Most media buyers are comfortable with CPMs, because while CPPs vary across the board by market, by demo, CPMs tend to be within a given range by demo regardless of the market. For example, the DMA TVHH CPP for Chicago, the #3 market in the U.S. in Early Morning could be $870. The CPM could be $10.91. Then, as we look at Dallas, the #5 market in the U. S. in Early Morning could be $396 (quite a difference from Chicago). The Dallas CPM could be $15.40 (not that far from Chicago’s $10.91). Now, let’s look at Phoenix, the #13 market in the U. S. In Early Morning the CPP could be $230 (way below both Chicago and Dallas!). The CPM in that same daypart could be $12.70. Can you notice how the CPPs are all over the board? $870; $396; $230. But, look at the CPMs – all are between $10.91 and $15.40 – a discernable range. In face, if you look at the Top 20 markets in the U. S. for CPMs – the mean is $13.29 – right in between those CPMs we were just looking at. One constant in all of our research here is that everything was based on the DMA TVHH demographic. Therefore, we can compare one market with another. Remember, apples to apples, oranges to oranges.
Now, let’s look at CPMs for one market – Raleigh/Durham/Fayetteville, NC.
Let’s suppose our imaginary client has 14 stores in that DMA. He has stores in some counties, but not others. He has done his research, and he knows people are unlikely to travel more than five miles from their home to shop at his stores. The media buyer wants to recommend Spot Television (the network affiliates in the DMA) and also Cable TV (only in the geography where his stores are located). Now we have two separate universes; one being the DMA, the other being cable operators located only in those counties in the Raleigh/Durham/Fayetteville DMA where his stores are located. The buyer found that he could reach his client’s customers (A18-54) through using Spot Television for about $10 CPM. He also found that by using the cable operators only where his client’s stores were, he couldn’t get the CPM lower than $20. Why is there is discrepancy?
The reason for the discrepancy is because with Spot Television, the buy is reaching A18-54 (including those who will not travel to one of the client’s stores because they live too far away); with Cable TV, the buy is reaching A18-54 (all of whom could likely travel to one of his stores to shop). In short, there is waste with the Spot Television buy, even though the CPM is only $10. The Cable TV buy is more expensive because it targets all of those people within the A18-54 demo who could possibly shop at the client’s stores.
Two different universes. Two different cost-efficiencies.