The Music Biz Has Mailbox Money; Why Shouldn't the Ad Industry?

Agencies Should Cash in on Their Content With YouTube

By Published on .

I work in advertising, and every two weeks my paycheck is direct-deposited into my checking account. But that salary is not the money that feels best to earn. Nope. When I get paid a hundred bucks (or sometimes less) to contribute an article to a magazine or make a short iMovie for someone, that's the check I want framed on my office wall.

Why is that? Maybe it's because those dollars, while small in comparison, are about the making. It's cash directly for content.

Trouble is, the content machine is eating the very industry I get those direct deposits from, the ones with more zeroes. The advertising industry is tied directly to a business model that is fatally flawed. While advertising at its core is a subjective, artful business that should compensate us for the merit of our ideas, we still sell time. Our business model is as blunt as a taxicab meter. Yes, in advertising we continue to be paid for the working, not the work.

But there may be a better way. There may be a better model, or at least a step forward.

Long before YouTube, the music business invented monetization. That's the reason songwriters and performers down in Nashville and the world over smile every time they hear the two words "Mailbox Money." Mailbox money refers to royalty checks big and small that arrive based on an artist's body of work. These checks are directly proportional to the size of that work in the world at any given moment.

This got me thinking there must be a way for ad agencies to make a little mailbox money of their own. The case I'm making is that ad agencies should place all of their videos on a dedicated agency YouTube channel, become YouTube partners, and monetize all of the video content they create.

Let's assume YouTube is going to take its standard 45% off the top. A YouTube ad rate ranges from 30 cents to as high as $10. But even if we're being super conservative by using a range of 30 cents to $3.00 for the cost of a thousand impressions, it means that a dedicated agency YouTube channel could generate between $300 and $3,000 on 1 million views and between $30,000 and $300,000 on 100 million views. That's real money. And most importantly, it's money that's not tied to the ebbs and flows of your fickle client roster and clients' annual purchase of hours.

Some of you may be rolling your eyes and thinking this is chump change. I see it as breaking the sound barrier -- finding a way to create an annuity, a new vein for advertising agencies to get paid based on the footprint of their work. And while it clearly won't replace revenue pegged to full-time employees revenue, it will supplement it. And don't we owe it to the industry to get paid for something more directly tied to the work? Because the business model we're currently operating under sends our clients into the art gallery asking to see Picasso's time sheets. It's time we flip the script.

Of course monetizing an agency channel comes with all sorts of questions, not the least of which is "Can we even do that?" People will ask what the split should be with the client -- it's their brand, after all. And what about digital rights usage and competitive issues? I think it's simple really. New agency contracts would need to be explored, and the competitive issue can easily be handled working directly with YouTube to block specific advertisers. Certainly talent, music labels and even third parties would take a piece of an already small pie, but slicing up the pie sounds more promising than selling hours.

But there's probably something else that's bothering some of you. Isn't it sort of slimy and gross to sell advertising inside of our advertising?

What if I told you that if I were a client, I would happily stand in line for an ad agency with the audacity to make ads for me that would be so good and become so well-known that others would want to buy advertising in my ads? When Elvis had a hit, he got paid more. This is not currently the case for an advertising agency. But by monetizing an agency channel on YouTube, the bigger an idea gets in the world, the more views to our channel, and the more we make.

The other key to this idea of agencies monetizing their YouTube channels is to quit defining success as creating one viral piece of video. CPM means cost per thousand. Sure, that happens faster with a hit, but an advertising agency makes a lot of film every year, and that film aggregates over time, as do the cumulative views. The cumulative views of an agency channel on YouTube will add up to dollars and eventually maybe even the "Mailbox Money" necessary to wean a stagnant industry off the meter. Whether the check from YouTube is big or small initially, it will look wonderful framed on the wall of my office.

Most Popular
In this article: