Perhaps Coke Should Consider Paying Their Agencies Based On Viewer Time Sheets

On April 20^th at the Association of National Advertisers Financial Management Conference in Phoenix Arizona, Coke took the first steps in trying to initiate an industry-wide movement towards a value-based compensation model.

According to Coke, value-based compensation means that their agencies will no longer be guaranteed a profit. Instead, they will actually have to earn it by creating value. According to Sarah Armstrong, Coke’s director of worldwide media and communication operations, “We need them (agencies) to be profitable and healthy, but they have to earn it through performance.”

Sounds reasonable, doesn't it?

What’s surprising is the response from the ad agency community. To date – little, if any. They haven’t said, "Good idea, Coke." Or, "Go to hell."

Missed opportunity? You bet.

You would have thought that the more creative agencies – Wieden, Goodby, Crispin, TBWA, BBDO – would have come out and said “about time.” After all, they are more then earning their keep every day. And yet, they are still paid on the same model that the less creative agencies get paid.

Hourly time sheets.

Which means, they’re leaving money on the table.

Coke is trying to change the paradigm by suggesting that its agencies be paid based on outcome rather than effort. While many might look at this as penalizing agencies, I see it as offering agencies a way to finally be paid what they are truly worth.

After all, good work should be worth more than bad work.

And, it can be, if Coke started to pay their agencies based on viewer time sheets rather than hourly time sheets.

What’s a viewer time sheet?

Basically, a viewer time sheet consists of digital data that shows how long viewers are engaged in a commercial for. Companies like TiVo, TubeMogul and Visible Measures are now compiling this digital data. The problem is that few have put two and two together and figured out that this digital data actually represents a basis by which agencies can be paid.

If Coke wants to pay based on outcome rather than effort, then paying for how long viewers spend watching a commercial, rather than how long the agency spent working on it, seems to do exactly that.

So how would advertisers go about paying their agencies based on viewer time sheets?

Common sense seems to indicate that the longer the commercial involves the viewer, the better the chance the message has of being communicated. In other words, the better the commercial will have worked for the advertiser.

The better the commercial works for the advertiser, the more the advertiser should be willing to pay the agency that created it.

The opposite, of course, would also hold true.

Sense Bernbach’s days, the creative agency’s lament has always been why can’t good work be worth more than bad work?

Well, now it can.

Which means it's time for creative agencies to stand up and own the value that they so deftly deliver.

And, if they don't, then Coke should tell its agencies that from now on they'll be equating time spent with value delivered. And, that agency compensation will be tied into how much time spent their agencies can create.

Chances are, it will open some doors.

And, for a few agencies, happiness.

Should Advertisers Continue To Be Forced To Pay Full Fare For An Impression That Doesn't Make One?

Let's face it. Nielsen gives advertisers information from which they can plan. TiVo gives advertisers information from which they can pay.

Nielsen delivers demographics - projecting who will watch what. TiVo delivers "durationgraphics" - showing exactly how long somebody watched something.

In other words, TiVo does what Nielsen does, only better, in regards to an impression's impact.

Matt Freeman had a great quote the other day. "An impression shouldn't be called an impression if it doesn't make one." Amen, Matt.

Nielsen sells impressions. TiVo further defines those impressions through time spent with the message, basically calling BS on those impressions that don't make one.

Hence the question: Should advertisers continue to be forced to pay full fare for an impression that doesn't make one?

Advertisers have always known that all impressions weren't created equal. But they never had enough information to pay less for those impressions which were, well, less then impressive.

Now they do. Which is why most media agenices don't want to share time-spent info with their clients. Where's the upside for the media agency?

Little do they know that their fear is misguided. After all, once a viewer decides to opt-in to a commercial of interest, the media agency's job is done. Length of view is not the media agency's responsibility.

It's the creative agencys.

For more on this, check out yesterday's post. Only by delineating responsibilty and accountability will we be able to accept something other than the inadequate information that is provided by Nielsen.

Sure, it has its place.

But that place is no longer at the head of the table.

Just something to think about as we head into the upfronts.

If The Point Of Advertising Is Engagement, Then The Current Forms Of Measurement, Based On Clicks And Impressions, Fall Short

Obviously, the purpose of advertising is still to make a sale.

That said, there is an awful lot of discussion currently taking place that says that the initial point of advertising is this thing called engagement. After all, it's difficult to persuade someone to buy your product if you first don't engage them in a conversation about the product.

If engagement is the goal, then the current methods of measuring and monetizing clicks and impressions seem to fall short. What's missing?

I would argue that it's the time component.

Engagement, after all, has a time element to it. A thirty-second spot offers the viewer the opportunity to engage for thirty seconds. A sixty-second spot offers sixty seconds in which to engage.

Neither a click nor an impression is based on any aspect of time spent with the commercial.

What does give an accurate measurement of time spent with the commercial is second-by-second data. And yet, this is often swept aside as a non-viable measurement metric. Not because it doesn't make sense. But because media platforms and media agencies aren't sure how to turn it into a measurement of media.

The fact is, they can't. Because it's not.

Time-spent is a measurement of the quality of the creative. Not the quality of the media buy or the media platform on which it runs. Once the viewer initiates the interaction with the commercial, then the amount of time spent with that commercial is strictly a reflection of the creative.

No doubt part of the problem is in the vague and often disparate definitions that we have of engagement. I've always thought of engagement as being a three-step process.

Engagement = Impressions + Initiation + Involvement

What's interesting about this definition is that it allows advertisers to hold different parties accountable for different aspects of engagement, while at the same time, not making any one party solely accountable for the whole of engagement.

Impressions are the responsibility of the media agency. As well as making sure that those impressions are as relevant as possible.

Giving the viewer the ability to initiate the interaction with the commercial—and to be able to leave the commercial when it no longer interests them—is the responsibility of the platform on which the commercial runs. This could be the cable company, the online publisher, TiVo, whomever is the one that gives the viewer the control to watch what they want when they want.

Once the viewer initiates the interaction with commercial, accountability as to how long they're involved with the commercial falls under the aegis of the advertising agency that created the commercial.

A three-step process. Each step along the way allowing the transference of accountability to move from one party to the next.

Looking at engagement as a three-step process allows both impressions and clicks to offer value and accountability to the advertiser. But they are only two measurement metrics in what is a three-step process

What is missing is the metric for the third step—time-spent.

If the new purpose of advertising is engagement, then we need to start looking at it as a team effort, where each team is accountable for what they bring to the end result.

Only then will we be able to measure and monetize it accurately.

Are Shorter Or Longer Commercials Better?

There is much debate these days over the proper length of a commercial.

On one side you have those that claim that our attention spans have shrunk, so shorter commercials—15 seconds or less—are most preferred. On the other side, you have, well, no one really, outside of yours truly.

So, I found it interesting when I looked up the top viral commercials from last week. Guess what? They were all longer than 15 seconds. Much, much longer, actually.

Number one was a Samsung commercial, two minutes and forty-five seconds in length. Number two was a T-Mobile commercial, two minutes and forty seconds long. A Cadbury commercial was next, sixty seconds longs. As for the fourth most viral commercial of last week, it was for Geico, a minute and forty-five seconds in length.

If one choose to look at what are called the Viral All-Stars from last week—commercials as well as videos of interest—the shortest out of the top seven was one minute in length. The longest was four minutes. Average length? Two minutes.

So, what's going on here? If our attention spans are indeed, shortening, how come the most viral of the videos require us to focus for much longer than many think we are capable of doing?

Is shorter actually better when it comes to commercials? Or, does it depend on the content of the video itself? I would argue it's the latter. That if the idea is wonderfully crafted and of interest, people will not only watch all of it, but share it with their friends.

Now if you ask an advertiser if they would prefer consumers to spend more time with their brand's messaging rather than less, most would opt for more. And since it seems that people enjoy, and get involved in, messages that are longer, it appears that agencies now have the opportunity to start to create longer messaging.

Obviously, these longer messages cannot be intrusive in delivery. In other words, they cannot run as pre-roll or in-stream. I have to agree with those that say that no one will sit through a two-minute commercial just for the right to watch the one-minute news clip that follows.

But, there are other ways in which to place advertising that is not intrusive.

The commercials mentioned above did not run as pre-roll. And yet, they were watched. What's more, they were shared.

It appears that advertising is evolving into two distinctively different formats. The intrusive model—short messages to run in front of large audiences. And, the opt-in model—longer messages to run in front of smaller audiences.

Both will be needed. And, both will prove to be effective in varying degrees. The intrusive message's primary objective will be to create awareness. The opt-in message's objective, to create advocates.

The question for advertisers is how good do they think their agency is. Do they think that their agency is good enough to create involvement? Or, are they only good enough to create commercials?

Which, at least according to the most popular viral videos, is proving not to be good enough, any more.

The Difference Between Time Spent With A Commercial And Time Spent With A Web Site

Bob Kraut, VP-marketing communications at Pizza Hut, hit it right on the head when he said, "It's not about stickines on our website, it's about slipperiness." Bob was on a panel at the Ad Age Digital Conference in New York this week.

"We want people to come in and out as fast as they can because they know what they want and we want to give it to them in the minimum amount of time."

Couldn't agree more with Mr. Kraut.

But how can that be, I've been asked all week? You're always arguing that the more time spent the better.

True.

Which is why I thought I should address the issue here.

I've never been a supporter of time spent on a website, only commecials. That's because websites, unlike commercials, aren't created to exist in a certain amount of time. A website is created in multiple layers so that visitors to the site can choose how much time they want to spend. If they're just looking for a phone number, ten seconds is great, objective achieved, over and out.

Then again, if they want to study the company's twenty-year history, more time will be required.

A website is not constructed around a finite amount of time. Commercials, on the other hand, are.

For the most part, commercials are fifteen, thirty or sixty seconds. And while those time restraints may change in the future—becoming both longer and shorter—there will always be a beginning and an end to a commercial. This is time created and paid for.

This paid for part is why I think time spent with a commercial is important. There is a production budget involved which varies depending on the length of the commercial. In general, the longer the commercial, the more it costs.

An advertiser's immediate return on production dollars is to have those that the commercial was targeted to, watch it. And, preferably, all of it.

But what if the viewer got all they wanted out of the commercial in the first five seconds? Could happen, I suppose.

But if that's the case, then I'd suggest creating five second spots and saving some production dollars.

The best commercials are stories. Stories have a beginning, middle and end. If advertising's function is still the art of persuading people to think better about a brand, then the story will work better, and be more persuasvie, when seen from beginning to end.

If the agency thinks that they can tell the story in five seconds, then that's what they should do.

But, if they charge the advertiser for thirty or sixty seconds worth of production, then they should be held accountable for how well they involve, entertain, intrique or, in some other way, seduce the viewer into staying for the length of the spot.

This offers the advertiser a better return on investment for prodution dollars spent. Not to mention, increasing the chances for a sale.

When there are time parameters around a piece of creative, then, yes, delivering the time promised, and paid for, is something that agencies should be held accountable for on the digital platform.

Commercials have time parameters.

Websites do not.

Lucky Us. We Can Now Waste As Much Money Online As We Do Off.

The big news today is that Mindshare, along with YuMe, have teamed up to allow online video to be purchased on a gross-ratings-point basis, the same way that TV is purchased.

I believe that this is supposed to be good news. Although, for the life of me, I can't figure out why. We all know that buying TV is one of the least efficient media buys possible. Waste runs rampant.

But now it seems as if the industry bigwigs have found out how to waste just as much money online as they do off. I don't get it.

Oh, I know, this will make it easier for the media agencies to compare online and offline. Apples to apples, so to speak. The only problem is that using GRP's makes both apples rotten to the core.

I'm sure that the hope is that this will allow dollars to flow more freely from offline to online. And, no doubt, some advertisers will be fooled into doing just that.

But the online platform is about performance and accountability, not reach and frequency. Continuing to base value primarily on GRP's means there is no reason to differentiate between a commercial delivered on TV and one delivered online.

But the two work very differently indeed.

Today, there are a wide number of metrics available online that can verify the effectiveness of an impression. After all, not all impressions are created equal. Each impression, when it comes to video, has a time component to it. Isn't an impression that is watched, more valuable than one that isn't?

GRPs ignore this. They treat all impressions as equal.

The President of YuMe put it this way. "We can now start to say, that the same million dollars you spent for the TV buy, you can have it run for a month on these sites and you will get the equivalent."

He's right. And that's exactly what we should be worried about.

Attention Or Impressions? Which Would You Rather Be Selling?

I read Dave Morgan's column today, Attention For Sale.

In it, Mr. Morgan mentions that audience fragmentation will not only continue, but accelerate. No argument there. Dave then goes on to suggest a few ways in which we can attempt to deal with the situation, including audience re-aggregation.

Audience re-aggregation has been a solution that has been out there for some time. And, who's to say, perhaps it's the right one.

But it's always helpful to put one solution up against another. If for no other reason than to have a basis of comparison. So, let me go ahead and try to do that.

What if instead of aggregating audience — to be sold as so much an eyeball — publishers aggregated viewer time spent with the commercial, and sold it at so much a second?

Traditionally, audience is sold as demographic data - age, income, gender, etc. Basically, it's data used to plan the media buy.

Time spent, on the other hand, can be sold as behavioral data. It does, after all, measure the behavior of the viewer. One could argue that time spent also serves as "intent" data. Everyone wants to get their hands on intent to purchase data. It seems to me that viewer time spent with the commercial offers more "intent to purchase" data than say, age, income and gender.

But where it becomes really interesting is on the revenue side. Obviously, publishers need to expand and diversify their revenue streams as CPMs keep heading south. If audience is all they're selling and audience is fragmenting, well, that's not lucrative long-term business model.

Let's keep it simple. Let's compare a $20 CPM to, say, a $20 per second fee. At $20/second, an advertiser would pay the publisher $600 to get the second-by-second data for a thirty-second spot.

Doesn't seem like a lot, does it?

But to get that same $600 from a $20 CPM, the publisher will need to get 30,000 viewers. And, that can seem like a lot these days.

Impressions, as we all know, are becoming fewer. That said, there exists today, the opportunity to make a deeper impression. The depth of an impression, not it's breadth, is becoming a valued piece of information.

The amount of attention, or involvement, a commercial can garner from the viewer, has the chance to increase over time. Impressions, on the other hand, are going in the other direction.

If you were a publisher or program, which would you rather be selling?

Fortunately, it's not an either/or question. At least, not yet. Advertisers will need both the planning data and the behavioral data.

Both can be sold. And, will be.

It's only a matter of time.

How To Hold A Viewer's Attention

Isn't that the goal of a TV commercial? To hold a viewer's attention.

You'd think so, wouldn't you? A recent study by TiVo and Innerscope (a company that measures viewers' biometric responses to watching TV) revealed that commercials must score "high right out of the blocks" to maintain interest.

Otherwise, the fast-forward button becomes activated. And, apparently, that fast-forward button is getting quite a work-out.

According to Magna, 30.5% of households with TVs will have DVRs by the end of this year. Magna also states that about 60% of DVR owners will use these machines to speed past ads. This is relatively safe number. TiVo's CEO, Tom Rogers, says that 90% of the time an ad runs, the fast-forward button is activated.

That's just 10% under "all the time." Rogers also implies that creativity has nothing to do with whether people watch a commercial or not. Rather, the problem is that commercials interrupt what someone is enjoying. Fast-forwarding is a viewer's way to eliminate the interruption.

Great. So, what the hell do we do?

The answer, I suppose, is to make it so that people can access commercials of interest without having them interrupt their programming. The problem is that when you suggest this to people, their response is, "C'mon, who in their right mind would choose to watch a commercial?"

Good point. But if you listen to Rogers, and look at the data, the only conclusion you can draw is who in their right mind wouldn't skip one when they have the chance?

And, unfortunately, that chance is only going to become more prevalent.

So, we're stuck between a rock and a hard place. If commercials continue to interrupt programming, viewers will continue to skip the commercials. If commercials don't interrupt, but are available for viewers to access when they're interested, we won't have enough people accessing them to make it worth the cost of producing the commercials.

Or, will we?

If advertisers continue to justify the cost of production on the size of the audience that sees the commercial, then yes, we're pretty much screwed. But, if advertisers justify the cost of production based on how long viewers spend with the commercial, then, well, there's hope.

Because then, you see, creativity comes to the fore. The more engaging the commercial, i.e. creative, the longer viewers will pay attention. The longer they pay attention, the better the ROI on the dollars spent to create the commercial.

Lee Clow, Chairman and chief creative officer of TBWA, and, without doubt, a creative genius, last year deplored the state of online ad creative as being "semi-nowhere." Randy Rothenberg, CEO of the Interactive Advertising Bureau, has challenged ad creatives to begin a "creative renaissance," and to once again "start paying attention to great creativity."

Maybe it's not so much "paying attention" as it to have advertisers start paying, period, for great creativity.

If we can all agree that creativity is what inspires people to watch more of a commercial rather than less, then let's pay well those agencies that deliver such.

We can do this because the data itself, in the form of time-spent, view duration metrics, more or less tells us which commercials are creative and which commercials are not.

Which means that you could, in fact, argue that data is the new creative.

Then again, I already have.