If Advertising Is Dead, Why Is There So Much Of It Everywhere?

Some pundits say advertising's dead.

Others will argue the opposite. "Have you looked around lately?" they will say. Advertising is everywhere. On eggs, for God's sake. Not to mention, in the textbooks middle school kids are using in school.

If advertising is so dead, how come it seems to be so alive?

And maybe the answer is this. Advertising's effectiveness, not advertising itself, is what is dying.

We all know people about whom we can say, "Died at 50. Buried at 60." Well, that's advertising.

The fact is, the lack of advertising's effectiveness is the reason why it seems to be just about everywhere we look. I know, that seems to be a nonsensical statement. But here's why it's not. As resistance to our marketing efforts increased (with consumers getting control over what they watch and when), advertisers have increased their marketing efforts to overcome this resistance.

Not the best of strategies, mind you, when advertisers are no longer the ones in control. It's a bit akin to saying that the beatings will stop once the moral improves. Nice in theory.

The only thing that advertisers have accomplished by increasing their marketing efforts is to increase consumers' resistance to their messages. Which, by the way, they have become quite proficient at, with or without outside help like TiVo.

Any strategies advertisers employ need to take into account that they, the advertisers, are no longer the ones in control. Doing more of the same, only in greater quantity, isn't going to change anything.

Advertisers also have to take into account that everything is transparent. Including how well, or not well, their advertising is working

As consumers increase their resistance to advertising, the exposure to and engagement in the advertising (which is now transparent, and therefore, measurable) isn't high enough justify the cost of creating new and original work.

As the "birth" of new ideas slowly comes to a halt, can the death of advertising as we know it, be far behind?

It's said that a light bulb burns brightest just before it burns out. Not being a scientist, I'll take their word at that. Advertising's light might be at it's maximum glow right now.

Which means even though it seems to be everywhere, it's death has already happened.

We just don't know it yet.

Magazines Warming To Effectiveness of Time Spent

The tides are shifting.

Historically, the magazine industry has been against using time spent as a measurement of a medium's impact. After all, much more time is spent with TV than with magazines.

But recently, the Magazine Publishers of America have been putting more emphasis on each minute consumed rather than overall time spent, and guess what? Magazines stack up quite favorably.

Which is why Ellen Oppenheim, CMO of the Magazine Publishers of America is now touting a new metric called "Ad Value Per Minute."

All we can say is "welcome to the time spent club Ms. Oppenheim". You're not alone, by the way. It now seems that there is a new round of interest in advertising circles regarding the relative value of time spent.

Not with the media, mind you.

But, with the advertising.

Of course, the most accurate format in which to measure time spent with advertising is digital video. Viewers click in to start the video and click out when it no longer interests them. Those start and stop points are measurable.

And, we would argue, monetizable.

Viewer time spent for the money invested in which to create the video will either prove to be a good return on investment for the advertiser. Or, not.

The thing is, that ROI is now transparent. It still amazes us how many advertisers ignore this data. Or, fail to use it in a proactive manner.

If advertisers can now know how well the commercial involved the viewer, why not pay their agency accordingly?

Advertisers say accountability is their number one priority. If true, you'd think their actions would better support their words.

Why We Need To Start Monetizing An Impression's Depth And Not Its Breadth

If you haven't yet read Bob Garfield's article that's running in Advertising Age this week, do so now.

It explains quite colorfully why we need to start monetizing an impression's depth and not its breadth. Reach and frequency, for 50 years, the main source of revenue for the ad industry, are basically as underwater as most mortgage companies.

And, since it's fairly certain that a government stimulus package won't be coming advertising's way any time soon, it's up to us to figure out how to get out of this mess.

Change, no matter how minor, is difficult. But a minor change is usually seen as being more doable than a major change. So, instead of throwing in the towel and starting from scratch, what if we just start to look a little differently at what we're all already comfortable with?

Impressions.

We're all familiar with impressions. We're comfortable with them. Imperfect as they are, they're like family. So, we accept them. Yes, they're fragmenting as fast as all get-out but, hey, do we really need to discard them completely and find something else to love?

What if we just started to look at them a little differently?

Instead of thinking about impressions from a quantitative perspective, what if we looked at them from a qualitative perspective? In other words, instead of thinking of impressions in term of how many, what if we started thinking of an impression in terms of how long?

Instead of worrying about the breadth, or the number of impressions that we buy, what if we shift our focus to the depth of each individual impression?

Mr. Garfield, who, of course, is pushing his "Chaos Scenario," implies that this is impossible. As he so colorfully puts it, "Any hope for a seamless transition—or any transition at all—from mass media and marketing to micro media and marketing are absurd. The sky is falling, the frog in the pot has come to a boil and, oh yeah, we are, most of us, exquisitely, irretrievably fucked."

Well, maybe.

And, then again, maybe not.

The one thing we know about the web is that people spend a lot, I mean, a whole lot of time, up to 30% of their time, on it. The amount of time that each individual spends is important because there is only so much time in a day, 24 hours, last I checked.

In other words, time is finite.

That said, the number of choices one has to spend their time with online is infinite. That's Garfield's whole point. As he put it, "Mass media thrived on the economics of scarcity. The internet represents an economy of unending abundance."

Bingo!

To get back to what works, we need to find, and monetize, what is scarce and/or finite, not what is infinite.

And, what is finite, is time.

The more time a consumer spends with one brand's advertising, the less time that consumer has to spend with the competitor's brand advertising. This is why how long somebody spends with a commercial becomes of value to an advertiser.

And, in the long run, more valuable than how many are exposed to a brand's advertising.

Seconds spent, not eyeballs reached, becomes the new holy grail.

And the beauty of it all is that we're still dealing in the same currency—impressions—that is the foundation on which the advertising industry stands. It's not like we're trading in dollars for rubles.

Yes, impressions are becoming fewer. But, that said, there exists the opportunity to make them deeper. To switch our focus to building relationships rather than reach.

Success in the digital marketplace is going to depend on how well advertisers can transition their business models to be compatible with the new digital realities.

Fragmentation is a digital reality.

The unmassing of the mass media is a digital reality.

Niche audiences are a digital reality.

Time spent on line is a digital reality.

View duration data, i.e. time spent measuremt, is a digital reality.

It's time we start looking at reality.

Mr. Garfield has called it "apocalyptic."

Well, maybe.

And, then again, maybe not.

From Analog Pennies To Digital Dollars

NBC's CEO, Jeff Zucker, made quite a splash when he first uttered his now much quoted phrase that the TV business can't survive by turning analog dollars into digital pennies.

Recently, Mr. Zucker upgraded the value of the web from digital pennies to digital dimes. An improvement, yes. But, still not enough, at least according to Mr. Zucker.

The problem, as I see it, is that Mr. Zucker is still looking at the digital platform through analog glasses. Which means he still sees everything as it was, rather than as it is.

He's not alone. Many are still guilty of this. They're still looking at the web as a reach platform. It's easier that way. After all, reach is what the industry knows how to buy and sell. Unfortunately, that's not what the web's about.

The web isn't about building reach. The web is about building relationships.

And, for a relationship to grow, time needs to be spent. Need proof?

Go ask your spouse.

If Mr. Zucker were to look at the future through digital glasses, he would realize this. And he would see that the future is less about trading analog dollars for digital pennies then it is about trading analog pennies for digital dollars.

The fact is, TV advertising has been traditionally sold by the penny. How so? Well, a $20 CPM means that each impression is worth 2 cents.

But because the digital platform is less about reach and more about relationships, less about how many and more about how long, it can be sold less on an impression basis and more on a per second basis.

How much is a second worth to an advertiser? Well, that's where it gets interesting.

When it comes to producing a commercial, a second is worth a lot to an advertiser. The average :3o commercial costs around $360,000 to produce. Which means that each second is costing the advertiser in the neighborhood of $12,000.

Now how much to you think an advertiser would pay to make sure that the $12,000 they're putting down for each second is being well used? Or, in other words, watched by the viewer.

Would $1.00 per second be too much to charge for the digital data that says whether viewers did or did not watch every one of those very expensive produced seconds?

I would argue that paying $1.00 to insure the success of a $12,000 invesetment seems a bit low. It would mean that for only $30, an advertiser could insure their $360,000 investment.

What advertiser wouldn't do that?

At $50 per second, it means the advertiser would be paying $1,500 to insure a $360,000 investment. Still a very good deal for the advertiser.

And, at that price, also a good deal for the publishers that have the data.

After all, what it offers publishers is a secondary revenue stream to help make up for the price of online CPMs which seem to be heading south faster than AIG's reputation.

Impressions would still be bought and sold on a CPM basis. But involvement in the commercial would be bought on and sold on a second-by-second, view duration basis.

Since both impressions and involvement offer value to the advertiser, both impressions and involvement should offer value to the publisher.

It's not an either/or deal. It's a value add deal.

Focusing just on impressions (reach) on the digital platform is a form of nearsightedness that advertisers and publishers need to quickly get past. And, they will, once they see how much advertisers are willing to pay for relationship-building.

The digital data is there.

All that's missing is the foresight to turn that data into dollars.

To All Agency CEOs - Stop Your Whining

Every advertising agency CEO has seen the projections regarding the number of marketers who are going to renegotiate compensation with their agencies.

According to Advertising Age, 68% of marketers are looking to reduce agency compensation this year. 77% are planning to cut production budgets.

"Woe is me," laments the agency CEO. Yeah, right. Here's a word of advice. Zip it.

For the last 50 years the complaint coming from the good creative agencies was that creative has been basically treated like a commodity. There was no way to prove that good creative was worth more than bad creative. So, good creative agencies have always felt that they were leaving money on the table.

The fact is, they were. That said, they only have themselves to blame. After all, most agencies bill their clients based on costs incurred rather than value delivered.

The problem in the past was in defining value. A very subjective process, to say the least. That is, until the digital platform went and made value transparent.

As proof, I'll reference a recent conversation I had with the Finance Director of a large CPG company. We were discussing how there were two very distinct parts to a marketing budget:

1. Concepting/production of the advertising. 2. Distribution of the advertising.

The creative agency was responsible for the former. The media agency, for the latter.

Each distinct part of the marketing budget had its own separate return on investment. There was a return on investment on dollars spent to concept and produce the work. And, there was a return on investment for dollars spent to distribute the work.

The creative agency was accountable for the first ROI. The media agency, for the second ROI.

Initially, the Finance Director argued that the return on investment for dollars spent to concept and produce a commercial was sales. I disagreed, pointing out that while sales were indeed, the long term ROI, the more immediate ROI was tied into time-spent with the commercial.

To prove this, I asked a very simple question. "Let's say you produce two :60 commercials. After running the first :60, the digital data tells us that viewers, on average, watched only :10 before switching to something else. With the second :60 commercial, the data tells us that viewers watched, on average, :58."

"Which commercial was worth more to you, the advertiser?" I asked. Not worth more based on sales, mind you. But worth more based on actual dollars spent to concept and produce the commercial?

There wasn't any question in the Finance Director's mind that the spot that was watched more was worth more, or delivered a better return on dollars spent to produce the work.

"So if you can determine that a spot was worth more to you, should it not also be worth more to the agency that created it?" I asked. And if so, then why not pay your agency accordingly?

The Finance Director smiled and questioned whether any agency would actually agree to work that way? We went through a list of creative agencies, saying yes, that agency would probably work that way. Or, no, that agency probably would not work that way.

We came up with around five that we thought would. These five, of course, have great confidence in their creative ability. These five agencies are the ones that are constantly leaving money on the table by billing for their services based on costs incurred rather than value delivered.

Now, if a large CPG advertiser can recognize that their agency is delivering value by creating time-spent with their advertising messages, it won't be long before other advertisers also come to the same conclusion.

What's surprising to me is that agencies haven't gone to their clients first with this sort of approach. Instead, most seem to be waiting for 68% of their clients to call them up with the news that they're about to reduce their compensation.

Now, more than ever, it's time for creative agencies to go on the offensive. To put their money where their talent is. Not to drop their retainers, mind you. But to start to be paid for performance based on how well their spots involve the viewer first, and, sell product, second.

The IAB recently put out an all points bulletin saying it's time for a Creative Renaissance. If a Creative Renaissance is going to occur, then creative can no longer be viewed as a commodity. In other words, there has to be a way for good work be worth more than bad work.

Let good work be defined as work that first involves the viewer in the creative. After all, only through involvement can it sell product. Not that it always will. We're not saying that involvement in the message guarantees sales.

But I think it is logical to assume that watching the commercial is somewhat of a precursor to selling the product. Otherwise, why spend the money to create the commercial in the first place?

Look at it this way. The greater the viewer's share of time in a commercial the greater the brand's share of mind in the viewer.

And, the one thing that has been proven is that share of mind does lead to share of market.

Share of time is now measurable. And, monetizable. Which means that good work can now be worth more than bad work.

And isn't that what good agencies have always wanted?

So, what's with all the whining?

Monetizing Intentionality. Or, Not.

I went to a VideoEgg presentation the other day. I like the VideoEgg folks. Always very engaging.

As you may know, they have what they call a "cost per engagement" model where advertisers pay every time a viewer clicks-in to watch a commercial. It's a step in the right direction. CPM is an antiquated model at best, necessitating change to come quickly to the industry.

What VideoEgg is doing, to a point, is monetizing intentionality. Now intentionality is an unusual word to be associated with the ad business. After all, up to now, most of our measurement data measured the advertiser's intention, i.e. how many will this media buy reach and how often.

Accountability was based on whether or not the projected numbers were hit. Not on the end users actions.

The digital platform flips this on its head, allowing us to now measure the user's intention. When a viewer clicks-in to watch a commercial, their intentionality is measurable.

Valuable? You would think so, wouldn't you?

Which is why I was surprised that VideoEgg stopped with their Cost Per Engagement model at the click-in stage. By this I mean that the advertiser pays the same amount to VideoEgg whether the viewer watched a tenth of the commercial, or, the entire commercial.

I asked VideoEgg if they have second-by-second view duration data and, apparently, they do. That they're not making money off of this data, surprised me.

After all, once a viewer's intentionality is monitored, the duration of that intentionality becomes extrememly valuable to the advertiser. The longer a viewer is involved with an advertiser's message, the greater the chance the advertiser has to convince them why their product is better.

While there hasn't been a direct cause and effect study completed yet, length-of-view to sales, common sense seems to indicate that the correlation would be positive.

One issue, of course, is coming to some sort of agreement as to who's responsible and/or accountable for view duration. I would argue that once a viewer clicks-in to watch a message, the accountability for that message transitions from the media agency who placed the commercial to the creative agency that created the commercial.

In other words, viewer intentionality signals the Transference of Accountability from media agency to creative agency. Think of it as a tipping point.

What VideoEgg is actually monitoring is the point where this Transference of Accountability occurs. But then, they, like so many others who measure view duration - Omniture, Visible Measures, TubeMogul - stop.

Why?

Obviously, the intentionality of any good creative agency is to create work so involving that those that it is targeted to, will watch every second of it. By paying for media on a CPE basis, advertisers are only paying for those that have expressed interest.

Good? Yes. But isn't maintained interest of even greater value then initial interest?

If so, then why not pay for creative based on how well it works at involving those that have initially expressed an interest by clicking in?

In my opinion, one problem is that these companies are still thinking of themselves as media companies or ad networks. They're not. They're data aggregators. They're not selling media. They're not selling impressions. Nor, are they selling engagement.

What they are selling, basically, is accountability.

At least, that should be their intention.

After all, the intentionally of any advertiser, especially in these times, should be accountability over both those who place their advertising, and those who create it.

Data allows this to happen.

Up to now, the data aggregators have been ignoring this second revenue stream.

Intentional or not, I don't know.

But if so, I'm sure this will all be changing soon.

As Media Fragments, Should Brands Follow Suit?

It's become obvious that no matter how hard we try to re-aggregate viewing audiences, fragmentation will continue.

So, as the old saying goes, "If you can't beat 'em, join 'em." Which is why maybe it's time that brands start to fragment as well.

I wish I was the one that came up with this idea, but I'm not. That honor goes to David Armano, vice-president of experience design at Critical Mass.

On the surface, it makes sense. When one digs deeper, it makes even more sense. Many brands sell the same product across multiple age groups. But how that brand entices 18-24 year-olds to use the product versus 35-49 year-olds, should vary greatly.

In the past, media wasn't fragmented enough to warrant completely different executions with any degree of efficiency. That has obviously changed.

The largest problem that most advertisers will face in moving in this direction is in trying to find a way to underwrite all the new production of commercials that will be needed.

Traditionally, the cost of commercial creation and production was justified by the number of people who would have the chance to see the commercial. As advertisers start to realize what will be needed to be effective in this world of fragmentation (i.e. smaller audiences size), they're going to have discover a new metric to justify the production of multiple messages.

Our belief is that instead of how many have the chance to see the commercial, the metric of choice will be how long people watch the commercial for.

The reasoning is quite basic. If an advertiser pays to have thirty seconds or sixty seconds produced, they will want all thirty or sixty seconds consumed by the viewer. If only ten seconds are consumed, why should advertisers be forced to pay full-fare for the seconds not consumed?

In other words, paying for commercial creation based on time-spent with the commercial offers advertisers the option of paying for outcome rather than effort.

I still get those who argue that time-spent is a worthless metric. My response is that advertisers are already paying for time-spent with the commercial. It's just that now they are paying for the time that the agency spends in creating the commercial.

When advertisers find out that they have an option of paying for either the time spent working on the commercial, or the time the viewer spends watching it, well, the argument quickly comes to a close.

Paying based on viewer time-spent is now a viable option. As is the case for fragmenting brands. It doesn't mean that all advertisers will move down this path immediately.

The industry has always consisted of leaders and followers.

The question is, which are you?

The Devil Is In The Data

To all of the behavioral targetists and addressable advertising solutionists, may I suggest one thing?

Stop.

Stop making the viewing audience smaller and smaller. They're already fragmenting enough on their own due to infinite choice, control shifting to the viewer and multiple screen formats.

And now you're telling us that you can pinpoint a target that is male, makes over $300,000, has salt and pepper hair, owns two and a half dogs, one llama and lives in a ritzy zip code. I know, you're thinking that you'll be able to charge an arm and a leg to "reach" this person and just this person.

Fantastic.

One problem.

The devil is in the data.

And the same data that lets you target ever more niche targets will also tell us if any of these niche targets actually pay any attention to the advertising that runs.

The theory, of course, is that advertisers will create specific advertising for these specific audiences. Nice. In theory.

Unfortunately, commercial creation is currently underwritten/justified by the number of people who might see it. When that number is small, so is the amount of production dollars put aside to create that commercial.

Which simply means that now that we can target this quality audience, advertisers will be hard pressed to create anything of quality to say to them.

"Well, we already have commercials that we can run," is the typical answer. And that's right. You do. But how many times are you going to run these commercials before the data comes back telling you that no one is watching them any longer?

Sooner, rather than later, you're going to have to create original content. And, then what?

Is Visible World an answer? On the retail front, maybe. For branding, no.

Now that we can target the specific audience that the advertiser wants, it's going to be difficult to justify creating emotionally engaging, original content for this audience.

Unless, of course, the advertisers start paying for the creation of commercials based on the data that says how long viewers are actually involved in the commercial. In other words, performance-based creative where the performance being measured is time spent with the commercial.

The fact is, there are two givens in the digital future. Smaller audiences. And more data than ever before about those audiences. If we want to justify the cost of creating commercials for these smaller, yet critical audiences, we need to find a way to use the new data to justify the cost of producing these new commercials.

Impressions will no longer cut it. But if advertisers start aggregating the actual time viewers spend with the message rather than the number of people who might be exposed to the message, then there is the chance to once again base cost of production on size.

Of course, this means that agencies will be held accountable for how well their creative work actually involves a viewer. A devil of deal for many agencies.

But for the handful that are truly creative, it's a chance for them to finally be paid based on how good they actually are.

And, for them, that should be heaven.

As Viewers Gain Control, So Too, Do Advertisers

It happened again.

This week at the 4A's conference down in New Orleans, another top agency executive went on to say the following: "The consumer is in control and as a result, we are not."

Frankly, I have never understood the concept of "control" as being that of all or nothing. But apparently, either marketers are in control. Or, the consumer is.

Maybe the industry's plea of helplessness is just their way of defending the fact that they don't have any answers as to why advertising doesn't seem to be working as well as it used to. "Well, you see," goes the excuse, "we're no longer in control."

With all due respect, can we stop the whining?

Let's look at advertisers. Yes, it's certainly true that you have lost some of the control that you used to have over what advertising the consumer saw when. But, let's look at what you have gained - data as to how well the advertising you are running is actually working.

Now, I'm not saying that you're going to be happy with what the data reveals. But you now have access to more information than ever before. And if you don't use that information to optimize both your media buys and your creative product, well, then perhaps your plea of helplessness is justified.

True, advertisers have lost control to consumers, but in return you have gained control over your agencies. Which means that for the first time you can actually hold them accountable for things working as well as they promised you that they would work.

In regards to your media agency, instead of buying a hope and a prayer on a CPM basis, you can now buy on a CPC basis. Instead of impressions, you can buy actual interactions. Waste is reduced to almost nothing. Accountability can now be laid to rest squarely on the media agency's shoulders to deliver what they said they would deliver.

That seems to me like gaining control, not losing it.

As for your creative agencies, well, your control over them has also increased tremendously. Advertisers never really knew if the commercial that was so highly praised by their agency's creative gurus actually ever involved anyone or not. Oh, sure, it may have won its shares of awards, but did those folks in Middle America actually pay any attention to it when it ran?

To be honest, advertisers were clueless.

But today, by giving the viewer the control to opt-in when they're interested and to opt-out when they're not, advertisers have a running scorecard of digital data to which they can hold their agencies accountable.

If only ten seconds of a sixty-second spot are watched, an advertiser will know it.

And, if they continue to pay their agency full-fare for the fifty-seconds that they were told would be watched and weren't, well, that's their own fault.

Yes, advertisers have given up control to the viewer. But, in return, they have gained information. Which can easily be turned into knowledge.

With knowledge comes power.

And, the truth is, those with the power, are those in control.

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

Where we left off last time was with the idea that before we can have a Creative Renaissance, we're going to need a monetization renaissance.

So, how do we create a monetization renaissance?

Under the current agency retainer system, great creative work and average creative work costs the advertiser about the same. That's one of the major negatives of a cost-based compensation model. It allows the advertiser to pay a fixed amount of money whether the content creator adds value/greatness or not.

If advertisers want to inspire greatness, then greatness needs to be rewarded. The problem lies in trying to define greatness in a way that both sides - agency and advertiser - can agree to. It needs to be a win/win. There can't be the feeling that a dollar gained by one side comes at the expense of the other side.

And, it has to be completely objective rather than subjective. In other words, greatness needs to be measurable.

While this may initially sound impossible, a solution might lie in return path data. Return path data is the digital data that comes back when a commercial runs on the digital platform. Part of what this data reveals is how many viewers actually clicked-in to start watching a commercial. And, how long they watched the commercial for.

Arguably, this return path data is predictive in nature. The longer a viewer chooses to be involved in a commercial, the greater the chance is that they'll be interested in the product being advertised.

Does this mean that time-spent with a commercial will automatically lead to sales? Can't guarantee that. All we can guarantee is that lack of time spent with a commercial won't lead to sales.

Ultimate Objective versus Immediate Objective

Keep in mind that sales are the ultimate objective of any marketing campaign. That said, every commercial that is produced also has a more immediate objective.

To be watched.

After all, the advertiser spent "x" amount of dollars to produce a commercial that is "x" amount of seconds long. A produced second that is watched returns a better ROI on production dollars spent than a produced second that isn't watched.

By using return path data, advertisers will know how many produced seconds were actually consumed by the viewer. Obviously, in this time-starved era we live in, greater creativity is needed from the agency for seconds to be consumed.

Can both advertisers and agencies agree that a consumed second offers more value than a non-consumed second? You would think so, wouldn't you?

If that's the case, then by monetizing this second-by-second data in such a way that the longer viewers are involved, the more the agency makes, we have created a win/win situation.

Advertisers can pay for content creation based on the amount of time that viewers spend watching the commercial rather than the amount of time the agency spent working on it. To an advertiser, it's the difference between paying for outcome versus paying for effort.

To an agency, it's finally a way for good work to be worth more than average work. This is something that good creative agencies have been requesting for some time.

In these recessionary times, it's the difference between advertisers cutting creative budgets to be more efficient and paying for creative based on effectiveness.

I have yet to meet an advertiser who minds paying well for success. What advertisers do mind paying well for is failure.

Paying based on time-spent can only help to inspire the Creative Renaissance that is now being called for. After all, working under this model allows great work to be rewarded. Not just with awards and commendation.

But, with dollars.

Which, these days, is about as inspirational as it gets.

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.

Becoming Less Impressed With Impressions

I read a quote today from Augustine Fou - senior VP-digital lead at MRM Worldwide.

"We're coming from a world where a site that was attractive had to show it's getting tens or hundreds of millions of impressions. But advertisers are starting to realize simply having hundreds of millions of impressions isn't that important if they're getting 0.002% click-through rates."

And, so it begins. The movement from surface data to beneath the surface data.

Impressions tell us how many people had the chance to be exposed to a commercial. At one time, that was enough information to green-light multi-million dollar media buys. Exposure to, rather than involvement in, was all advertisers really needed to know.

But now that digital data exists that tells advertisers how involved people were in their commercials, impressions become less impressive.

Certainly, impressions will continue to be bought and sold. But basically, all an impression offers an advertiser is possibility. In the future, it will become much more difficult to justify paying for possibility when one can pay for actuality.

This change won't stop at media. It will also carry over to how advertisers pay for content creation. Why pay for the creation and production of a commercial based on the possibility that those who choose to start watching it will watch all of it?

Especially now that advertisers can get actual data reporting how many watched how much of a commercial.

Advertising agencies may balk at this. After all, the one thing ad agencies have always believed in is that it is far more lucrative to be paid for the possibility of success than it is for the actuality of results.

Digital data allow advertisers to pay for the actuality of success.

Failure will no longer be lucrative.

Advertisers, the ball's in your court.

Penalizing Mediocrity

Here’s the question that advertisers need to ask themselves. Is their advertising brilliant? Excellent? A-okay?

Or, just mediocre?

In most cases, I’m going to bet that the answer is the latter. And, if we’re all being completely honest, the advertiser needs to take a fair share of blame for this.

Unless, of course, the advertiser (after approving the concept from the agency) was completely hands-off, letting the agency do well what they are well paid to do.

Involve viewers in the commercial.

But as we all know, advertisers meddle in the production process and the end result is, well, mediocrity.

So, how do we go about changing this behavior?

What if there was some sort of financial incentive? Not just for the advertiser but for both the advertiser and the creative agency. In other words, some sort of incentive that would allow success to be rewarded and mediocrity to be penalized.

The problem lies in trying to get everyone to change the way they define success.

Traditionally, success equated to sales. And, we’re not suggesting that this needs to change. That said, we do believe that there is both short-term success and long-term success associated with a commercial.

Sales are the longer-term aspect. Short-term, it’s about getting people to watch the commercial so as to help create those sales.

A mediocre commercial would be one where viewers have expressed interest by clicking in to watch the spot and then losing interest well before the spot is finished.

Agencies used to argue that the only people they wanted to watch the commercial were those it was intended for. The spot, or course, was sold under the auspices that when targeted correctly, it would be watched all the way through by those it was targeted against.

In the past, viewer involvement wasn’t measurable. So we never really knew how well a commercial kept a viewer’s interest.

On the digital platform, viewers have the chance to self-select what interests them by opting-in. And then, to stay, or not stay, as long as they like.

Do you think that agencies will still stand by their position – a position that can now be verified through data – that when the targeted start to watch, they will watch the whole thing?

And, even more importantly, will they be willing to be paid on that basis?

Now we’re not talking the whole agency retainer here. That would be foolhardy. We’re just talking about the part of the fee it took to concept the commercial. For simplicity’s sake, let’s say it’s $100,000. A couple of creative teams, a producer, the other odd hand here and there.

Would your agency be willing to put that fee on the line?

If those that opt-in to watch the commercial watch more of it rather than less, the agency would make more than $100,000. But if those same viewers end up watching less rather than more, the agency would make less than $100,000.

Let’s say the agency upside is $200,000. And, the downside, $25,000. What do you think? Would your agency play?

The devil’s handshake, of course, Mr. Advertiser, is that you can’t hold an agency financially accountable for what they don’t have control over. What you’re asking them to do is create a message that is so involving that viewers choose to watch more rather than less. If so, you’ll probably sell more of your product.

In return, you have to back off as the creative is being produced. Once you approve the concept that’s based on your strategy, your job is leave them to it.

Let the agency prove it’s worth. Or, not.

If the agency succeeds, i.e. creates more involvement in the commercial rather than less, chances are good that the advertiser will succeed as well. So, it is the proverbial win/win.

I know, the counter-argument goes something like this – “But my agency will create something really weird just to create involvement and not be worried about sales.”

C’mon. You really think so?

Remember, if sales don’t go up at the end of the year, the advertiser can still fire the agency. They are, after all, still accountable for the long-term success of the brand. What we’re talking about here is holding the agency accountable for one of the steps along the way to that success.

It’s also important to remember that the advertiser approves the script. A script that was based on an approved strategy. If the advertiser thinks the script was designed just to create involvement and not sales, then they shouldn’t approve it in the first place.

Will all agencies agree to work under this agreement? No way in hell. But my bet is that BBDO will. Goodby will. Crispin will. Wieden will. TBWA/Chiat Day will.

There are a few others that I have talked to that are also interested. Give me a shout and I’ll be happy to pass on their info.

In the meantime, advertisers need to take a good long look in the mirror. And decide for themselves how far they’re willing to go.

Accountability is out there.

The price? Trust.