Wednesday, July 17, 2013

The Negative Response Was To Be Expected


The bigwigs from media buying agencies responded in the typical fashion to the news that Apple wants to allow viewers to skip commercials and would pay networks for revenue lost.

Here’s the comment from the chief investment officer for WPP’s GroupM:  “The networks are very unlikely to support any service with their linear feed that allows for commercial messages to be skipped even if they get some form of compensation.  This is not a viable economic model and subscribers to the system would not pay an adequate premium to compensate for it.”

Expected, right?  Don’t mess with the status quo.

Two things. 

The first is that it’s ironic that the only way to accurately measure if someone has actually watched a commercial is by allowing them to skip the commercial.  In other words, by giving the viewer complete control.

Media companies don’t want this.  Why?

Why do you think?  Because it will only prove that the majority of commercials aren’t actually consumed by viewers.

The second thing is that most advertising people think that the only option to intrusive advertising is a subscription model.

Is that true?

Think about it for a moment.  What is an impression?  An impression is nothing but a data point, right?  A data point that, when sold at a $20 CPM, costs 2 cents per person.

In other words, networks are currently selling data.

The different types of data that networks now possess have multiplied greatly over the years.  This data, even the data that says how many people skipped a commercial, has value to an advertiser.

When data has value, it is sellable asset.

Instead of charging viewers a subscription to watch commercial-free programming, it sounds as if Apple is going to allow viewers to skip commercials and compensate networks by establishing new, and sellable, data points.

What might this prove?

That networks can make more money by allowing commercials to be skipped then by forcing them to be watched.

Now, wouldn't that be interesting?

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