Wednesday, June 06, 2012

If Content Is The New Currency, How Do We Pay For It?

Everywhere you look, the experts seem to be saying that content will soon be replacing ads as the way to build brands.

GM recently walked away from advertising on Facebook.  But GM is not reducing the $30M it spends annually on creating content for Facebook.

If the experts are right, how do advertisers determine the value of a piece of content?  Are sales still the answer?

To a point, certainly.  After all, if there are no sales, there is no money for creating ads or content.

But one of the biggest differences between advertising and content, at least to me, is the way people interact with it.

Advertising, for the most part, interrupts.  Content, for the most part, does not.

People come to content on their own volition.  Reach and frequency are therefore no longer the ultimate measures of success. 

The word that's replacing both reach and frequency is "engagement".  Interestingly enough, engagment means different things to different people.  But the one thing people don’t usually argue with is that engagement has a time element to it. 

People can become involved with a piece of content for as long as they want and that particular piece of content is.  Most interruptive advertising online requires the viewer to be invovled as long as the advertiser wants. 

And usually, that's for the complete lenght of the spot.  "I paid for 30 seconds to be produced, damn it. You're going to watch all thirty."

But with content, people control the amount of their involvement they'll give each piece of content.

Fortunatley, we can measure the length of the involvement for each engagement.  If advertisers say that longer is better, then couldn't it be argued that length of involvement is the immediate value that content brings?

And, if invovlement is the value received, why aren’t advertisers paying their content creators for value delivered?

Soon, content creators (ad agencies) will have no choice but to change the way they get paid.  After all, content, unlike advertising, cannot be underwritten by reach and frequency.   No longer will production be 10% of the media budget.  Media budgets will be too small to be able to enable great content.  

And there's the rub.  Content needs to be great if people are to get involved of their own volition.  Even though the size of the audience for an individual piece of content is smaller, it is no less important.  Which means, the cost of creative can't become less.  It may well need to be more.

Which means, advertisers need a new way to justify the cost of creating content.

It was easy to figure out a formula (production will be 10% of media) when success was measured by reach and frequency.

What will be the formula when success is measured by involvement?

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