A new paradigm for selling advertising slots

There are fundamentally two kinds of videos – videos for which willing to pay to see, and videos which you are paid to see. It is intuitive that advertisements fall in the latter model – for watching an advertisement, you are being “paid” a certain sum of virtual money which gets encashed when you watch the program along with with the advertisement appears.

You might also notice that despite all the hue and cry about copyrights and people getting videos pulled off youtube, it is unlikely to find a case where an advertisement has been pulled off youtube. An advertiser will only be too happy to have more people watching the advertisement, and by pulling it off youtube, the advertisor will be shooting himself in the foot.

When you are watching TV, and a painful ad comes along, you are likely to switch channels. Or get up and take a break. And turn your eyeball to the screen only when all the advertisements for that particular session are over. So, in effect, by showing a bad advertisement, a channel is reducing the number of eyeballs for the other advertisement in the same session (a session is defined as a consecutive set of advertisements, uninterrupted by the main program. it can run from approximately thirty seconds to five minutes)

On the other hand, a good, popular and well-made advertisement is unlikely to make the viewer switch channels, or get up. It is more likely to generate higher eyeballs for the other advertisements in the session – without any additional effort by the other advertisements in the slot. And thus pushes up the value added for all advertisers in that particular slot.

So the idea is simple – advertising slot providers (i.e. TV channels, etc.) should incentivise advertisers to make better advertisements. Or use the better advertisements more. And the simplest incentive you can give is monetary. So offer a discount for the better and more popular ads. So far, the model has been to make viewers view ads that come along with a programme. The new paradigm is to make viewers view ads because they are placed next to ads that viewers want to see.

I’m sure that once this kind of pricing gets implemented, it will be more profitable both for the TV Channel and for the viewers. TV Channels will be able to sell the “network value” of placing ads on their medium, and use that to more than compensate for the lost revenue in terms of discount. Viewers will like it because the bad ads will be gone, and they will be saved the trouble of switching channels each time there is an ad break.

There remains the small matter of implementation. We need a way for rating advertisements. Online/SMS polling will be no good as they can be rigged. Neither will youtube help. We will need to find a better way to gauge how much people in general find ads. If there is some way in which TRPs for ads can be measured, that would be helpful, too. I’ll think about this problem, and maybe publish a solution to it in due course. I urge you also to think about this kind model, and let me know if you can come up with any bright ideas.

One option would be for the channel to pick what it calls a “winner advertisement” and fix the various slots in which it is going to be played. Maybe the winner might be given the choice of picking which slots it wants to go in. Then, the channel can make the placement of these winner ads public to the other advertisers and encourage them to bid for the surrounding slots. This bidding can help gauge the popularity of the initial winner ad, and then the channel should share some part of the proceeds of the auction with the winner advertiser. And when the premium that other advertisers are willing to pay in order to get a slot close to the winner drops, the channel will know that it is not a winner anymore and replace it.

So what I have described here is some sort of effective peer-review process for advertisements. Different channels can choose different strategies for the order in which to let channels pick their slots, about what kind of auctions to hold, etc. The most important thing about this peer-review process is that here people are voting with their chequebooks – and when people do that, they are very likely to know what they are doing.

So think about this. I think it is a good idea, and it seems like one of those things that if one channel implements it, it will become some sort of an industry-wide standard. And if you are not doing this because you think you don’t have quantitatively inclines people,  the fired investment bankers are still around.

5 thoughts on “A new paradigm for selling advertising slots”

  1. DTH can help. One can run a simple program where the viewer presses some button on his DTH remote to convey his vote. DTH subscriber data is available with the DTH service provider and hence can be authenticated. Every DTH set top box has an unique identifier (like an IP address). So no cheating.

    Of course, human beings can still try to figure out how to hack it. It’s programming after all.

    1. but again, these kind of votes can be rigged, with advertisers deciding to invest on voters in order to save up on their advertising costs. which is why i say that the only trustworthy votes are when you “vote with the chequebook”

  2. What you are suggesting is a derivative/second rung of what’s happening in the industry already wherein channels use the show’s popularity to get ads..you are taking it one level further whereby show’s popularity gets you the ads and an ad’s popularity gets you surround ads…problem as you pointed out is in implementation..when even TRP’s on half-hour shows are disputed as not being representative, measurement of 10-second or 20-second spots will be much more difficult.
    another thing to consider is the timing of the ad…ads which are placed in the last 30 seconds of a session will always get more eyeballs simply because viewers will be willing to st through those since they know the program will resume soon..so,quality of the ad won’t matter in that case.

    1. yeah – if some slots are more lucrative than others, the channel should charge more for them. i think with the kind of bidding process that i’ve described here, this also gets taken care of.

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