News BKG4

While the television industry is moving at full throttle to shift from a traditional cost-per-point business model to one based on audience impressions, radio is taking a more measured approach to what would be a fundamental change in the currency advertising is bought and sold on. Top executives at major radio companies see potential benefits to such a switch but also worry about a possible “race to the bottom” in pricing.

Townsquare Media CEO Bill Wilson says there are pros and cons for changing the way radio transacts business. “On one hand, if migrating radio to the common buying currency of our agency partners makes radio easier to buy, and therefore ad spend moves towards radio, that’s a very good thing,” Wilson told Inside Radio. “On the other hand, some I have spoken to believe a move to impression-based buying could spark a race to the bottom CPM mentality that we have seen and we all obviously do not want to see that occur.”

Impressions would move the industry from the current cost per rating point model to a cost per thousand impressions (CPM) approach based on AQH persons. That would flip the currency from the percentage of the population reached by an ad campaign to the projected number of viewers or listeners. Talk in radio circles about making the transition quickly heated up after the Television Bureau of Advertising (TVB) announced Sept. 18 it is spearheading an industry charge to convert to an impressions-based system by 2020. The topic was the top agenda item during the NAB’s Committee on Local Radio Audience Measurement (COLRAM) meeting at the Radio Show in September.

Beasley Media Group CEO Caroline Beasley has mixed emotions on the issue. “I’m somewhat skeptical that this impression transition is a net positive development, however, I believe it is something that should be done,” Beasley says.

Even those most bullish on making the switch have expressed reservations. “I don’t think this is a decision of whether to convert, but rather when and how,” says Cumulus Media CEO Mary Berner. “That said, there are executional issues that warrant careful consideration.”

While Entercom has been closely watching as TV prepares to make the move, COO Weezie Kramer says the company has yet to finalize its strategy. “We are being very thoughtful and strategic in our approach,” she says.

Radio executives see a number of potential upsides to impressions-based currency:

Packaging Analog And Digital Assets

Having the flexibility to package and sell all of their offerings using a common metric is appealing to some broadcasters. “The immediate short-term benefit could be the ability to package our streams and digital capabilities, along with our AM/FM assets,” Beasley says. “The longer term benefit that I can see is that it might hasten programmatic buying, which ultimately will enable us to streamline our structure, allocate fewer resources against transactional and focus on business development and deeper client relationships.”

Kramer agrees impressions-based sales would be good for companies that offer multi-platform solutions for advertisers. “It will allow us to easily sell across all our platforms and we believe that we should get value for all the impressions that we generate, whether they’re over the air or on smartphones, desktops and smart speakers.”

Common Metric Could Help Boost Revenue

Proponents believe that using the same metric as digital would make radio easier for advertisers to buy and could lead to more money flowing into the industry. This would create “more value across dayparts and allow for a more elegant bundling of cross platform impressions, such as over the air, streaming, on demand and podcasting,” Berner says.

iHeartMedia CEO Bob Pittman believes impressions-based sales could benefit radio at a time when media planners look to buy more holistically. “What this is leading to is the advertising industry, instead of planning media in silos, they're beginning to do cross-media planning, which means they'll be able to take all the media players regardless of the sector they're in and plan as one,” he said on the company’s third quarter earnings call.

Kramer too sees an upside from speaking the same lingo as digital media. “Our ability to sell just like TV or digital we think can bring more business to the table for us,” she says. “It has the potential to bring more revenue into radio as a result but we need to be thoughtful about it.”

Monetizing Non-Prime Dayparts.

A move to impressions could help radio better monetize dayparts that have less demand, advocates say. To boost impressions in campaigns, advertisers could buy across dayparts. “It will allow us to sell through all of our dayparts to get the impressions, which is the biggest opportunity we've got in broadcast revenue,” Pittman said.

But as with any change, there are also potential downsides to consider:

Downward Pressure On Rates

Some broadcasters worry that converting to a cost per thousand metric could lead to “race to the bottom” pricing mentality. They point to low CPM rates for digital advertising as an example.

Concerns About Posting And Weighting

Another concern is that agencies would expect stations to post at 100% of impressions. Posting refers to the practice of comparing the ratings that an ad schedule was purchased on to the actual audience delivered. When the campaign delivers less than what was promised, make goods are typically required. Day and time of exposure aren’t usually part of the equation for streamers like Pandora and Spotify but they’re important in radio buys. That means CPMs vary by daypart at radio and not all impression are valued equally. “These agencies are not applying the same rules/guidelines to radio,” Beasley points out. “Judgement and data should be utilized to ‘weight each media channel’s impressions,” she argues. – Paul Heine