Digital Gabe
Cutting Edge Commentary On All Things Media

Let The Radio CPM Debate Begin

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Well that didn’t take long.  Last month I featured a post about NBC’s O&O TV stations transitioning their pricing model from CPP to CPM.  In the story I predicted radio broadcasters would soon have to follow TV’s lead in adopting CPM pricing, since there’s no way the medium can stay on CPP Island while the rest of the media universe transacts on a CPM.

Now the NAB’s Committee on Local Radio Audience Measurement (COLRAM) has taken up the question in an open forum discussion.  While there was considerable back and fourth on the topic, COLRAM ended the discussion with the vanilla statement that nothing is imminent, as many radio companies are still developing a stance and analyzing the pros and cons of adopting the same currency used in digital media.

Even though I no longer work in broadcast radio, I’m sure two things are happening in radio’s hallways right now.  First is the growing realization that radio must convert to CPM pricing sooner than later.  Pressure from the buy side to transact on CPMs will be overwhelming within the next 6-12 months, and all sellers eventually succumb to how their customers want to buy.

The second and more troubling thing going on at broadcast HQ is the calculus around what CPM pricing will do to revenue.  Just like the first point, this one also has a definitive answer . . . rates will go lower.  Except for a very few top stations in the major markets, the typical AM or FM doesn’t have enough listeners at any given moment to achieve the CPM equivalent of the CPP rates they now charge.  This sets up a conundrum for broadcasters who know they need to get on the CPM bandwagon to have access to mainstream ad budgets even though it devalues their over-the-air product.

This one feels like a Sophie’s choice to me.

 

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