Changing the way radio transacts business would flip the currency from the percentage of the population reached by an ad campaign to the projected number of viewers or listeners reached. That’s the crux of converting from the long-used cost per point ratings model to a cost per thousand impressions-based system (CPM) based on average quarter hour persons.
“Ratings are based on the percentage of the universe of the market, so you reverse that math and go to what are the actual impressions of the market, not the percentage of the market,” explains Kathy Doyle, Executive VP, Managing Director, Local Investment of IPG’s Magna Global, who buys audio for such clients as BMW, T-Mobile, Amazon and Zillow.
In digital media it refers to the number of ad impressions served. But in radio, cost per thousand impressions (also known as CPM) simply refers to the sum total of average quarter hour persons delivered by a given schedule. Agencies would avail stations on a CPM basis and stations would develop ad schedules in that vernacular. CPM is already one of the metrics used in Nielsen Audio’s TAPSCAN software.
As with any change in the currency that media is bought and sold on, education is key. Sellers need to get schooled on the math behind going from cost per point to cost per thousand impressions so buyers can’t chisel them on rates.
Nielsen in the last year launched a training program on the subject with separate courses for broadcasters and agencies. Free to radio clients, the program educates sellers on how to take an existing schedule that was bought on CPP and convert it to CPM. “That way they can be totally informed and start on an apples-to-apples playing field,” says Tony Hereau, VP of Cross Platform Insights at Nielsen. “We’ve had hundreds of radio sellers come though this class, but clearly you can see there is more work to be done. You’re almost asking people to become bilingual, to do their job in one language and then also learn to do it do it another. That transition is not as easy as flipping a light switch.”
The shift would cause both buyers and sellers to adopt a new mindset and change some conventional thinking. For instance, under the current system, larger markets have a higher cost per point than small markets. But in a CPM world, the opposite would be true: cost per thousand would be higher in smaller markets.