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.