Tuesday, January 11, 2011

Should Advertisers Pay Their Creative Agencies A CPM?

Before you dismiss this idea out of hand, think about the impact social media has on great creative.

Social media allows great creative to be shared.

Sometimes a great piece of creative gets passed along to a million other people.

A million exposures at a $30 CPM would normally cost the advertiser $30,000 in media costs. Since these were basically free exposures, why not pass those savings onto the agency that created the commercial?

Research has shown that commercials that are shared, and allow people to come to on their own terms, are more effective than commercials that intrude.

The only reason a commercial is shared is because people think it’s worth sharing – entertaining, informative, funny, relevant, etc. All components that are functions of the creative, not the media.

And yet, creative gets stiffed when a commercial gets shared.

One way to do this, at least with the good agencies, would be to increase the CPM and lower the retainer. Instead of a $30 CPM, make it a $100 CPM. This would allow the agency to base their fee more on performance than on hourly time sheets.

Obviously, if an agency is to be paid this way, the advertiser would have to give them more rope in how and what they create for them. Less niggling. More trust.

Difficult, I know.

Perhaps it would be easier to start smaller – focusing solely on the production budget. Rather than paying the agency for their time as they produce the commercial, pay them the CPM rate instead.

The result?

Better advertising, certainly.

But at the same time, the advertiser would enjoy some modicum of accountability on the creative itself.

And isn’t that what they’ve been saying they want?

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