Friday, May 28, 2010

Should We Buy Data By The Eyeball Or By The Second?

When it comes to commercials, either online or off, we primarily pay for data by the eyeball.

Eyeballs are relatively cheap. At a $20 CPM, a set of eyeballs only cost two cents. Maybe that’s a fair price. After all, as the old sayiny goes, you get what you pay for.

And with eyeballs, you don’t really get much. You don’t know if the viewer paid attention to your commercial or not. All you really know is that when your commercial ran, the screen that held your commercial, whether on the TV or computer, was presumably in front of that viewer.

Of course, other ways of paying for data have become popular online. We can pay for data by the sale. Or, by the engagement. Or, by the click. All of these cost more than eyeballs, so advertisers must believe that they are worth more than eyeballs.

But what if we started to pay for data on our commercials by the second? What would a second of data cost? What should that cost?

Is a second worth of data more valuable than a set of eyeballs?

Arguably, yes. After all, with second-by-second data, we can know how long a viewer has actually been involved in the commercial that they are watching. Especially, if the commercial is opt-in, versus pre-roll.

But again, how much is that second of data worth? If it’s more valuable than a set of eyeballs, how much more valuable? Is a second worth four cents? Ten cents? A dollar?

I would argue that a second of data is worth anywhere from $15 to $80 dollars, depending on the length of the commercial.

$80 dollars per second? Are you mad, man?

Probably. But, let’s do some math. A $25 CPM for a thirty-second spot that runs in front of 100,000 viewers, costs the advertiser $2,500 for the data.

If we were going to pay the same amount for a thirty-second spot on a per second basis, it would come out to around $80 per second (80 x 30 = 2,400).

Interestingly enough, the cost to the advertiser is about the same. The revenue to the publisher/network is about the same. But the information delivered to the advertiser is unequivocally more valuable.

Obviously, as the length of the commercial gets longer, the cost per second of data will go down. A sixty-second spot, for example, would only cost $40 per second for the data. A two-minute spot, $20 per second for the data.

If we just compare seconds to eyeballs, $80 dollars versus two cents seems somewhat ludicrous. But when you see that the total amount paid out is the same, it becomes a bit more palatable.

The way we sell $80 a second, or $40, or $20 to our clients is simply by explaining to them that the average cost for thirty seconds of commercial production is $366,000.

That comes out to $12,200 per second of production.

To our clients, it’s worth it to pay $80 per second to see if the $12,200 they paid to produce a second’s worth of advertising actually engaged anyone.

To them, $80 per second is a small price to pay to be able to hold our creative output accountable.

Chances are, your clients would to.

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