Wednesday, March 04, 2009

Using Return Path Data To Underwrite The Cost Of Creating Commercials. Part I

It used to be different.

It used to be that 20 million viewers would see a commercial on a single night. With 20 million viewers, it was easy for the advertiser to justify the half million dollars it may have cost to create that commercial.

Today, because of viewer fragmentation due to both choice and control, not to mention the industry's own improved targeting methods, 20 million viewers have become 20 thousand.

As audience size becomes narrower, the need for advertisers to make a deeper impression on a smaller group of people becomes imperative. Unfortunately, the current economics of production can only be justified through large audience size and repeat exposures.

Neither of which will be prevalent on the digital platform.

So how can advertisers afford to create emotionally compelling, original content, for the smaller viewing audiences inherent in the Digital Marketplace?

Randall Rothenberg, President of the IAB, has called for a Creative Renaissance. Mr. Rothenberg is right. The industry desperately needs a renaissance.

But before the Creative Renaissance can take place, a monetization renaissance is needed.

According to Advertising Age, 68% of marketers are currently looking at reducing their agency's compensation. 72% of marketers plan to cut production budgets.

Which means now that advertisers can target more precisely than ever, now that advertisers can talk to only the audiences that should be interested in their messages, advertisers are cutting back on the fees they pay their agencies for creativity.

As well as the amount of money that they can spend to create those messages.

This is the opposite of how most selling works. With most selling organizations, once an interested customer is identified, the big guns are sent in. Not the junior varsity.

Now that advertisers have narrowed their audiences down so as to be able to talk to just the interested, they are cutting their agencies off at the knees.

There must be a better way.

There is.

Part II tomorrow.

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