The paying-people-to-view-ads model is the vampire of digital marketing. No matter how many times it dies, it pops right back up in some reincarnation.
So here’s my attempt at a wooden stake through the heart. I know my stake won’t work. I know entrepreneurs will keep trying it. But this is at least a reference point I can point them to, rather than re-stating the same arguments again and again and again.
By the way, the reason I know this is because I’ve also been sucked in to this kind of thinking. So it’s the voice of experience, rather than my little pet theory.
Just to set the context here, I’m specifically talking about Permission Based Marketing (PBM), though the points may well apply to other models too.
1. You don’t need to
If you think citizens need paying to see advertising, you’re on the wrong track. It’s the wrong way of thinking about the messages you’ll be sending out.
Instead, you need to think about the content in the same way as an editor of an old skool newspaper thinks about her editorial. Will this be of interest to the reader? Will it add value to their lives? Will it be welcomed as part of the ongoing communication? If you can honestly answer “yes” to this, you can send it. if it doesn’t pass this test, don’t. Simple as that.
5 years ago, I wrote a post about what constitutes value and it’s probably worth a look if you’re interested in this area. But the basic point was that adding value was about providing the user with an IDEA – or Information, Deals, Engagement or Advertainment. More detail in the original post or in my White Paper on LBS, which I’ll send you if you email me russell AT mobhappy DOT com.
2. The Consumer Won’t Earn Enough
Once you start crunching through the numbers, no matter how you slice and dice it, it’s hard to find a scenario that earns a person a (very) maximum of $10 a month. Why? Because advertising is about scale. You have to deliver ads in very large volumes to make money or earn money.
Let’s do some basic maths. If you charge the advertiser $50 CPM (by the way – approximately 5 times the going rate) and give say 10% of that to the consumer, that would seem reasonable, right? So, every 1000 ads the consumer sees, earns them $5, which equates to 2000 in a month to earn $10.
Don’t forget we’re talking PBM here, so that’s 2000 messages (think SMS or email) over a month or 66 a day. It’s just not going to work.
Now, people will say. Yes, but this is a new form of marketing. It’s post-advertising advertising. Maybe it is, but with inflated cost you get minimal advertisements to sell, which means the consumer earns less than ever.
Of course, I can’t cover every scenario here. It maybe that providing the value in some other form of currency with a high perceived cost, but low actual cost is possible. But if you heed my first point above, you don’t need to worry about this element at all.
3. Contingent Liability
When you issue your user the right to claim money from you, from an accounting perspective (this may depend on where you’re based), you have to make provision on your balance sheet that you will pay them. Even when it’s perfectly clear (like 5 years later) that you won’t be paying them.
This can create a huge liability for a small business, hogging increasingly large amounts of precious cash.
Of course, there are ways to get round this, like having an expiry date, but this makes it less attractive for the consumer. Back to Point 1 again.
4. The Wrong Users
If you do pay people and they are really doing it to get their grubby little hands on $10 a month, how attractive do you think this audience is going to be to an advertiser? If they really need money that badly, are they going to be able to afford anything that the advertiser wants to sell?
Even if they really are a great audience, you’re going to find it hard to overcome this widely held belief among agencies, especially. It’s just another reason not to try your groovy channel out.
5. The Nick Syndrome
Apologies if you’ve read this little story before.
I had a friend I shall call Nick, because that’s his name. When he gets very drunk and happens to be in a restaurant, he calls the waiter over and asks for 15 eggs and 15 wine glasses. The bemused waiter normally brings them and Nick spends about 20 minutes building a complicated pyramid of eggs and glasses. By this time, most of the restaurant are watching in suspense.
Nick then announces that he’s going to pull the table cloth out and all the eggs will break and fall neatly into their corresponding glasses. The suspense is palpable as it would be truly amazing if he managed to pull this trick off. With much theatre, Nicks grasps the table cloth, (even the kitchen staff are watching now) and with a flourish, he yanks it hard.
Glasses and egg fly everywhere, coating the immediate vicinity in broken glass and yolk. It’s also noticeable that not one egg has broken cleanly into one glass. The restaurant is hushed in shock and Nick stares at the wreckage. He then shakes his head and says, after a 4 second pause:
“It never works….”
Paying consumers doesn’t either.
Happy for a startup out there to prove me wrong and maybe it is possible. But I doubt it.
