Cost effectiveness of an Ad

Cost of an ad to reach a 1000 people in a particular target group. It can be normalized at 10 seconds or 30 seconds CPT (cost per rating point) for TV, a 60 or 100 cc CPT for print, and similarly for radio, digital, OOH, activation etc. It is the one currency for efficiency that can cut across all media investment opportunities.

It is a single currency that allows apple to apple comparability across media and within media. It also has an intuitive kitchen logic that allows investment decisions to be made more wisely. It differs from TV CPRP in that it brings the audience base on which ratings are measured into the equation. By bringing a base into the picture it demystifies the picture.

Advertisers will gain because it brings transparency and accountability, and a simple kitchen logic for valuing a media property. It works best when evaluating across platforms and across geographic TGs. In an environment where plans are getting more and more integrated, cross channel comparison becomes important.

For example, if I am a top end car manufacturer and I have to evaluate a single ad in a main line daily versus a 6 month campaign in a car magazine, it helps me to know that with the same outlay I can achieve a CPT of say Rs 800/ Rs 1000 in a mainline daily and may be Rs1600 in the magazine.

However, if I believe that I might get 80% wastage in the mainline daily and 0% wastage in a car magazine then the 100% CPT premium in the magazine is well worth it. That gets hidden when you are trying to compare a 6000 Rs/cc with say 1,50,000/ page. Also it allows an advertiser to assess the effectiveness of media better and hopefully get them to invest more.

For example, if I’m being asked to pay a CPT of 600 on a print ad that has to elicit a response, I can compute at what conversion can I be gross margin positive. The media owners will see the impact of growing media penetration being factored into their pricing that CPRP hides today. Media owners believe that cost of media is the lowest in India.

CPT will establish that point clearly since developed media markets trade in CPTs. They will find out that it is now possible to segment markets and may find that while existing CPTs may not be too low for low priced mass products there may be actually a case for charging premium CPTs on top end brands. Media owners will be able to monetize small rating programs that get say 0.2 ratings better. Ultimately it will move the market into buying audiences rather than ratings.

Rather than only competitive pricing, the market will grow if CPT prevails. Look at TV channels versus news papers today. Newspapers could take up prices for many years because they managed to keep the sanctity of a rate card. That is pretty much eroded now. TV on the other hand has not even bothered to keep the pretence of a rate card and has operated opportunistically. Of course there are benchmarks of effective rates and CPRPs however the range will be staggering. Agencies will gain because the market will grow. Hopefully the value of inventory will grow and agencies will prosper as a result. Also the game will move from mindlessly ensuring lowest price in the market to the best value.

Media owners are not sure what will come out of CPT. The ones with high CPTs will fear that their prices will come down. Advertisers know that they are paying a premium to be on some platforms, and CPT will not necessarily change that. There are are always premiums to be paid for reach, no wastage, affinity, associative environment, and properties that offer Impact and Stature. The challenge is really to get the metrics right. Definition of the universe, unit of CPT across media (10” or 30”/ 60 cc or 100 cc), and then to have media owners’ desire to drive it, since agencies and advertisers are more than likely to embrace it. Not relevant to have a middle path. That defeats the point.