Silence Media is an agency which launched earlier this year, offering video banner advertising for the music industry, on a cost per engagement (CPE) basis. 

I’ve been talking to Silence Media founder Lee Henshaw about why he thinks that all banner advertising will use this CPE model within the next two years…

Why did you decide to launch Silence Media?

We launched this year and started our first campaign in March. We are focusing on the music industry, and clients include EMI in the US, and Universal and Sony in Europe, along with some independents.

My background is in digital communications, and towards the end of last year I wondered what I could do in 2009 that would be successful, given the economic situation.

From this came the idea of an agency which offered banner advertising on a CPE basis, as I had used this as a media buying metric in the past. If the economy was going to be as difficult as predicted at the time, then I felt that video banner advertising using this model could work.

How is cost-per-engagement (CPE) better than CPM?

CPM is an inefficient model compared to search marketing. Within the music industry, there has been very little buying of banner advertising over the past three or four years, and much of this is because of  the CPM model.

You are almost buying blind, with little idea of how it will perform. This is the case with offline formats like print ads, but it doesn’t have to be like this online.

If you look at the last big IAB report more deeply, you’ll see that banner advertising was the only online ad format that dropped, by around 6%, and this is because of the inefficiencies of the CPM model. With CPE you have accountability.

Is this the thinking behind the three second delay before ads play?

Of every 100 people that rollover an ad, just two-thirds launch it, which suggests that accidental roll-overs happen all the time.

With our CPE model, transparency is all important, and we don’t want clients paying for accidental roll-overs, so we have a three second delay before the video starts, so we know that people are properly engaging with the content.

On top of this, the ad copy shows exactly what they will get, so the majority of clicks will be intentional.

Whbat resuts are you seeing from these video banner ads?

We want to make the ads useful to people, so we will offer a link to purchase music on Amazon iTunes or elsewhere with a discount code, or perhaps a link to download a free MP3.

After people have rolled over and engaged with the ad, we see click through rates of between 10% and 20%. It’s not unusual to see a fifth of people clicking through.

The content is often exclusive and therefore more compelling, for instance we will show an interview with Johnny Marr, or a unique version of a Kings of Leon video, and this kind of content makes engagement rates high for the videos.

How much of the banner ad campaigns do you coordinate?

Silence Media is a full-service agency, which is the only way it can work when you are offering a CPE model. Advertising and media agencies are often separate beasts, but with CPE you need t have the ability to change the creative mid campaign, and to deal with publishers directly.

At the beginning of a campaign, we start talking to publishers about the content before they run the ads, it’s a three way conversation between advertiser, agency and publisher. Because of the industry we are in, we can give them great content.

Do you plan to extend your work beyond the music industry?

We have just started our first ads around comedy, for Jeff Dunham, and these CPE video ads are relevant to other industries that have some compelling video content, so we could promote DVDs, TV shows, games, movies etc.

At the moment, although we will do more comedy work in the next year or so, we plan to continue working with the music labels.

What are you doing with mobile? Any plans?

I think this will become very important next year. There is currently very little video and banner ad inventory on mobiles. It looks good, but the pricing is prohibitive.

With publishers intending to launch mobile platforms next year, the amount of inventory will increase ad become more cost effective, and more clients will begin to ask for this.

What developments do you see in the future for banner advertising?

I think CPM models will become obsolete within two years, and CPE will become the dominant model.

This means that agencies, advertisers and media owners will need to behave differently. It’s a brave move for publishers, as they will not be paid if no-one engages with the ads, so they will want to make sure the ads they have on the site are effective.

Procter and Gamble have moved towards the CPE model, and publishers and others will also be doing so more and more. This is something that agencies will have to adapt to. This means that the workload for agencies will increase, as CPE campaigns require more effort, in terms of designing and  delivering ads that people will engage with and that will also keep publishers happy.

Many agencies are not ready for this at the moment., but they will have to shape up, and I think they will adapt to this over the next year.

The popularity and dominance of search in the online ad market is down to its accountability, and this is something the current CPM model cannot compete with. CPE brings the same principles of accountability to banner advertising.