• by Alex Rowland , June 15, 2010

The mechanics of acquiring audience through investments in digital media has begun to fundamentally alter the way in which video is produced, marketed, and distributed. This transition is nowhere more apparent than in the world of branded entertainment. Online branded entertainment video series are judged based upon the quality and size of the audience they accumulate in support of brand goals. In order to ensure these goals are reached, studios and agencies use a variety of tools to build this audience. But one of the most important arrows in this quiver is the media buy.

This is where things get a bit interesting. Initially, many BE media plans involved working with large portals or social networks to create large blended media packages. Brands would be provided with an exclusive branded area/channel of the site and they would purchase a variety of display units to drive audience to this area. There would be no guarantees when it came to overall viewership, but there would be a guaranteed number of display impressions served. The problem with these types of media packages is that the blend yields abysmal viewership. The portal would sell a ton of display, but the investment in production on the show was largely burnt. If nobody watches the show, why not just make a smaller investment in some rich media display and call it a day.

In response to this, studios and their brand partners have begun moving to a model that involves simply buying guaranteed audiences directly. Why waste money on the interim impressions used to drive viewership when you can just buy the audience without the waste? Since this trend gained footing, studios and brands have experimented with buying audience through autoplay in-banner units (which is essentially a hybrid of display and guaranteed views) and click2play units (in which buyers only pay for engaged viewers). We can debate the merits of each approach, but the decision to buy audience directly rather than indirectly represents an important development that has implications beyond our market niche.

If you look at the current standards in film and television promotion they look a lot like the experiments in portal distribution by the early online BE pioneers. But instead of investing in display, the TV and film guys are making massive investments in television, radio, print, and outdoor media to drive audience awareness. The goal of these investments is still to buy audience, but the audience is bought indirectly. But imagine if instead of paying a CPM on billboards or TV spots, a content owner could pay for actual viewers of the content in something that looks more akin to a CPA model. A lot of buyers would have a lot more confidence in making those marketing investments if they were able to measure the cost of each engaged user directly.

One of the great benefits of Internet advertising is measurability. While not perfect, it is far easier with digital media to track various metrics that yield some measure of performance against investment. The problem that most TV show and movie marketers have with traditional analog media buys is they have very little understanding of what worked. How many viewers did that billboard yield me for the pilot of my new show? That is a very difficult calculation to make because most of the important metrics are "guestimates" based on sampling data and things like "brand lift." However, what would happen if the studio simply bought audience for the pilot directly? Rather than buy media, simply buy viewers. Then you can look at the metrics around how much of the show was watched or shared, and make a decision as to whether the pilot should lead to additional episodes.

This movement from buying audience indirectly to buying audience directly represents the effective merging of marketing and distribution costs. Rather than making one set of investments in marketing content and a different investment in distribution (through revenue splits), combining these costs into a single budget can yield substantial savings. This is why the costs of direct audience acquisition cannot be compared side-by-side with traditional marketing or distribution costs individually. The more that the costs of production, marketing, and distribution can be looked at as a whole with their cumulative impact on margin the better new methods of audience development can be assessed.

As pricing pressure mounts on production budgets and marketing costs increase due to audience fragmentation, the movement to direct audience acquisition represents a necessary evolution in the distribution of digital video. The only question really is how long it will take the industry to adapt and what mechanisms will yield the most efficient path to generating engaged viewership. But the one thing that is likely to become clear is that buses and billboards may not be the most efficient way of bringing the next "Lost" to market.