Wednesday, October 06, 2010

Creating Original Advertising For Smaller Viewing Audiences Is Not A Good Use Of Money If Costs Relate To Sales

And therein lies the problem, doesn’t it?

Research is now out from Dynamic Logic that says original creative is much more effective at influencing purchase decisions on the digital platform than re-purposed work.

Yet, most of the advertising on the digital platform is re-purposed.

Why is this?

Simply because the current economics of commercial production are based on large audience size and repeat exposures. Neither of which are readily available on the digital platform.

The audience on the digital platform will always be less than what advertisers are familiar with on broadcast. Production costs are currently a fixed cost spread out across exposures.

When the number of exposures is smaller, it’s difficult to justify the dollars needed to create the emotionally compelling stories required to build brands.

The result? Re-purposed work.

What is needed is a new commercial production model that isn’t underwritten by exposures or impressions. Instead of a fixed cost spread out across exposures, what if the cost of production became a variable cost dependant on view duration?

After all, the longer viewers watch a commercial, the more value that commercial offers the advertiser. So, the more value it should also offer the agency and production company that created it.

Is it possible to separate the media budget from the creative budget, having them each be responsible for their own non-transactional ROI, rather than having them lumped together for an ROI based on sales?

And, if so, what would be an appropriate non-transactional ROI for commercial creation?

Advertisers create spots of a certain length to be watched. If an advertiser creates thirty seconds, chances are they want all thirty seconds watched. Otherwise, they would have created a fifteen-second spot.

Does a “watched” second return a better ROI on production dollars spent than an “unwatched” second? I would argue yes.

Advertisers currently pay for a produced second of a commercial whether it is watched or not?

Why? Advertisers now know if consumers are consuming their commercials. Why not pay accordingly?

Why don't advertisers hold their creative agencies accountable for delivering what they are actually being paid to deliver.

No, it's not sales. At least, not initially.

What agencies are paid to deliver initially is time spent with the commercial.

Only then can sales occur.

One is a precursor to the other.

Time spent can be measured. Hold your agency accountable for time spent and sales should follow.

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