Tuesday, May 28, 2013

How Obamacare Can Change Advertising

According to a Thomas Friedman article in the New York Times on Saturday, Obamacare is based on the notion that the main reason we pay so much for our health care is because the incentive structure in our system is wrong.

Doctors and hospitals are paid primarily for procedures and tests, not health outcomes.

A quick look at the incentive structure for advertising indicates that the ad industry is also being incentivized for the wrong things

Primarily, ad agencies are being paid for effort versus outcome.  The longer it takes to come up with a campaign, the more the agency makes.  The more advertising the agency makes, the more money the agency makes.

The incentive is not so much to make the client healthy as it is to keep the client advertising.  In other words, the ad industry is paid more for the volume they deliver than the value they offer.

What will make Obamacare work is the instant availability of data about patients.  What will make a new incentive structure work for the ad industry is also the instant availability of data about individual commercials.

How many people started to watch a commercial?  How long did they watch for?  How many shared a particular commercial with friends?

The more involvement each individual commercial, or piece of advertising receives, the better the overall campaign should work.

By pinpointing the effectiveness of each individual component of a campaign, accountability can be assigned to the creators of those components.

Effectiveness will be rewarded.  

Wastefulness will not.

Doctors will need to get used to this

As should advertising agencies.

1 comment:

  1. very informative..thanks and keep posting..:)