Wednesday, April 11, 2012

Skippable Ads

Yesterday, the IAB put out an Executive Summary indicating that skippable ads would become one of their ad formats.

Today, Vindico, a video-ad platform, added an interesting tidbit about skippable ads – that 31% of video viewers choose to watch an ad to completion when given the option to skip, compared with an average of 77% for non-skippable ads.

As we’ve said in the past, people don’t mind investing time when they control the time invested. If I can leave when I want, I’ll stay as long as I’m interested. Well, 31% of viewers are interested enough to watch all the way through.

No, 31% is not as high as 77%. But research has shown that when the viewer chooses to watch, the ad is more effective than when viewers are forced to watch.

So, the actual effectiveness of the 31% number might be higher than the 77% number.

Vindico also released another interesting number - all but 2% of video ads that flowed through its platform last year were re-purposed ads.

Dynamic Logic recently released research that shows that original creative is more effective that re-purposed work at influencing purchase decisions.

Of course, another factor in influencing purchase decisions would be watching the entire commercial.

Does original creative lead to longer involvement/engagement on the part of viewers?

It seems rather obvious that it would.

So, why don’t more advertisers create original content for the online platform?

Cost.

Commercial production is currently a fixed cost spread out across exposures. It’s difficult to create enough exposures online to justify the cost of creating original creative.

What is needed is for production to become a variable cost dependant on something other than exposures. Our suggestion? View duration.

As we mentioned above, if purchase decisions are directly correlated to view duration, than a commercial that is viewed in its entirety is more valuable than one that isn’t.

A commercial that is deemed more valuable in the marketplace should also offer more value to the agency that created it.

This is the theory behind View Duration Compensation. As viewing audiences continue to fragment and control increasingly shifts to the viewer, advertising’s ability to hold an audience is becoming as important, if not more important, than the number that see it.

The IAB wants skippable ads to lead to new ad models for publishers. They will.

But they will also lead to new ad models for the creation of commercials.

The current economics of commercial production can only be justified through large audience size and repeat exposures. Neither of which are readily available on the digital platform. Therefore it is difficult to justify the production dollars needed to create the emotionally compelling stories required to build brands.

By allowing commercials to be skippable, or in other words, by putting the engagement level of the commercial in the hands of the viewer rather than the advertiser or publisher, advertisers will be able to hold their agencies accountable for view duration.

As view duration is measurable, it is also monetizable.

Agencies and production companies will be able to be paid based on how well the creative involves/engages the audience.

Which will lead to more original creative being made for the digital platform.

All because we’re allowing viewers to skip the commercials.

As we said in our last post, the only way to regain control is to give the viewer complete control.

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