At a time when more ad dollars are shifting from traditional TV to digital video, research company Standard Media Index has developed a new metric that enables buyers and brands to better compare the costs of network and cable to over-the-top.
The new metric is effective cost per thousand viewers--eCPM. Brands buy television based on estimates of how many viewers they expect their commercials to reach. Sometimes campaigns exceed those forecasts, sometimes they fall short and, if there’s a guarantee, the brand gets makegood ads to cover the shortfall.
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Digital ads are sold based on impressions, and commercials stop being served exactly when the contracts number of impressions have been delivered.
To calculate its new metric, SMI takes its detailed TV unit pricing data and ratings from Nielsen to see how many viewers a campaign actually reached to calculate the real cost per thousand or eCPM.
The buyers and sellers both can use eCPM to compare the cost of broadcast and digital within their campaigns.
“TV has always been a challenge because we haven’t been able to compare digital CPMs to TV’s gross ratings points," SMI president Ben Tatta told Broadcasting+Cable. "In the case of TV it’s really important to find an apples to apples way to understand the effective rate for a show, a network, a daypart.”
He said unless you have the kind of pricing data SMI gets from the buying agencies, including whether ads are bought in the upfront or in scatter or are paid or makegood units, getting accurate numbers is difficult.
“You can do the math for your own inventory, but we can provide that benchmarking capability,” Tatta said. That allows publishers to compare their rates to competitors,’ and for buyers to maximize the efficiency of their campaigns.
Tatta said the SMI is working with Nielsen to determine eCPMs for campaigns based on traditional demographic groups, such as women 18 to 49. It is working with another measurement company to determine the eCPMs of campaigns aimed at advanced audience segments, such as likely car buyers.
“This is all part of our new pricing intelligence suite, that include both digital CPMs, as well as linear eCPMs.
With linear ratings falling, eCPMs for traditional TV are often higher than the CPMs based on pre-campaign estimates.
For example, SMI said the eCPM for adults 18 to 49 in an NFL game is $108. A broadcast primetime show is $93 and tier one cable prime entertainment carries an eCPM of $42.
Tatta said the new eCPM metric can be using for planning and optimizing campaigns.
Though using eCPMs make TV appear more expensive relative to digital video, digital video prices are also high and there are many dayparts and networks where buyers can buy TV without a premium to digital.
“You’d be surprised. On TV, eCPMs really vary by daypart and if you move off prime, it’s really efficient,” Tatta said. Using eCPMs can help identify bargains.
“One of the first myths to bust is that TV is a lot more expensive,” he said.
Eventually both traditional TV and will be bought on an impression-based currency.
“We do think that it will evolve to an impression-based currency on TV. Over time, I think that’s inevitable,” Tatta said.
