Thursday, November 03, 2011

Who’s Responsible For ROI For A Commercial Production Budget?

Let’s say you’re a client who’s going to make a thirty-second spot.

Total production cost: $500,000.

How do you determine the ROI of your production budget?

Most marketers don’t even think about it. They’re just happy if the job comes in on budget. They're not thinking about ROI on a production budget?

Most will probably ask, is there such a thing?


What is the immediate return you’re hoping to get for that half a million dollars spent on production? Not long term return, i.e. sales, but immediate return.

Well, as it’s a thirty-second spot, I can only assume that you’re hoping that people watch all thirty seconds.

After all, each second costs so much to produce. If the total production budget is half a million, each second cost $16,666 to produce. So, if only ten seconds are watched, your return on production dollars spent is less than if thirty seconds are watched.

Every second not watched is $16,666 wasted.

What this means is that with commercial production costs, your Return on Investment directly correlates to the Return On Involvement on the part of the viewer.

Most will argue that the longer a viewer is involved with a commercial, the greater the chance of persuading the viewer of your proposition. As well, the agency must have thought thirty seconds were necessary to persuade the viewer, otherwise they would have created a fifteen-second spot.

Which is why some advertisers are now starting to look at view duration as a proxy for sales.

But here’s the thing. If view duration can serve as a proxy for sales, why don’t advertisers hold their creative agencies accountable for the amount of view duration they (the agency) create?

In other words, make the creative agency’s fee correlate directly to the viewer’s Return on Involvement.

Chances are, the higher the Return on Involvement, more sales and more money for the client. More money for the client should correlate to more money for the agency.

Which means as the advertiser succeeds, the agency succeeds.

It sounds revolutionary, I know.

But, isn’t that the way it’s supposed to work?

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