Monday, April 11, 2011

Allowing The Worth Of A Commercial To Affect Its Cost

How much is a TV commercial worth?

What the advertiser paid to have it created and produced?

Of course not.

Most advertisers do not equate the cost of a commercial with its worth. They want a commercial to deliver much more than what it cost. Otherwise, the return on their commercial investment would be zero.

So, how does one determine what a commercial is worth?

First, you need to decide who should be determining its worth.

The agency that created it?
The advertiser that paid for it?
Or, the viewers that watched it?

It seems as if the only one of these three who doesn’t have a dog in the hunt in regards to the outcome is the viewer.

So is there a way for viewers to tell us what a commercial was worth? At least, to them.

I think so.

If you consider that all of us are too busy today to waste our time with things that are not relevant to us, then for someone to keep watching a commercial, it needs to be worth, at least for starters, their time. (Whether it will be worth a sale for the advertiser will depend on how well the commercial is crafted. But for the selling proposition to have a chance to hit home, the commercial first needs to be watched.)

To put it another way, viewer time spent is a good indicator of viewer dollars spent.

So how would an advertiser allow the worth of a commercial to affect the cost of the commercial?

By paying for the creation and production of the commercial based on view duration. The longer people watch a commercial for, the more the agency makes. If viewers watch less, the agency makes less.

Fair?

I’d say so.

The digital marketplace now lets us measure view duration. It lets viewers opt into commercials of interest. This view duration data tells us what the commercial was worth to those viewers who decide to opt in, at least in terms of their time.

And yet, we keep paying agencies for their time spent creating the spot rather than the time viewers spend watching it.

Why?

This new model of compensation is called View Duration Compensation (VDC).

It allows advertisers to pay for creative based on viewer time sheets rather than agency time sheets. More can be found here on VDC.

It’s not for everyone, mind you.

Just those who think its time for the worth of a commercial to affect its cost.

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