RIP To The CPP?
This week NBC’s O&O stations made a transformational decision to begin selling over the air inventory on a CPM basis instead of the traditional CPP method. Most in the buying community believe the move to impressions-based sales of broadcast media is long overdue. For decades TV and radio have been living on a CPP island, while print and digital are bought on a CPM. With digital now commanding such a high percentage of ad spend, the CPP is becoming more marginalized year after year.
The migration to CPM is getting a high-profile boost from the Television Bureau of Advertising (TVB), who yesterday announced it is spearheading an industry charge to convert local broadcast audience measurement from a ratings-based to an impressions-based system by 2020. And since TV is moving so swiftly to convert its pricing to the same metric used by digital media, it could force broadcast radio to do the same.
The idea of radio pricing itself on a CPM should make broadcasters nervous for one simple fact – it will drive down rates. In the 17 years I spent in terrestrial radio I’d come across a few buyers every year who would force our stations to submit proposals on a CPM instead of a CPP. That always meant trouble because there are just not enough listeners tuning in to a typical station at any given moment (even in larger markets), to justify charging CPMs that are equivalent to the stations’ CPPs. As a result, we had to drop our rates to get the CPMs in line with other media channels’ pricing.
Regardless of what CPM pricing might due to radio, they won’t have a choice in the decision. If When TV goes CPM, it will be impossible for radio to stay on CPP island.