Tuesday, November 23, 2010

YouTube's The First To Get It Right. Almost.

The fact that YouTube is going to give viewers the option of opting out of commercials raises an interesting question.

Who will be next?

Giving consumers the choice to opt out of watching commercials, or leaving when the commercial no longer interests them, is one way that publishers can make additional income in the future.

Why?

Because it will allow advertisers to pay for commercial creation based on viewer time sheets rather than agency time sheets.

A viewer time sheet is based on digital data that tells advertisers how long those who started to watch their commercial actually watched their commercial for.

Did they watch all of it? 50%? 10%?

Once they know this number they can pay their agency accordingly. The model for this is called View Duration Compensation.

The key for publishers is that this is not about media data (or placing media). This is performance or creative data.

Which means that publishers can be paid for both placement and performance. Two revenue streams versus one. Granted, they won't be held accountable for performance. They will only sell the data that will allow advertisers to hold their creative agencies accountable for performance.

According to Phil Farhi, a Google senior product manager, advertisers were at first hesitant about allowing viewers to skip their ads. What tipped them over the edge was the fact that they didn't have to pay for ads that weren’t watched. (Advertisers are slowly starting to realize that opt-in is far more effective in terms of recall than intrusive - see yesterday's blog.)

This is where I think YouTube has missed the boat. There should be two fees to advertisers. One to place the ad and then a second fee for the performance, or view duration data.

YouTube is still looking at view duration as something media delivers.

This is where their wrong. View duration is completely the responsibility of the creative.

Maybe they’ll figure that out shortly.

And it not YouTube, Hulu’s not far behind.

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