Thursday, May 14, 2009

Should The Worth Of A Commercial Affect The Cost Of The Commercial?

This seems liked a logical question to ask in lieu of Coca-Cola going to value-based compensation models.

Advertisers currently pay for commercial creation and production based on effort – time spent to craft the commercial – in the form of hourly time sheets.

As Coca-Cola has mentioned, they want to start paying based on outcome.

The first immediate outcome with any commercial – way before sales results come in – is did anyone pay any attention to the commercial? And, if so, for how long?

A commercial’s ability to hold an audience (time spent) is now measurable on digital platforms.

We define "time spent" as an impression in the control of the viewer. If the commercial seems worthwhile to the viewer, they will continue to watch. If not, they leave, moving on to something else.

In other words, time spent measures a commercial’s worth in the eyes of the viewer.

Now what if Coca-Cola paid their agencies based on what the commercial was actually worth to those that it was targeted to, rather than the amount of time it took to create and produce the commercial?

Value, in this case, would be decided by the viewer. Not the agency. Nor, the advertiser.

There are many who continue to argue that it is impossible to qualify value. Their argument goes along the lines that value is subjective.

Hardly.

When a viewer stops watching a commercial, that’s the point where that commercial lost value for that viewer.

Measurable?

Yes.

Monetizable?

Yes.

According to Ad Age, 72% of marketers are planning to cut production budgets while 68% are looking at reducing agency compensation.

Why?

If the worth of a commercial can be measured, then why not let the worth of a commercial affect how much the agency gets paid for concepting and producing that commercial.

In other words, give them a chance to earn their fee.

I know a few agencies that will gladly play this way.

If your agency will not, give me a shout.

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