Thursday, September 16, 2010

Would Consumers Pay To Opt-Out Of Advertising?

Joe Marchese, a writer I like a lot, raised an interesting point in his column this week.

Joe posits that advertising is becoming a consumer choice. That consumers who have the money, are now being given the choice to opt-out of advertising by paying for advertising-free content.

In other words, consumers are being given the option to “outbid advertisers for their attention.”

Marchese writes that any attention that viewers give to advertising comes with a cost. Either advertisers pay that cost. Or, the viewer does.

In general, when advertisers pay a $20 CPM, the cost to them is 2 cents for the opportunity to garner 30 seconds of a viewer’s time/attention. When buying in scale, this makes sense for the advertiser. Of course, advertisers know that they’re not going to get 30 seconds of everyone’s attention. But they hope to be able to total up enough seconds of attention to make the buy worthwhile.

To the viewer, the cost is thirty seconds of their valuable time - time in which they could be doing something else. Something much more worthwhile than watching a commercial.

As for the network or online publisher, they have two options. They can offer content advertising-free, for a fee, to the consumer. Or, take $20 from the advertiser for every 1,000 viewers they bring in.

How much would they have to charge the consumer for advertising-free content?

If the average thirty-minute program has ten minutes of advertising (or twenty, 30-second spots) and the network is charging a $20 CPM, that means that every thousand viewers brings in $400 to the network.

On the other hand, if 1,000 viewers can watch the program advertising free for say, fifty cents each, the network makes $500 on the same thousand viewers.

Would you pay fifty cents to watch your favorite program advertising free and uninterrupted? Put another way, would you pay fifty cents to get ten minutes of your time back?

Once viewers do the math, they’ll realize that it comes out to only $3.00 to get an hour back in their life everyday. To get eight hours of your life back, one day’s time, it will cost them only $24.00.

I think many viewers would find that to be a bargain.

Starting with me.

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