When Advertising Is Entertaining

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Generally, commercials are, well, boring. They interrupt the entertainment we really came to watch. Sure, some percentage of ads are good, actually are worth watching, but they generally are expensive and represent a small percentage of ads.

If you are lucky, you are personally friendly with an advertising creative genius like my friend Ari Merkin, and regularly get to see truly brilliant advertisements, like Elf Yourself, Ikea LampChrismahanukwanzakah, and on and on.

The Super Bowl is the exception that proves the rule event of the "most advertising is terrible" environment. As many people watch Super Bowl for the ads - the one event during the year when the probability of good commercials is significantly higher - than for the game itself, which, often, is not a very good game. Since audiences are so large, and companies pay millions of dollars for the right to advertise, they actually put in the effort to put out good and entertaining advertisements.

The rest of the year, we use commercial breaks to use the facilities, get a snack or sandwich, or, lately, catch up on email or Facebook. For a number of years, companies sold gadgets that you hook up to your television that would dampen the sound of the awful commercials.

Over the last few years, there has been a greater shift towards online advertising, including video advertising on YouTube. What YouTube's owner Google has done differently, however, is made the ads skippable. Google has every incentive to do this. On the one hand, they want to encourage users to come back to YouTube to view more videos and stay longer. Higher page views with higher stickiness means higher values. On the other hand, Google is not a philanthropic foundation, and they need solid revenues.

By making videos skippable after 3-5 seconds, they create tremendous pressure on advertisers to make videos that people want to watch.

The two salient questions are:

  1. Will this improve the quality of advertising?
  2. Will this improve sales?

These two issues are intertwined. If it costs you $100k more to create a good video, but that will only lead to $10k more in sales, then no; if the reverse is true, then yes. I expect, over time, to reach an equilibrium where low cost videos do their job in a few seconds, while higher-cost and higher-quality videos become entertainment in their own rights. We will have reached equilibrium when very few people skip the commercials at all.