Thursday, August 19, 2010

Is Time Spent With A Commercial An Indicator Of A Commercial’s Worth?

Before it’s watched, a commercial is a commodity whose price should vary according to its worth comparative to other commercials.

After all, a commercial’s selling proposition can only be effective if the commercial is viewed. And arguably, the more of the commercial that is viewed, the stronger the viewer’s takeaway is of that selling proposition.

Which is why I argue that viewer time spent with a commercial is, indeed, an indicator of a commercial’s worth.

If so, should the worth of a commercial affect the cost of the commercial?

In other words, should marketers pay their agencies more for commercials that are viewed in their entirety versus commercials that are not?

I would argue yes.

That is the theory behind a new model of performance-based compensation for an agency’s creative output. It’s called Second X Second Compensation.

It’s a way for advertisers to pay for creative based on outcome rather than effort.

After all, it allows advertisers to pay for creative based on how long viewers watch the commercial – view duration - rather than how long the agency worked on creating the commercial - hourly fee.

It’s based on a simple theory. Right now, advertisers pay full fare to the agency whether the commercial engages viewers or not. This is neither fair to the advertiser nor motivating to the agency.

What I have found is that advertisers don’t mind paying full fare for success. What they do mind paying full fare for is failure.

With Second X Second Compensation, failure will no longer be lucrative for agencies.

Good agencies will appreciate this. I’ll explain why tomorrow.

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