YouTube’s “TrueView” and Legacy Media’s Resistance to Change

The difficulties of shifting the television advertising business model are evident in Will Richmond’s report on the Videonuze Online Video Advertising Summit. At one panel, the old model of measuring and valuing viewer “impressions” was challenged by the new model of valuing viewer “engagement.”

According to Richmond, a YouTube representative explained why YouTube’s “TrueView” format, which allows viewers to skip pre-roll commercials, is a good development for advertisers. When viewers control which ads they see, they are more likely to be “engaged” with the advertising. YouTube charges advertisers only for the ads that viewers choose to view. TrueView allows advertisers to pay for and reach only those viewers actually interested. Such “targeting” should, over time, become more valuable to advertisers because the viewers they reach may actually be influenced by advertising. In a digital media environment like YouTube where viewers choose what to watch, catering to viewer choice in advertising is a logical step.

The representative of the traditional television model on the panel, Peter Naylor from NBCU, dismissed the possibility that television networks would adopt skippable advertising or change from an impression-based metric to an engagement-based one. Naylor identified two problems with changing to an engagement-based metric. First, there’s the problem of inertia: the advertising industry is comfortable with forcing exposure on passive captive audiences and then measuring and monetizing those impressions.  Second, to lure audiences to view skippable ads, the “creative” element of the advertising would have to be high quality, which would cost more and put more pressure on agencies.

Naylor’s view is typical of the “head in the sand” response of legacy media to changing audience behaviors. Linear television networks provide programming to lure audience attention only to sell it to advertisers. Audiences must sit through the commercials in exchange for viewing the programming. So to invite audiences to skip ads is simply anathema to the advertising and networking professionals whose expertise is based on the “bait and switch” model of advertising. 

Given that audiences are no longer locked into viewing linear television, and given that audiences have far more content options, including options without commercial interruptions, shouldn’t networks and advertisers realize that they can no longer force viewers to endure commercials but must develop strategies for enticing them to view ads?

Naylor’s second point is another admission of failure to address audience interests. He notes it would be more expensive to provide more “creative” advertising, even though it may increase audience interest. Does that imply that advertisers have been boring audiences with cheaper bad commercials all this time? And what is wrong with putting more pressure on agencies to produce more interesting commercials?  Wouldn’t that improve audiences’ attitudes toward advertising?

Naylor seems to assume  that the legacy business model will continue to be functional, when clearly it will not. The profitability of linear television interrupted by commercials has been based on audience captivity to network schedules.  That captivity is ending.

If I were an advertiser or a network, I would be observing opt-in advertising models in online video very carefully. Even though “inertia” may be delaying  most advertisers from trying models like TrueView, that could change. Any day.

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5 thoughts on “YouTube’s “TrueView” and Legacy Media’s Resistance to Change

  1. It’s a great idea. The problem: well, there are a couple of related problems.

    Entertaining and effective aren’t necessarily the same thing. Nobody’d watch Mr. Whipple out of anything but inertia, but he sold one hell of a lot of Charmin. I love the Old Spice Man, but am I going to buy Old Spice? When I grow a beard, maybe. Probably not even then.

    What this kind of approach will do is create a very few winners and everyone else will lose. You win if you produce a massively entertaining, competition-killing ad that also happens to be successful. You lose doing anything else, and bottom line is you reduce the number of winning ads. It’s not enough to say “get more effective with your massively entertaining ads” — what do you think they’ve been trying to do up there in those agencies for the last century?

    The winners will also be terribly shortlived, because people have the attention span of gnats. Do you really want to see the GEICO lizard again? No, and neither does anyone else, really. All he does at this point is remind you that GEICO exists. He’s okay, but you’d ditch him in a heartbeat for something hot and novel. Think about the weird effect on sales this might have if you actually did get a simultaneously superentertaining and effective ad: crazy boom and bust that temporarily sucks all the sales away from substitute products. It’s no way to run a business.

    Naylor’s not being stupid, in other words. I don’t know how much ad-skipping people actually do, for one thing. At home, it may be true that more and more people can (we don’t; services like Tivo cost money). But a lot of viewing goes on away from home. It’s almost impossible to find a waiting room without television; restaurants have them; buses and planes have them; they’re ubiquitous. And you have no choice there; you’ll watch it and like it, see.

    I’m reminded of a used bookstore I used to work for long ago. When I first got there, I was out of my head with the crazy promotional opportunties I saw, because it was a very good store with almost no advertising. People came in all the time saying “I had no idea you were here”. And I cooked up all these plans for advertising. The owner had to talk me down: if we did all this advertising, and it was successful, people would come and denude the shelves faster than he could fill them again. In used sales you can’t just order up whatever you want at a reasonable wholesale price. Often you’re waiting for people to die, essentially throw away the books. Finish reading them, anyway. Anyway, if he had masses of customers come in and ravage the place, the next crowd would show up and find the place looking empty, word would get out, and that’d be the end of him.

    The lesson: Advertising’s only one part of sales. If I had something to mass-market, I wouldn’t be anxious to do it in the least stable possible way, either. You might get rich quick on a fad, but you’re not likely to build a business on it.

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