Interactive commercials

I was watching hulu the other day and before the show started, there was  a car commercial which had three options (three different Fords if I remember correctly), and I had to pick one. If I didn’t pick, the commercial would continue for another 15 seconds and then select one automatically.

I don’t know who came up with this, but it’s brilliant in two respects.

First, the commercial allows the company doing the advertising to trade time for attention. Usually, no one pays much attention to a commercial, but the prospect of waiting an additional 15 seconds for my show just made me click one of the cars. I could of course picked arbitrarily, but, being forced to pick made me at least briefly consider which car I should select.

Second, and this may not be a reality yet, but market research can get done by recording how many people click on different options. Essentially, this is another way of getting input on products.

Will these innovations raise or lower the cost of advertising? Hard to say because there are competing effects. Interactive advertising is more valuable than regular advertising so it might be more expensive, but if users click through the advertisements, then the supply of ad time might increase. So from the demand side we should expect a price increase, but looking at the supply side, we should expect a price decrease.


3 Responses to “Interactive commercials”

  1. 1 chris
    April 7, 2010 at 3:00 pm

    This is why I truly did not understand the resistance some television stations had to putting their TV shows online. It just seemed to me like you could do so much more with television advertising and television TV show watching. The games you mention are just a start. Websites could also track much more efficiently how many people were watching their television shows if more people did it online. They could make people take a survey before watching a TV show about how old they were and what kinds of products they were in the market for. I am still somewhat surprised that certain TV shows like Law and Order can’t be accessed through the NBC website.

    Then I was reading a comment on the Yglesias blog, about a totally different topic, which helped me understand the reluctance of TV stations. It is probably totally obvious to anyone who has taken I haven’t economics (which I haven’t) but it was new to me. It’s a different point (I think) from the one you’re talking about in the last paragraph, but the commenter was saying something like, “really efficient markets are only good for the consumers of the product, they tend to lower prices, lower profit margins, and make business harder for the producers of a product.” In this analogy I’m trying to make the product is advertising space, the companies with razors and cars to sell are the consumers, and the TV stations are the producers. If the advertising market is made a lot more efficient by internet TV consumption than the TV stations will probably suffer most. Maybe TV stations understood this, and this is why they were and still are reluctant to put their content online.

    • 2 questionbeggar
      April 7, 2010 at 4:19 pm

      Yea I think this is right. For people who want to buy advertising space, I don’t know if prices will go up or down. What I meant with the clicking through comment is that if people generally click through advertisements, they will be much shorter and so potentially allow for many more advertisements in a given time span. If commercials are 2 seconds instead of 4, then there can be double the number of commercials for the same time cost to the viewer, therefore, the price will cut in half (on a crude supply curve).

      Also, your point about stations is dead right. It’s about control. If NBC (is it NBC?) can control hulu and the content on there, then they can reap advertising revenue. Without this control, they lose all the money they make, which I think mostly comes from advertisements.

  2. 3 chris
    April 7, 2010 at 3:05 pm

    So in the end, I think my answer to your final question is that it will probably lower the cost of advertising. Like I said, I’m a noob when it comes to economic analysis, so we should probably get mengster over her to comment. I’m not sure what you mean by, “but if users click through the advertisements, then the supply of ad time might increase.”

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