The Evolution of Video Advertising
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I’m surprised to see some businesses still using traditional 30-second television advertisements. My surprise is due to ever-decreasing television viewership pitted against the inexplicably ever-increasing television advertising costs.
Even when television is watched anymore, DVR/Tivo technologies allow viewers to easily skip past the commercials. My household has two televisions and a DVR on each set; I refuse to watch television anymore without being able to skip the commercials. Commercial-skipping ability on local channels is a reason I stick with Dish rather than switching to DirecTV. Dish carries local channels in their satellite programming, enabling local channel recording and thus commercial-skipping. DirecTV has broken numerous promises for several years to add local channels to their lineup.
I read a book at our local library (Buzz Marketing, I believe, though I couldn’t find it in an online catalog search) that computed the costs of television commercials and subtracted out the statistics of people skipping commercials (or completely ignoring commercials by going to the kitchen or restroom). The author computed the actual costs of television commercials to be $16 per viewer, much more than the $.02 per viewer that television stations claim.
How many people are even watching any television anymore? Business 2.0 magazine reported this month (and numerous other sources have confirmed) that people spend more time online now than they do watching television. Their article reported how businesses are shifting to new media advertising venues like blogs, and away from traditional media advertising venues.
Advertisers that want to continue using 30- or 60-second video clips are increasingly turning to YouTube.com. YouTube is the hottest startup of the year, still less than a year old, and enables anyone to upload videos for no charge and requiring very little technical experience. The choice is then between free upload and worldwide audience vs. charged airing with small television viewing audience.
So I had an idea for local businesses to ensure they are capturing eyeballs for their video ads. Imagine walking around the park or the greenbelt, and someone offers you $5 to watch two 30-second ads. All you have to do is pay attention to their laptop screen for 60 seconds, and you earn $5 on the spot. It’s not a huge amount of money earned, but it’s also not a lot of time lost, either.
A company could coordinate local business ad sales, converting ads into digital files, and sending sales people out into the public areas to sell watching ads. Individual entrepreneurs could even walk around with a laptop or tablet PC and wearing a t-shirt ($5 for 60 Seconds?) This person could have a little portfolio in hand that contains viewing contracts and payment receipts.
The earning rate is $300 per hour, and people only have to watch an ad for one minute. Reading and signing the one-page contract, watching the 60-second ad(s), then waiting to receive their $5 and sign the cash payment receipt would likely about 2 minutes per person. Groups of people can all earn the money, but they must focus individually on the screen one at a time, so the whole group will likely overhear the ad as many times as there are members in the group.
Talk about taking the message directly to the people! Every signed contract (viewer) would be turned into the business at day’s end, and the person delivering the ads could earn $2.50 per 30-second ad watched (proved by the contracts). This would cost the business $5 per 30-second ad, a bargain compared to the $16 per viewer with traditional television advertising. The businesses could even gather viewer demographic information (from the contracts).
Of course IdahoFallz.com also enables you to advertise effectively to the Idaho Falls market.
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Comments
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0 
0 My wife and I rank among those who — forget skipping commercials — rarely watch television at all these days. Sure, we watch movies, but not often. We intermittently watch videotapes of two shows (Monk and House) taped by my father-in-law. The tapes are passed among several families, none of which I imagine watch the commercials. Keeping up with three kids and our other projects doesn’t allow a lot of TV time, so we don’t waste it on commercials. And yeah, maybe you’d get a few schlubs in the park who’d watch a TV commercial on a PC for $5, but not us. I’ll admit when you started touting idahofallz.com as an ad venue, I nearly tuned out. For my selfish sake, hope advertising never happens here. Even without TV in our lives, we’re inundated with commercials, on the Internet, in the mail. 99.9 percent of it goes in the round file. Yes, some gets through the filter. But companies are pounding their ad money down rat holes, in any venue, in any form, as far as my family is concerned.
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0 0 I’m going to have to call hooey on your claim that television advertising costs $16 per viewer. You can buy a local spot in the morning news for $25. Are you telling me that only one and a half people watch the local morning news? Late news spots can be bought for a couple hundred dollars, but reliable sources (ratings diaries) say that hundreds if not thousands of people see those commercials. Of course not every viewer is riveted, but our clients’ results show that TV advertising works.
So the real cost is closer to 2 cents per viewer than $16. Also, as Archy pointed out, advertisers or merchants in a common shopping center/downtown etc. can go in together on an ad. Or they can buy 5, 10 or 15 second ads. But I don’t understand his reference to channel 6. They offer nothing that KIDK or KIFI doesn’t offer too.
This is the kind of misinformation that some people read and just assume to be true. Then before you know, it’s an urban legend that TV advertising costs $16 a viewer, which is outrageously false.
Local TV advertising fills a niche for both the advertiser and those viewers who don’t seem to resent them so much. I for one am glad that we have television to watch that has local content and not just beamed in by satellite.
Joe, I don’t see how this concept of video advertising could work. But if you run into any people who are willing to pay $5 for one person to see their ad, please have them call their local TV station. We’ll make them a lot better deal than that.
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0 0 “your claim that television advertising costs $16 per viewer.”
It was not my claim, it was from a marketing book. I admit I don’t know the author’s method of deduction.
Given the spread of DVR technologies, I would bet on the figure being closer to the $16 side than the $.02 side. Let’s say it’s $8 per viewer. The idea described above still presents a bargain, but more importantly the power is given to viewers in that they choose to watch the ads and they are paid to view the ads.
What kind of spot can be had for $25 on a local morning show? Do you get a full 30-second spot? A 10-second spot? A blip in the ’sponsor’s screen that flashes for a half second at the end?
Yes, merchants in common areas can go in on ads, but the value is diluted further (probably why they can, yet we don’t see that many of them).
There are many criticisms of the ‘ratings diaries’ that advertisers use to guesstimate viewerships, and I’ve heard the number of DVR’s sold in broadcast areas are never taken into account.
One thing I’ve always thought was bunk was how television bases their viewership and advertising rates on sweeps periods. They air great stuff for four weeks, then charge the same rates for the next two months when the programming quality is not nearly at the same level.
I don’t know what you mean by “I for one am glad that we have television to watch that has local content and not just beamed in by satellite.” I said Dish includes local programming with their satellite offerings.
Plus with Dish’s DVR the local programming can be enjoyed and the local commercials skipped.
Which goes back to the original point: witness the evolution of video advertising.
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0 0 Joe, I’m sorry if I inferred that it was you who claimed the $16 per viewer rate. But I did get the impression that you agreed with that figure, and you did repeat it. So it was in a marketing book? I wouldn’t be surprised if the author was putting down TV advertising because he had a vested interest in a competing form of advertising. A lot of times that’s where criticism comes from.
So you’re claiming maybe it’s only $8 per viewer? So for a $25 commercial in the local morning news you still say only 3 people are watching any given commercial. It’s hard for me to understand how you could really believe that. By the way, that $25 commercial is for a full 30 seconds. And there are some times of the day commercials are cheaper than that.
You say that when merchants go in together on ads the value is diluted. Well, so is the cost. As with anything else, you get what you pay for. I’ll just give you an example of how this could work. This weekend there is a big celebration and unveiling at Taylor’s Crossing. Imagine if some of the businesses there shared the cost of an ad. They could promote the celebration at the beginning of the ad and then give different businesses each a portion of the ad to promote themselves. Sounds like a good value to me.
Local TV advertising is a great tool for new businesses to make their presence known. In what other medium can a new business owner introduce themselves and their business, either in voice, on camera, or both?
You said “There are many criticisms of the ‘ratings diaries’ that advertisers use to guesstimate viewerships, and I’ve heard the number of DVR’s sold in broadcast areas are never taken into account”. Those are pretty vague terms. “Many criticisms” could be a lot more specific. And “I’ve heard” something without giving a source means nothing to me. You also “heard” that TV advertising costs $16 per viewer, which is way off base.
As far as the ratings being “bunk” because only four weeks of great programming skew the figures, that may be true at the network level. But not at the local level. While local stations might have a few special reports or series during sweeps, it’s mostly the same news product you get all year round.
When I said that I for one liked local content, I’m not just referring to programming. I enjoy a lot of the local commercials. I learn about sales going on, I learn about area businesses, and most importantly I support the local economy every chance I get. I don’t just talk about it, I do it.
Although I’ve seen the local media get slammed on this site, I’ve also noticed that they get praised when they deserve it and for the most part people are watching. It’s a great asset to a community to have local TV news. But news departments are the biggest expense in a TV station. All of the staff, equipment, and vehicles cost money. Without local commercials you would have no local news. Or maybe it would be by subscription and you would have to pay for it. It would have to be paid for somehow. It’s a nice trade-off to get that local news for the price of watching a few commercials.
I’m sorry that your original topic of the evolution of video advertising wasn’t the focus of my post. But in reading the first several paragraphs of your post, all you do is make a bunch of false claims against TV advertising before you tout your “video advertising”. If an idea can’t stand on its own merits and has to be reinforced with false statements about its competition, maybe it’s not a great idea after all.
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0 0 Some people might waver at stopping for 60 seconds to earn $5 (probably don’t see it as worth their busy time?)
How about if that person with the laptop has 30-second video ads from 10 different local advertisers?
Would you stop to watch five minutes of ads for $50?
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0 0 Though it’s not video media, the yellow pages are another incredibly expensive ad medium. To run a med. sized ad in the three that dump books on on our steps (a huge wate of resources)will run you about a grand a month. It is information that potential customers will go to rather than ignore, but the expense is seldom worth the return for a small business. That would reach a couple of thousand people by your method, and leave them with something to talk about. If half of the people had good experiences and impressions from the method and told one other person about it (I feel this is conservative) you could at least reach 2500 people with your message. That’s pretty significant in a town this size.
The idea sort of reminds me of travelling uhauls I have seen in the cities promoting things such as Buzz cola just driving around with huge logos on the side and giving out free soda.
Also, though it doesn’t appear that much is going on as a result, the karate gut who put out boxes and flyers everywhere for the last couple of months is a good example of how easy it is to get your name out there on a grass roots level.
Your Idea takes this kind of thinking to the technological level. Anyone with a little Flash savvy or Powerpoint skills, even, could make an entertaining, interactive presentation and also throw it up on a website so that others could be referred to it easily.
I have seen several responses from different media members disagreeing with the insights about the future of the printed and televised media, here. My advice to those clinging to those rapidly changing jobs is to do a little reading of some Terrence McKenna and some Marshal MacLuhan (didn’t check my spellings, there) and get hip to the evolution or go the way of the dodo.
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0 0 Okay. Say you do find people in a park willing to spend $5 per ad, just to watch it. $50 for ten ads? Sure. I’d do that, and Ihate advertising to the point I won’t even answer the door when the cheerleaders are there selling whatever to buy their costumes. But find any advertiser who wants to spend $50 just to reach TEN potential customers — nine of whom only stopped for the $50 and don’t give a fig for what they watched (they’d watch a rock for 2 1/2 minutes for $50) — and I’ve got some interest in the Brooklyn Bridge I’d like to sell them. Now, I’m not in advertising, but I’m much more willing to belve the 2 cents per customer — or far less — per commercial than the $16 or $8 figures, no matter what ‘marketing book’ they’re in. Tell O’Dell’s Furniture their local advertising is costing $16 or $8 per customer, you’ll be laughed you right out of the furniture store. (NOTE: Neither am I associated with O’Dell’s Furniture. No sinister motivations here.)
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0 0 I should clarify that, the 10 commercials would be ten different businesses, the effect would be lost if you watch the same commercial 10 times.
I thought about it more, and it would probably be best to restrict showing an individual person more than 4 commercials in a row, maybe even 2, since the early ones will get lost in attention span and short-term memories.
I’ve been laughed out of many places, wouldn’t surprise me to get laughed out of O’Dell’s also 8^)
However, does O’Dell’s really know how many people are paying attention to their aired ads, or are they relying on what the local television salespeople say?
Is there any independent source of viewership?
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0 0 Thank you Brian, for pointing out the obvious to those who can’t see it. And Archy made a good point about all the different yellow pages and other more creative forms of advertising, there are just a lot more advertising choices these days.
A few years or decades ago, most advertising consisted of print, radio, TV, billboards and yellow pages. And there was only one yellow page company at that time. Now there are probably half a dozen yellow pages, website ads, lots more radio stations including satellite, lots more TV stations including cable and satellite, the list goes on. There are so many more options for advertising, and for most of these media the only way they will get the business is to take away ad dollars from another media. Most businesses will only budget a certain amount for advertising and not increase their expenditure every time a new advertising medium comes along. So people with an interest in selling other media will sometimes either exaggerate their own medium’s effectiveness, or criticize the medium the advertiser currently uses. It’s the fear factor, but sometimes it works. Advertising is one of those things that is based on speculation anyway, there are no guarantees.
I have no problem debating the merits of TV advertising, especially as it relates to local businesses. But if we are going to have a debate, let’s stick to the facts, please. The cost per viewer figures are way off, please just admit it. I could dig up some hard data if I had to, but common sense should prove my point. And at least I did provide facts on the cost of running a 30 second commercial.
Archy, I hear your comments about changing with the times and I totally agree. But I don’t feel like I’m “clinging” to a career that is a dead end. The TV business has been “rapidly changing” for the past 30 years and it isn’t going away anytime soon. There are a lot of ways it has evolved and I would mention some specifics, but there are some trade secrets and proprietary information that I can’t share. Sure there are lots of newer ways to get information, in fact there is a glut of ways. But there are only 3 local TV stations here and I think they’ll be here for a while. A year ago KIFI was bought by a media company for $12.5 million and I’m pretty sure they plan on making that money back along with a profit someday. This is a company with a large multimedia background so they have their finger on the pulse of the industry. I trust their judgment far more than that of a person making a comment on a blog.
Over the years it has become popular in some circles to bash TV commercials. Before you go jumping on that bandwagon, take a minute and think about what a service it is to the community to have local news and information available, subsidized by local advertisers. It’s a win-win situation in my opinion.
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0 0 TV Ad Guy, you make some valid points. I appreciate your concern for sticking to the facts in an intelligent debate. Again, the $16 per viewer figure was something that stuck with me after reading a marketing book, and I don’t know how he determined that.
I don’t have facts on the subject, so I’ll try to find that book and see if he published a bibliography.
I agree with you 100% that television stations will continue to be profitable, and the new owners of the local station will certainly make their money back several-fold.
My position is that just because the advertisements are still sold, does not mean they are still effectively reaching the people like did 10 years ago.
Nobody has disputed the DVR effect of skipping commercials, and how that diminishes advertising reach.
A station may very well have 10k veiwers for a particular episode, but does the station acknowledge the difference between who watches those 10k show viewers and how many actually watch through the commercials (rather than skipping through them)?
You are absolutely correct that businesses set advertising budgets and divvy it between the availble venues. My position is that national advertisers are increasingly migrating their dollars away from traditional television commercials because they are following the eyeballs.
How long until local advertisers follow the national trend?
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0 0 I have to admit Brian Davidson’s bit left me a bit confused. I don’t see that people would be spending money to watch ads, but getting paid. And who wouldn’t at least mention to a few others how they made 10 bucks from x businesses today just to watch acouple of ads, and then talk about the ad? (secondary advertizing for lack of a better term)
I don’t see any disagreement with how many people you could reach with a grand to hand out, or what percentage of our population that represents.
TV ad, I mean no offense nor do I imply your job is dead end, my point is that evolution is happening and jobs in your industry better evolve, too. Radio did not kill the written word, TV did not kill radio. Radio has evolved. Think NPR and sattelite. But the major tv or radio shows have websites, because you have to.
People are watching TV on their own computers now, as well as listening to the radio online. This is more the wave of the future as memory becomes cheaper and smaller at a rapid rate. The little boxes we have to buy now and subscribe to services for will become integrated into our computers as media becomes more and more a consumer’s choice. See: Windows ME for a primitive lurch into the future.
Joe you really bring it home with your last question. In the past IF and the west in general have lagged behind in fashion, music,etc. Trends move from the East coast west, and that takes a couple of years. But the times are changing due to the fact that no matter where you live, you can find out about and get the “latest and greatest” as long as you can access the web. And anyone can do that even if they don’t own a computer, yet. So my theory is that if local people are following the tech trend, advertisers are going to have to evolve as quickly as the technology. Lag is decreasing and tech is increasing at an exponential rate.
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0 0 OK I reread that BD and guess it’s just a typo? I think it is significant to the subject to look at the fact that individuals are already laying down their hard earned cash to avoid commercials.
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0 0 Are ya kidding, $5 for a minute of my lifetime?!? Id do it in a heartbeat! If I ran into this joker as I was racing back to work, of course Id deck him, but on the greenbelt or at a park Im relaxing and I can spare a minute, especially to get paid for what I get at home for no pay.
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0 0 Lo and behold, this month’s Business 2.0 magazine features a company that pays people to watch advertisements!
Brightspot has an early deal to give discounts to your Gamespy or Blockbuster monthly rental accounts, when you watch their advertisements and answer questions about the ads and your demographic information.
I read one blogger using this who said he had earned about $1 per ad watched, about $20 in 20 ads in his first two months.
I’m a visionary on these things, I tell ya. Someone once told me I should be hired to just think up these crazy ideas for market opportunities, but the problem is it can take years to realize the market and profits from these ideas.
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0 0 Ooop, another story about rewarding consumers to watch advertising:
http://www.engadget.com/2007/05/10/japanese-vending-machine-offers-free-drinks-for-watching-ads/
Watch a 30 second commercial.
Earn a free drink.
Who wouldn’t?
Let me watch 5 minutes of ads in exchange for a free lunch.
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chill, gato, it ain't worth getting your purty fur messed up
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This is certainly a feasable concept. Having priced and purchased local media, I know the costs, especially for TV. The only way I could imagine a smaller business getting their ad on the telly would be to cram together with several others on a sponsorship like on channel 6, I think. The ad process could also include a short poll about the product and the ad method itself, to further improve. And keep that list up, Joe. It will grow. I wonder how proactive you might let people get about posting businesses that they just like? That might spur it on, a little.