Wednesday, December 01, 2010

What If Advertisers Looked At Production Budgets As A Loan?

As we all know, loans are paid back with interest. That's how loans work.

If advertisers looked at production budgets as a loan, and the advertiser paid $500,000 for a commercial to be produced, then what type of interest would the advertiser want back on that amount of money they “loaned” to the agency?

In my opinion, the interest the advertiser wants is the viewer’s.

If a 60-second spot was produced, then the advertiser want the viewers the spot was targeted to, to watch all 60 seconds.

If only 10 seconds are watched, who’s fault is it?

The advertiser’s? Or is the lack of viewer interest the responsibility of the agency that created the spot?

In other words, if interest in the form of viewer attention isn’t paid back to the advertiser on their dollars spent, who should suffer? The advertiser? Or, the agency?

That’s the theory behind View Duration Compensation. Advertiser’s pay to have commercials produced, but the amount is variable depending on how much interest the creative elicits from viewers.

The longer viewers watch the commercial for, the more money the agency gets to keep. The less viewers watch, the less money the agency keeps.

You could call it a performance model for creative. But it’s based on some basic financial principals. Money is paid out, interest is due.

So, when do advertisers start looking at production budgets as a loan?

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