“But my cost-per-spot is too high!”
Have you ever heard this one? Better yet, how many times a day do you hear this one?
Don’t go there!
Because cost-per-spot is NOT a metric!
Because it cannot be!
Because for cost-per-spot (let’s give this non-metric an official title – CPS) to be a metric, the spots being compared or ‘metered’ must have the same number of viewers per spot.
Now, here’s the really important stuff about this bamboo shoot under my fingernail:
Cost-per-thousand (CPM) and not CPS will directly impact your client’s cost per sale and therefore impact their ad-to-sale ratio (ASR) and therefore… their profitability.
Said in another way: Cost per acquisition of a customer — one of the most, if not the most important measure of advertising — is a function of cost-per-thousand and not CPS!
Consider a client with $1,000 to spend.
His/her considered media selection includes broadcast and/or cable.
After careful analysis (and by the way, “careful analysis” rarely happens because if it did, cable would not be allowed to sell on CPS):
- The broadcast television CPM is $10
- The cable CPM is $40 (we’re sandbagging that number too … it’s usually more)
With broadcast, this client can buy 10 groups of thousands, or 10,000 possible customers.
With cable, this same client with this same $1,000 can buy 2.5 groups of thousands, or 2,500 possible customers … amazing how the cable CPM is 4x greater and the possible audience reached is one-quarter the size (in our house we call this, “Fun With Math”… in our industry it will be called,”StopTheBadMath.com”.)
It gets worse for cable….much!
Follow the below grid to see how critical it is to select the proper medium.
Rest assured that:
- If you’re sitting with a client who analyzes your proposal based on CPS … cable was there before you
- If you get a call from a client asking you to ‘sharpen your pencil’ to get a better CPS … cable was there
If you want to help a recent or current cable-victim:
- Prove the non-existence of cable’s CPS
- Demonstrate the direct correlation between CPM and their cost-per-sale
- See immediate improvement in their investment and return of ad dollars
- Ask for a recent cable invoice
- Calculate the true cable CPM (remember to find the true delivery of the ads)
- Develop a recommended broadcast schedule
- Return the next day with the cable CPM and your CPM as analyzed given the above grid
The truth is, most local advertisers cannot afford cable television advertising. Yo, cable guise…we’re on to you!
ESA & Company has an easy-to-use spreadsheet that proves the farce of cost-per-spot selling. Help your clients understand that they can’t afford cable television advertising!
Price: FREE for ESA member stations.
INTERESTED? Contact ESA today for your CPS vs CPM Cable Killer.
Roland Eckstein is the Managing Partner of ESA & Company, an advertising strategy firm that accelerates profit for local businesses.