Is TV Ready To Move From CPP To CPM?

Nielsen has the data to facilitate the switch to CPM (cost-per-thousand) buying. In fact, some spot TV buyers and sellers are already using CPMs for buys. Looking ahead, CPMs will make it easier for buyers to incorporate TV stations into the next phase of media buying — automated buying. On the other hand are the arguments against switching to CPMs, notably that spot TV is at risk of being commoditized if buyers throw it into one pool with other media types. “Right now, there are more questions than answers,” says TVB's Abby Auerbach.

During TVB’s Forward Conference in September, TVB Chairman Bill Fine asked the crowd of 350 broadcasters, sales reps and agency executives whether broadcasting should move to a cost-per-thousand (CPM) basis rather than a cost-per-point (CPP) basis to facilitate cross-platform buying and selling in spot TV.

With the help of a wireless polling system, the answer came within seconds: 75% were in favor of a move to CPMs.

That favorable response, while not shared by all broadcasters or media buyers, reflects a changing media landscape where CPM is the metric that media buyers and sellers use in multiplatform deals. And, it jibes with the next generation of media buying systems — automated computer programs that churn out media buys built on CPMs.

“CPMs would give us a uniform measurement,” says Janice Finkel-Greene, EVP and director of buying analytics at Magna Global. “We’re talking about something that’s comparable to other media, which opens up the real possibility for cross-platform comparisons, buying and all sorts of opportunities we’re not taking advantage of.”

Another reason interest in CPMs is building is audience fragmentation. As TV viewers splinter off in smaller and smaller groups, ratings — or the percentage of people watching a show, go down. Sometimes, they’re so small that Nielsen doesn’t report them. However, behind those 0.0 ratings may be thousands of viewers.

“We end up limiting ourselves to fewer and fewer programs as we get down to lower ratings,” says Finkel-Greene. “The trend now is hyper local. If we go to the sub-DMA level, we’ll need impressions. Even at the DMA level, we’d like to look at a larger program selection.”


Moreover, CPMs make it easier for spot TV buyers to combine multiple markets into one buy. Impressions used in CPMs are added up with simple addition.

In contrast, “cost-per-points are meaningful within a market, but you don’t know what it represents in terms of aggregate audience delivery,” says Finkel-Greene. “A rating of 5.0 in Chicago and 5.0 in Tallahassee is not a 10.”

Nielsen has the data to facilitate the switch to CPMs. In fact, some spot TV buyers and sellers are already using CPMs for spot TV buys.

Looking ahead, CPMs will make it easier for buyers to incorporate TV stations into the next phase of media buying — automated buying. One of those systems is being developed by the Magna Consortium, a partnership between IPG Mediabrands, A&E Networks, AOL, Cablevision, Clear Channel, Magna Global and Tribune Broadcasting.

“One of the purposes of the Magna Consortium, or programmatic buying, is to measure assets across media platforms,” says Julio Marenghi, chief revenue officer at Tribune Broadcasting. “So, whether you are outdoor, a top-five broadcast network, a top-100 cable network or a local TV station, they can all be looked at with the same currency.

“When you look at local TV now, we’re a square peg trying to fit into a round hole, which is why a switch to CPM helps. We don’t fit into that conversation as easily right now.”

The arguments against switching to CPMs comes down to a few significant points, notably that spot TV is at risk of being commoditized if buyers throw it into one pool with other media types.

“I am in favor of anything that can make local broadcast and multi-platform buying easier to evaluate and execute,” says Wayne Freedman, VP of sales at Raycom Media. “But the concern I have is the potential for any further commoditization of broadcast, particularly as it impacts premium inventory.

“Are all impressions created equally? How will broadcast impressions be evaluated against, or in combination with those of other media? How would a live impression be evaluated, for example, against a time-shifted impression? How will all that be worked out?”

However, Michael O’Brien, VP of sales at E.W. Scripps, says he’s not worried about how well spot TV will stack up against other media, even based on CPMs.

“I don’t think there is a downside to this,” he says. Scripps works with agencies that use CPPs and those that use CPMs. “Local TV is still the biggest megaphone. When we put our numbers down on the table, my thousands versus their thousands, TV will still come out on top.”

The CPP vs. CPM discussion is forcing the industry to rethink spot TV buying, in general. Are either of these metrics the best way to buy and sell spot TV?

“Rather than saying ‘CPMs are the future,’ we have to step back and say, ‘Is that what we really want?’ ” says Maribeth Papuga, EVP and director of local investment and activation at Starcom MediaVest Group. “Maybe we should first determine the best methodology for local markets.

“My concern is the metric that feeds the CPMs. Do you use a CPM off of live ratings, live-plus-same-day or something else? In local markets, what data source is it coming from?”

Some spot TV buyers and sellers worry that CPMs will favor low-cost markets when low cost may not be the best criteria to figure out if viewers will buy an advertiser’s product.

“You can’t expect to get the same CPM in Sioux Falls that you get in New York,” says Finkel-Greene. “Markets [like Sioux Falls] might look expensive if you do a superficial comparison. But if you need Sioux Falls, you don’t buy it because it’s cheap.”

The discussion about spot TV switching from CPPs to CPMs is just that, a discussion.

“Right now, there are more questions than answers,” says Abby Auerbach, EVP, chief marketing officer at TVB. “But the way things are moving so fast in content distribution, we thought it would be helpful to ask our members.

“It will have implications as Nielsen measures cross platform. When a viewer starts watching TV at home, leaves the house with her tablet and watches the show on the bus, we need those impressions counted. The industry is starting to consider how to blend TV ratings with mobile impressions.”

In the meantime, expect buyers and sellers to mix it up.

Ellen Drury, managing partner and president of local broadcast at GroupM, says some of clients prefer CPMs and others prefer CPPs. “You have to examine this on a case-by-case basis.”

Comments (6)

Leave a Reply

Matthew Castonguay says:

November 13, 2013 at 9:22 am

One thing not mentioned…rating points are based on the DMA geography. Impressions can fall outside the DMA…in some cases, quite a significant %. It would seem that moving to CPM would effectively increase the total local TV audience in play.

Michael Schott says:

November 13, 2013 at 11:06 am

Points never bought anything from and advertiser…people do and what’s wrong with people living outside the DMA? They buy products, too….CPM IS the way to go forward.

Ida Anderson says:

November 13, 2013 at 11:51 am

It’s simple math, people. We truly are a business of C students.

Allan Wikman says:

November 13, 2013 at 12:31 pm

Long have we known, (see for more on this) at least on a local basis, broadcast TV is less expensive on a CPM, sometimes dramatically so, than radio, newspaper, cable. Having the ability to see our product compared with an apples to apples comparison against these other platforms may actually lead us to realize we’re underpricing our product vs. these other media. We’re not just competing against the other TV stations in the market, we’re competing against the complete spectrum of products our clients see. I’d love to see us get a CPM even close to the cable interconnect in our market! By the way, NSI provides impressions on both a TSA or DMA basis. Seeing our reach in 000’s in the TV DMA compared to the reach of radio, newspaper or cable interconnects, all with diffenert coverage footprints would normalize a market to any advertiser seeking to reach their complete market zone.

Amneris Vargas says:

November 18, 2013 at 4:43 pm

CarlLaFong. I don’t know about C students, but definitely lazy students (who will do anything to avoid long hand division)!

Wanda LaCroix says:

November 18, 2013 at 7:36 pm

Janice Finkel-Greene and Michael O’Brien are “spot” on!

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