Back to basics…
Today’s NY Times ran a very interesting article about Joel Moss Levison, a 28-year old college drop out who has made more than $200,000 in prizes entering his own online digital commericals in contests.
As the Times headlines it “Finding a Gold Mine in Digital Ditties”
But I think it is far more than that.
TV commercials used to be created and produced by ad agencies.
The agencies charged millions to come up with the ideas and then to produce them.
It was a very expensive proposition, and on a per-minute basis, more expensive than most Hollywood films.
We all understand the application of the ‘digital revolution’ to the news business. Cheaper cameras, cheaper edits, cheaper content in greater volume.
But what happens when the new technology hits the ad side of the business?
This is something we should pay more attention to, because ad income is the engine that drives the content side. We have a million ideas on how to arrange the content but when it comes to the revenue side, we kind of lower our heads and mumble a few words and hope that God will provide.
Perhaps it is time to rething the income side along with the content side, and apply the same lessons.
For the past two years, we have been producing daily content for a major cable provider in Washington, DC. It’s a hyperlocal news channel, and it has been extremely cost effective. Extremely. The VJs all work from home, the overhead is next to nothing. But the ad revenue side has been disappointing. While we were very revolutionary with the content creation, we left the ad sales and fabrication to a conventional agency.
This was a mistake.
Now, we are engaging in an equally radical experiment both in ad sales and ad creation, and ironically, we are borrowing from the ‘Avon Calling’ or Mary Kay Cosmetics model. But in this case, instead of selling nail polish or lipstick, our door-to-door sales force is selling ad spots on cable.
How does it work?
We have been able to cut the cost of producing local television content do low, that our break-even for ad sales is in the double digits. The very low double digits. Thus, we can afford to sell advertising commercial spots for local cable at $50 per spot. That’s pretty good for a local cable ad.
And because the rates are so low, we can attract a whole new class of potential advertisers – people who had never even considered buying TV commercials, because they thought it would be too expensive.
We’re commissioning a small army of ad maker/sellers (there is no term for this, because it never existed before). Their job is to go, quite literally, door to door, to the local pizzaria, the local shoe store, the local dentist and create a funny and clever 30-second spot (like Mr. Levison, using a camcorder and laptop), and then sell the spots. The creator gets 25% of the income from the spot sale, no matter how long the ad runs, they get paid 25% every time. The merchant gets a lot of face time on local cable for next to nothing. And we don’t need ad agencies or sales people. It’s all done door to door, and can be done by housewives (or househusbands), or students or retirees. Extra income and some fun at the same time.
Will it work?
I think so.
And I think it’s a very scalable business model.