for doing the same with creative. Engagement is, after all, a sum game. It takes both exposure to the message (media) as well as involvement in the message (creative) for a viewer to be truly engaged.
As for accountability, there’s one thing that hasn’t changed. The actuality of results is still the best way to increase the possibility of success. Now it just requires advertisers to change their definition of results to include viewer time-spent with their messaging.
Monday, September 29, 2008
Wednesday, September 24, 2008
DoubleClick’s Creative Insights on Rich Media
A recent report from DoubleClick in which they measure click-through rates, interaction rates with video and non-video ads, average interaction time and video completion rates, states two things of particular interest.
1. Interaction time with an ad – video or non-video – is dependent on how interesting and engaging the creative is.
2. The video completion rate for video commercial plays is 40% to 55%.
Which means, of course, that half of the commercials are not watched all the way through to completion. All due, according to DoubleClick, to how interesting or engaging the creative is.
This has an enormous impact on the ongoing discussion (see previous blog) regarding who’s accountable for engagement, or time-spent with a commercial – media or creative. It appears as if DoubleClick is coming down on the side of the creative. Which means that if the responsibility of any video creative is to engage viewers enough to watch thirty out of thirty seconds (and I would argue that it is) then agencies are consistently failing about half of the time.
Not bad, you might be saying. After all, a .500 batting average would be damn good in baseball.
But this isn’t baseball, is it? And, you would think that an advertiser who pays for a full thirty seconds to be created at today’s average production cost of $12,000/second would be plenty upset to find out that fifteen seconds, or $180,000 of their production dollars, have been completely wasted.
What is their return on investment on the production budget, when only half, or less, of the seconds they paid for to be produced are being used?
Obviously, this is data that advertisers have not had access to in the past. And, now that they do, most really have little idea as to what to do with it.
But, deep down they must be thinking to themselves, isn't there a way that they can avoid paying for the whole thing once they find out that only half is being used? Seems like a fair question, doesn’t it? And, maybe the fair answer to all parties involved is to start paying for creative development on a per second viewed basis.
If the agency creates a spot where 28 out of 30 seconds are watched, that agency would be paid more for their efforts than if only 10 out of 30 seconds are watched.
In other words, the better job the agency does, the more they make. And, vice-versa.
Granted, there are many arguments against working this way. Advertisers claim that the agency’s job is to sell product. They don’t care how long people watch the commercial for. And advertisers are right about that. Long term, they should retain, or, fire their agency, based on how well that agency sells product and/or build brands.
But short term, every production and content development opportunity has a cost associated with it. Which means that it also has an ROI associated with it. In the case of content development, a higher return on viewer involvement will lead to a higher return on dollars invested in development of that content.
It’s in this way that time-spent with a commercial message starts to deliver value to advertisers. Not just in how it helps to sell product and/or build brands.
But also, financially.
1. Interaction time with an ad – video or non-video – is dependent on how interesting and engaging the creative is.
2. The video completion rate for video commercial plays is 40% to 55%.
Which means, of course, that half of the commercials are not watched all the way through to completion. All due, according to DoubleClick, to how interesting or engaging the creative is.
This has an enormous impact on the ongoing discussion (see previous blog) regarding who’s accountable for engagement, or time-spent with a commercial – media or creative. It appears as if DoubleClick is coming down on the side of the creative. Which means that if the responsibility of any video creative is to engage viewers enough to watch thirty out of thirty seconds (and I would argue that it is) then agencies are consistently failing about half of the time.
Not bad, you might be saying. After all, a .500 batting average would be damn good in baseball.
But this isn’t baseball, is it? And, you would think that an advertiser who pays for a full thirty seconds to be created at today’s average production cost of $12,000/second would be plenty upset to find out that fifteen seconds, or $180,000 of their production dollars, have been completely wasted.
What is their return on investment on the production budget, when only half, or less, of the seconds they paid for to be produced are being used?
Obviously, this is data that advertisers have not had access to in the past. And, now that they do, most really have little idea as to what to do with it.
But, deep down they must be thinking to themselves, isn't there a way that they can avoid paying for the whole thing once they find out that only half is being used? Seems like a fair question, doesn’t it? And, maybe the fair answer to all parties involved is to start paying for creative development on a per second viewed basis.
If the agency creates a spot where 28 out of 30 seconds are watched, that agency would be paid more for their efforts than if only 10 out of 30 seconds are watched.
In other words, the better job the agency does, the more they make. And, vice-versa.
Granted, there are many arguments against working this way. Advertisers claim that the agency’s job is to sell product. They don’t care how long people watch the commercial for. And advertisers are right about that. Long term, they should retain, or, fire their agency, based on how well that agency sells product and/or build brands.
But short term, every production and content development opportunity has a cost associated with it. Which means that it also has an ROI associated with it. In the case of content development, a higher return on viewer involvement will lead to a higher return on dollars invested in development of that content.
It’s in this way that time-spent with a commercial message starts to deliver value to advertisers. Not just in how it helps to sell product and/or build brands.
But also, financially.
Monday, September 22, 2008
Who’s Accountable for A Commercial's Viewership?
If you haven’t yet, take a look at the column written by Alan Schulman in today’s MediaPost.
Mr. Schulman raises the question that I’ve been talking about right here for some time now. Who’s accountable for a commercial’s viewership? Or, to put it another way, who’s accountable for the engagement value of a commercial?
Perhaps it’s because Mr. Schulman is an executive creative director that he takes such umbrage at the fact that the networks should be held accountable for the engagement level of a commercial. Let’s face it; once a viewer starts watching a commercial, the network really has little impact in regards to how long that viewer continues to watch the commercial for.
Networks are responsible for bringing people to the message. They are not responsible for engaging people in the message. The job of the creative person is to intrigue, involve, entertain and persuade. The job of a media person is to put the most relevant commercials in front of the most appropriate people so the former can better take place.
Networks are about how many.
The creative itself, is about how long.
The most interesting point about the argument put forth in Mr. Schulman’s article is that time-spent with a commercial can now be accurately measured on most digital platforms. And, if the creative agency is indeed accountable for creating that time-spent, you would think that some of the more forward-looking advertisers would like to pay their agencies based on how well they actually do create this time-spent.
The more time-spent they create, the more the agency makes. The opposite would also hold true.
You would also think that some of the more creative agencies would welcome this new way of being paid. After all, instead of being compensated based solely on how long their agency worked on the commercial – hourly fee + mark-up — they can now be partially compensated based on how long viewers watched the commercial for.
Instead of paying for inputs, advertisers can now pay for outcome.
The long-standing gripe among the more creative agencies has always been why they can't be paid based on how good they are? In other words, why can’t good work be worth more than bad work?
If length of involvement in a commercial is a proxy for good work, then, it seems as if this indeed now possible.
Granted, it won’t suit every agency. In fact, my guess is that most would initially refuse to be paid this way. But there are a handful of creative agencies, based in cities like San Francisco, Boulder, Venice and Portland, who might think otherwise.
And, truth be told, if they lead the way, the other agencies really have no choice but to follow.
Consider Wieden, Saatchi & Saatchi, and Proctor and Gamble. Wieden has some P&G business, as does Saatchi and Saatchi. Now let’s say that Wieden says that they’re willing to be paid based on how good their work is. In other words, based on how long it engages people for. Does Saatchi then really have an option but to agree to be paid the same way?
If Saatchi says “no,” than what does that say about their confidence in their own creative?
Also in today’s rags, an interesting article in Ad Age regarding “Putting A Price On Digital Production.” It raises the question regarding how the industry can continue to justify the high cost of production as the size of the viewing audience continues to shrink through fragmentation.
Again, it comes down to the digital data now available. If creative agencies are willing to be paid based on involvement, then shouldn’t production companies take on some of that responsibility as well?
Many of you might say, “Yeah, fat chance.” The fact is, those were my thoughts exactly until I went down to talk to some production companies in L.A. They actually grasped the whole idea of being paid on a return on involvement model faster than most.
“You know what this does?” they asked, when I proposed the idea to them. “It allows – put director’s name here – to be paid based on how good he is, rather than how large the job is.” There’s not an “A” director in Hollywood who wouldn’t take that challenge.”
I reminded them that if the viewer involvement were low, the director would be paid very little. Didn’t faze a one of them.
So, it’s in your hand’s advertisers. If you want accountability on the creative side, you can have it. And, you can pay accordingly.
The question is, do you want it?
Mr. Schulman raises the question that I’ve been talking about right here for some time now. Who’s accountable for a commercial’s viewership? Or, to put it another way, who’s accountable for the engagement value of a commercial?
Perhaps it’s because Mr. Schulman is an executive creative director that he takes such umbrage at the fact that the networks should be held accountable for the engagement level of a commercial. Let’s face it; once a viewer starts watching a commercial, the network really has little impact in regards to how long that viewer continues to watch the commercial for.
Networks are responsible for bringing people to the message. They are not responsible for engaging people in the message. The job of the creative person is to intrigue, involve, entertain and persuade. The job of a media person is to put the most relevant commercials in front of the most appropriate people so the former can better take place.
Networks are about how many.
The creative itself, is about how long.
The most interesting point about the argument put forth in Mr. Schulman’s article is that time-spent with a commercial can now be accurately measured on most digital platforms. And, if the creative agency is indeed accountable for creating that time-spent, you would think that some of the more forward-looking advertisers would like to pay their agencies based on how well they actually do create this time-spent.
The more time-spent they create, the more the agency makes. The opposite would also hold true.
You would also think that some of the more creative agencies would welcome this new way of being paid. After all, instead of being compensated based solely on how long their agency worked on the commercial – hourly fee + mark-up — they can now be partially compensated based on how long viewers watched the commercial for.
Instead of paying for inputs, advertisers can now pay for outcome.
The long-standing gripe among the more creative agencies has always been why they can't be paid based on how good they are? In other words, why can’t good work be worth more than bad work?
If length of involvement in a commercial is a proxy for good work, then, it seems as if this indeed now possible.
Granted, it won’t suit every agency. In fact, my guess is that most would initially refuse to be paid this way. But there are a handful of creative agencies, based in cities like San Francisco, Boulder, Venice and Portland, who might think otherwise.
And, truth be told, if they lead the way, the other agencies really have no choice but to follow.
Consider Wieden, Saatchi & Saatchi, and Proctor and Gamble. Wieden has some P&G business, as does Saatchi and Saatchi. Now let’s say that Wieden says that they’re willing to be paid based on how good their work is. In other words, based on how long it engages people for. Does Saatchi then really have an option but to agree to be paid the same way?
If Saatchi says “no,” than what does that say about their confidence in their own creative?
Also in today’s rags, an interesting article in Ad Age regarding “Putting A Price On Digital Production.” It raises the question regarding how the industry can continue to justify the high cost of production as the size of the viewing audience continues to shrink through fragmentation.
Again, it comes down to the digital data now available. If creative agencies are willing to be paid based on involvement, then shouldn’t production companies take on some of that responsibility as well?
Many of you might say, “Yeah, fat chance.” The fact is, those were my thoughts exactly until I went down to talk to some production companies in L.A. They actually grasped the whole idea of being paid on a return on involvement model faster than most.
“You know what this does?” they asked, when I proposed the idea to them. “It allows – put director’s name here – to be paid based on how good he is, rather than how large the job is.” There’s not an “A” director in Hollywood who wouldn’t take that challenge.”
I reminded them that if the viewer involvement were low, the director would be paid very little. Didn’t faze a one of them.
So, it’s in your hand’s advertisers. If you want accountability on the creative side, you can have it. And, you can pay accordingly.
The question is, do you want it?
Tuesday, September 16, 2008
Googling View Duration Data
I was on the phone with the Google folks recently. I asked if they offered view duration data with their Google TV Ads product. They said they did.
I asked if they also offered view duration data with their overlay product on YouTube. The Googlette on the phone wasn’t certain. Her area of expertise was Google TV Ads, not YouTube.
My guess is that they do. Because the overlays on YouTube are sold on a cost-per-click basis, Google knows when people start watching. So it’s not that far-fetched to assume that they also know when they stop watching.
I asked the Google folks how they used their view duration data. They said they give it away to the “agency” as part of the media buy. I asked whether they were referring to the media agency or the creative agency? They said, “the agency that is in charge of the account.”
Okay. But in charge of media or in charge of creative? Both agencies are in charge of something, right?
They kept answering, to the agency in charge of the account. What they meant was the agency that bought the space on Google TV Ads. In other words, the media agency was receiving the data that would really be of even greater benefit to the creative agency.
I asked if they would share just the view duration data with the advertiser that was paying the media agency who was buying the space on Google TV Ads. They said, “no”. That information is only shared with the agency that is in charge of the account.
I asked if the advertiser could pay an additional fee to have just the view duration data supplied to them separately. “No,” was the answer. Google doesn’t work that way.
So, I asked if they would be willing to sell the view duration data to the creative agency that created the commercial for the advertiser that is paying their media agency to run the commercial on Google TV Ads.
No, they just provide the data to the agency that is in charge of the account.
I asked if they were aware that other data providers were willing to separate view duration data and sell it to the creative agency and/or advertiser as a stand-alone entity.
They said they weren’t aware of that.
I asked them if they offer the agency that is in charge of the account a way to monetize the view duration data. In other words, offering a way to add value to the data, rather than just offering data itself.
They said, “no.” They don’t know of any way to monetize view duration data. That would be left to the agency in charge of the account.
My thinking is the agency that the view duration data offers the most value to is the creative agency. Or, the agency in charge of the creative on the account. At present, because creative agencies don’t buy media, they can’t get the data.
What I don’t understand is why data providers can’t provide the data to any of an advertiser’s agencies, if they are willing to pay for it. After all, it is the advertiser’s data.
Isn't it?
When is Google going to realize that they’re not a media company. They’re a data provider. In the digital marketplace, it's not about selling media.
It's about selling data.
Or, at least, it should be.
I asked if they also offered view duration data with their overlay product on YouTube. The Googlette on the phone wasn’t certain. Her area of expertise was Google TV Ads, not YouTube.
My guess is that they do. Because the overlays on YouTube are sold on a cost-per-click basis, Google knows when people start watching. So it’s not that far-fetched to assume that they also know when they stop watching.
I asked the Google folks how they used their view duration data. They said they give it away to the “agency” as part of the media buy. I asked whether they were referring to the media agency or the creative agency? They said, “the agency that is in charge of the account.”
Okay. But in charge of media or in charge of creative? Both agencies are in charge of something, right?
They kept answering, to the agency in charge of the account. What they meant was the agency that bought the space on Google TV Ads. In other words, the media agency was receiving the data that would really be of even greater benefit to the creative agency.
I asked if they would share just the view duration data with the advertiser that was paying the media agency who was buying the space on Google TV Ads. They said, “no”. That information is only shared with the agency that is in charge of the account.
I asked if the advertiser could pay an additional fee to have just the view duration data supplied to them separately. “No,” was the answer. Google doesn’t work that way.
So, I asked if they would be willing to sell the view duration data to the creative agency that created the commercial for the advertiser that is paying their media agency to run the commercial on Google TV Ads.
No, they just provide the data to the agency that is in charge of the account.
I asked if they were aware that other data providers were willing to separate view duration data and sell it to the creative agency and/or advertiser as a stand-alone entity.
They said they weren’t aware of that.
I asked them if they offer the agency that is in charge of the account a way to monetize the view duration data. In other words, offering a way to add value to the data, rather than just offering data itself.
They said, “no.” They don’t know of any way to monetize view duration data. That would be left to the agency in charge of the account.
My thinking is the agency that the view duration data offers the most value to is the creative agency. Or, the agency in charge of the creative on the account. At present, because creative agencies don’t buy media, they can’t get the data.
What I don’t understand is why data providers can’t provide the data to any of an advertiser’s agencies, if they are willing to pay for it. After all, it is the advertiser’s data.
Isn't it?
When is Google going to realize that they’re not a media company. They’re a data provider. In the digital marketplace, it's not about selling media.
It's about selling data.
Or, at least, it should be.
Tuesday, September 09, 2008
A Creative Take On Targeting Behavior
Behavioral targeting is used by publishers to help media agencies better select which advertisements to put in front of which people.
Makes perfect sense.
After all, it would be foolish not use measurable behavior to increase the efficiency of an ad campaign. My question is, why stop there? Why not use the viewer’s behavior once they start watching a commercial to also increase the efficiency of an ad campaign?
We can now measure the length of time that a viewer chooses to be engaged with a commercial. This view duration data is available from many different online sources. These sources provide this data—at no charge—to the media agencies, in an attempt to assist them in making future buys.
But is the media agency the right agency to be receiving this data? Or, should it be the creative agency?
What it comes down to is delineating who is responsible for bringing viewers to the message and who is responsible for involving viewers in the message. Before you answer that, keep in mind that whomever is responsible should also be held accountable. In other words, success or failure is their burden to bear.
With that definition, media agencies seldom claim that engagement is their bailiwick. Bringing people to the message, oh yes, that they are good at. But once a viewer decides to start watching, it is really out of the hands of the media in regards to how long a viewer watches for.
View duration, at least, in my opinion, is the responsibility of the creative agency. The longer an agency can get a viewer to watch a commercial, the greater the chance of making a sale sometime down the line.
The fact is, we currently build brands on digital platforms through reach and frequency optimization. But with the continued fragmentation of the viewing audience, reach and frequency numbers will continue to diminish. Which is why I feel that, down the road, the smart way to build brands on digital platforms will be through time-spent optimization.
If an advertiser wanted to, they could start to aggregate the amount of time that their agency persuades viewers to spend with their particular brands. As I’ve often said, time is finite. And the more time that an agency can get an individual to spend with one brand’s messaging, the less time that individual has to spend with the competitor’s advertising.
Granted, there have not been any studies that show a direct correlation between time-spent and sales. But doesn't it seem logical to expect that one will soon be discovered?
Once it is, the behavior we will all be most concerned about is what happens when an individual starts watching a particular commercial, rather than which commercial should run where.
Curiously enough, I have talked to a lot of the data providers to see if they would be willing to sell view-duration data directly to advertisers and/or their creative agencies. Many have said "no." They didn't have a good reason. It's just that they feel that since they are a deliverer of media, they need to deal with media agencies.
When do you think they will start understanding that they are a deliverer of data, not media?
Makes perfect sense.
After all, it would be foolish not use measurable behavior to increase the efficiency of an ad campaign. My question is, why stop there? Why not use the viewer’s behavior once they start watching a commercial to also increase the efficiency of an ad campaign?
We can now measure the length of time that a viewer chooses to be engaged with a commercial. This view duration data is available from many different online sources. These sources provide this data—at no charge—to the media agencies, in an attempt to assist them in making future buys.
But is the media agency the right agency to be receiving this data? Or, should it be the creative agency?
What it comes down to is delineating who is responsible for bringing viewers to the message and who is responsible for involving viewers in the message. Before you answer that, keep in mind that whomever is responsible should also be held accountable. In other words, success or failure is their burden to bear.
With that definition, media agencies seldom claim that engagement is their bailiwick. Bringing people to the message, oh yes, that they are good at. But once a viewer decides to start watching, it is really out of the hands of the media in regards to how long a viewer watches for.
View duration, at least, in my opinion, is the responsibility of the creative agency. The longer an agency can get a viewer to watch a commercial, the greater the chance of making a sale sometime down the line.
The fact is, we currently build brands on digital platforms through reach and frequency optimization. But with the continued fragmentation of the viewing audience, reach and frequency numbers will continue to diminish. Which is why I feel that, down the road, the smart way to build brands on digital platforms will be through time-spent optimization.
If an advertiser wanted to, they could start to aggregate the amount of time that their agency persuades viewers to spend with their particular brands. As I’ve often said, time is finite. And the more time that an agency can get an individual to spend with one brand’s messaging, the less time that individual has to spend with the competitor’s advertising.
Granted, there have not been any studies that show a direct correlation between time-spent and sales. But doesn't it seem logical to expect that one will soon be discovered?
Once it is, the behavior we will all be most concerned about is what happens when an individual starts watching a particular commercial, rather than which commercial should run where.
Curiously enough, I have talked to a lot of the data providers to see if they would be willing to sell view-duration data directly to advertisers and/or their creative agencies. Many have said "no." They didn't have a good reason. It's just that they feel that since they are a deliverer of media, they need to deal with media agencies.
When do you think they will start understanding that they are a deliverer of data, not media?
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