Radio Advertising Measurement: CPP or CPM

Advertisers

Discussing the challenges in moving radio advertising measurement to a CPM standard by Becky Byrn, SVP media strategy

There have been a few conversations lately around transitioning radio advertising from a cost-per-point (CPP) to cost per thousand impressions (CPM) metric. In other words, switching radio measurement from measuring the percentage of the population reached to measuring the projected number of viewers or listeners. This would standardize radio and digital advertising purchasing and performance metrics. Except that it wouldn’t.

Standardization across advertising platforms will enable advertisers to compare reach, cost, and ROI. However, the impressions counted for a digital display ad or podcast episode are not exactly like radio impressions. Radio ad impressions are split across dayparts; the length of the ad spot; and spot type: endorsement or prerecorded.

What is a Radio Daypart?

Radio dayparts break up each weekday based on the type of listeners tuning in at that specific time of day. The first daypart is from 6-10 a.m. and is considered morning drive time. Morning drive time typically has the most active listeners as people commute to work.

The next portion is 10 a.m. to 3 p.m. with very loyal daytime at-work listeners. Evening drive time is from 3-7 p.m. and is comprised of listeners commuting home. Once people get home for the night, the audience drops significantly, as media attention shifts to the small screen. However, listeners during the evening daypart–7 p.m. to midnight–or late night from midnight to 6 a.m.–are very loyal and engaged. They are tuning in to specific non-television entertainment with focus and consistency.

Radio advertisers specify when their ads will run based on dayparts and pay different rates across each daypart and station.

What is a Radio Endorsement Ad?

Advertisers will pay higher rates for a host-read live “endorsement ad” versus a pre-recorded produced ad that plays during set commercial breaks. Endorsement advertisements cost more and typically have a higher return because a trusted host or DJ endorses the advertised product or service to their loyal listeners during a live show.

Where digital ads provide direct click-through attribution reporting, radio advertisements rely on the listener remembering the unique URL or completing a post-purchase “how did you hear about us” survey. This can be trickier to measure against same-time placed prerecorded ads for a single advertiser. Radio offers a much higher reach where digital excels at attribution accuracy.

So how do we normalize CPP to CPM’s?

Consideration to spot type and daypart shouldn’t be overlooked when judging on CPM and delivered impressions. While there isn’t an obvious apples-to-apples comparison, there are ways to build a model that can translate the current radio cost-per-point measurement to cost per thousand impressions (CPM). Since 2002, Veritone One has been utilizing our internal reporting dashboard to normalize performance metrics and costs across radio and all other advertising channels for our clients.

As an agency that has placed and tracked media for years, we know all CPM’s are not created equal. Paying a higher CPM for an endorsement or specific placement can still out deliver the lowest CPM’s by 25-30% or more. This creates a challenge when looking to plan media based on CPM and delivered impressions alone. Spot type weighting should be considered as a best practice.