Paying for Effectiveness Instead

Roughly three weeks ago, Advertising Age's MediaWorks published an article about potential changes in the way that ad space is valued, bought, and sold. Apparently ESPN and CNN are exploring ways to measure the amount of "buzz" that is generated from television commercials on their channels. Soon, advertisers may be able to pay for advertisements based on how many viewers talk about the ads, not on the number of impressions.

Great idea! (assuming that ESPN and CNN can get it to work.) Payment always ought to be tied as closely to performance as possible. So why not tie valuation of ad time to the effectiveness of that time slot in connecting with consumers?

The possible results from an advertisement (or advertising campaign) fall on a spectrum of effectiveness that looks something like this:



An advertisement is slightly effective if it leads to brand recognition (consumers can remember having seen the brand when they are presented with the brand name or logo) or brand awareness (consumers can remember the brand when asked to name ads they've seen recently, or to name brands in a particular product category). But an ad is really effective if it generates word-of-mouth, if it gets people excited and talking about the brand with their friends; or, even better, if it starts a veritable ideavirus - one than spreads like wildfire from person to person simply because it is excellent, remarkable, and worth spreading.

Traditionally, advertising is valued based on CPM, or cost per thousand impressions. The number of impressions is the number of people who might potentially have seen the ad (assuming that they were paying attention, and hadn't muted the tv, gotten up to use the bathroom, or engaged in a side conversation while the commercial played). Thus, media "impressions" is quite a nebulous term - it gives no real indication of the effectiveness of the ad:



Setting prices for advertising space and time based on the number of people talking about the brand, rather than the number of "impressions," places value on the real results of the ad: its effectiveness.



I do hope that ESPN, CNN, and other media outlets will be able to find an accurate way to measure the amount of talking that an ad generates. Switching to a new pricing scale based on effectiveness will be a huge improvement to tv advertising, one that will benefit the media, advertisers, and viewers alike.

A Return to Soap Operas?

We are seeing a welcome shift in the marketing world - a move away from trying to capture customers by shouting at them with ads and commercials, and a move toward gaining fans by creating simply excellent content. Certainly we are still inundated with traditional "interruption marketing" (to borrow the term from Seth Godin) in magazines and newspapers, on tv and billboards and the Internet. But more and more marketers are letting great content speak for itself. They are doing and creating remarkable things that get people talking. (To learn more, read Seth Godin's Purple Cow, if you haven't already.)

I think the rise of smartphone apps and customer-created media (a la YouTube) has aided this trend toward remarkable content. Marketers are communicating via things that can be enjoyed as entertainment even without a brand message.

There is Gillete's uArt iPhone app that lets you add facial hair to a photo of yourself, then shave it into designs of your choice. There is the microsite for Coke Zero, which is really a video game in disguise. And how many company-created YouTube video phenomena do we see now? Like the Frosty Posse from Wendy's.

I see this trend, and I like it. This model inspires us to deeper levels of creativity. It makes me wonder whether we will soon see a huge reinvention of traditional advertising, such that we no longer see magazine ads and billboards and tv commercials as we have them today. Instead, will we see pure content - art, music, videos, games, short stories, poetry, etc. - "sponsored" by companies? For example, instead of tv commercials between our programmed viewing, will we see fun, 60-second short films with a simple, one-line message at the end: "brought to you by [insert brand name here]"?

It would be as if advertising (at least tv and radio) were coming full-circle, returning to the soap opera model. Soap operas got their name because a consumer products company (i.e. Procter & Gamble, who may have been the first?) would sponsor the radio or tv show. They would promote their cleaning products (i.e. Ivory soap); hence the name. If we see more pure content coming from marketers, it will be like a return to our roots.

Regardless, it will be interesting to see where advertising heads in the future. With the rise of the Internet and other "new" media, there has been talk of whether traditional advertising is on its way out. I can still see television, print, and radio ads as having a place alongside (instead of being replaced by) interactive, social media, viral marketing, etc. But these traditional advertising media may look very different in just 5-10 years than they do now.