The traditional way of calculating a campaign’s cost is to divide the sum of people hearing “X” number of commercials by 1,000, and then to multiply that by what you consider a fair market CPM rate. CPM, however, has been dropping for a very good reason. Reaching 1,000 persons today is much easier than a decade ago. There are also millions of slots for more local impressions available. That creates a supply far larger than demand, and makes what comes next easier to understand (if not difficult to swallow): Radio is not defining a competitive CPM rate in each market anymore.

Outside forces now influence what media buyers pay, and (in most cases) online CPM is in single digit dollars. In some online ad buys, CPM is even dipping into double-digit cents. A saving fact is that online ad pricing is still finding its footing. Eventually online rates will rise to better than what they are today, but that rise won’t be within the simplicity of CPM.

Soon (in 3 to 5 years), a majority of radio’s clients will become tuned into the lower cost found with local internet advertising. And here’s the caveat that radio still needs to grasp: Having a web site attached to a radio station isn’t enough to justify a higher online CPM (than what’s being paid in your local internet advertising market).

Unfortunately, a station web site only offers more impressions in a world where impressions are costing less. That’s not the future, especially with more media buyers demanding that an advertising campaign make more money than it costs. Fortunately you don’t need to panic, though you do need to change.

In five short years it will be standard procedure to use analytics and metrics to evaluate an advertising campaign. To gather the numbers with software and export those numbers to a spreadsheet will give the media buyer, media, and advertiser direct insight into whether money spent is money returned. (The tech-savvy are already well underway in this area.)

Instead of ignoring the numbers used to measure campaigns, radio has an opportunity to learn and demonstrate the value it brings to an advertiser. To use analytics and metrics for improving an advertiser’s campaign – online or off – gives radio an advantage that other traditional media still ignore.

Here is one more NTR area in which the radio industry should immediately make its move: keyword ad buying. Every radio group, in every market, should have its own expert on staff.

It’s inevitable that advertisers will buy more local keyword search and content campaigns. So, if steps are taken now to show clients how to invest those dollars with a combined on-air and local internet advertising search/content ad buy, radio will make commissions before those dollars leave.

Get good enough at placing keyword ad buys and measuring response to ads run on your station’s web site, and your sales team will keep bringing in new local clients.
Radio can no longer avoid the effects of internet advertising, nor can it compete in delivering consumers at its lower CPM rate.

Play your cards right, and the client list will increase as you get more involved online.
It’s time for a change. It’s time to work the numbers.


--Ken Dardis is VP, Marketing for Spacial Audio Solutions. The opinions expressed are his own.



ken@spacialaudio.com | 440-564-7437 | spacialaudio.com