Converting to impressions-based buying and selling was the talk of the 2019 Radio Show, after the TV industry started shifting away from transacting on cost per point. Nearly two years later the transition is gathering steam in radio’s largest markets but there are hurdles to overcome. Chief among them: how should radio prove the value of its audience impressions compared to other media.
The volume of business now being transacted on impressions is significant in major markets like Los Angeles, where most buys are agency-driven. Radio groups in these markets are working with Nielsen to train sellers on how to negotiate with buyers on a cost-per-thousand basis (CPM), the metric used by digital media.
As the shift slowly gains momentum, broadcasters are of the mind that not all impressions are created equal. “We want to differentiate how you value a radio cost per thousand as opposed to a digital cost per thousand,” says Miles Sexton, Chair of the Southern California Broadcasters Association. “They’re not the same across media.”
This is a key point in “Media KPIs That Matter,” a May 2021 report from the Association of National Advertisers (ANA). The ad trade group surveyed marketers about the key performance indicators they use to evaluate media. While CPM came in first, it was only one of a dozen KPIs used by 65% or more of survey respondents. “CPMs need to be relevant, as lower isn’t always better,” said one ANA survey respondent. “CPM isn’t the first thing to look at because it’s more of a tracking/efficiency KPI. It needs to be augmented with more specific metrics.”
Sexton thinks radio can do a better job differentiating its value on the media landscape so radio is valued on its own merits, such as the trust it engenders with listeners. Sixty percent of adults 35-49 and 54% of adults 18-34 consider radio spots very or somewhat trustworthy, according to the March 2021 Total Audience Report from Nielsen. Radio out-performed TV, streaming music, podcasts, apps/websites and social media, which scored the lowest on the trust scale.
As the back and forth between buyers and sellers on the value issue continues, Sexton says radio is nearing a “tipping point” where CPM becomes the new currency.
Among large agency holding companies, IPG Mediabrands has been buying radio and television on impressions since 2016, first with its UM shop, followed by Initiative in 2018. Now virtually all its audio investments are made this way. “Everybody was on board with it,” says Kathy Doyle, Executive VP, Managing Director, Local Investment of IPG’s Magna Global, which is responsible for $17 billion in U.S. ad spend. “We didn’t have anybody that wouldn’t work with us or take our business based on that.”
If they haven’t already switched to impressions, most large agencies are looking at it for 2022, insiders say. A Nielsen Audio survey of ad agency clients conducted last October found 60% weren’t currently transacting on impressions but a majority said they planned to in the next six months. Now Nielsen is heading back into the field to learn whether agencies made good on that pledge.
“Impressions exist and they are being transacted on but it’s not prevalent,” says Brad Kelly, Managing Director at Nielsen Audio. “It’s increasing in use at local radio but it’s moving a lot slower than I think everyone expected.”
With more viewing and listening shifting from linear to digital platforms, an impressions-based currency could help facilitate sales across platforms. Radio stations, for example, could roll up all their impressions across all their platforms for advertisers. This approach is likely to grow in importance once Nielsen One brings true cross-platform measurement to radio. “If the sales side is moving to an audio-based approach, impressions is the smart way to go,” says Doyle.
Another advantage, especially when buying TV, is helping “extend reach when you’re buying things that don’t generate a rating but generate impressions,” Doyle adds. “You can still buy it and count it.” In addition, impressions make it easier to place buys using the audience-based or audience-informed listener segments buyers are swiftly moving to. “If it’s a more informed execution, that makes it more appealing to clients,” notes Doyle.
Agency execs say migrating from CPP to CPM would reduce friction and that buying across media with a common audience delivery metric makes their lives easier. “They’re seeing this as something that makes radio easier to fit into their overall media plan as they transact in impressions,” says Tony Hereau, VP of Cross Platform Insights at Nielsen. “They’re saying it levels the playing field, it combats ratings fragmentation, and it’s easier to explain to clients.”