Thursday + Gregory Huffstutter = The Ad Man Answers
At the risk of turning into “The CPM” Man, I received a couple follow-ups after the last Ad Man column, which I’ll handle before moving on to new topics.
Q: I guess I'm surprised how little effect that the target audience has on the CPM. I can see how a billboard would have a low CPM because the target demographic is so broad and the exposure is so brief (if at all), but shouldn't the Tee Time media be significantly more because it's so targeted and the exposure is more profound? Just seems odd to lump all static outdoor ads into a fairly condensed $1-5 range. Is that just how the advertising industry is? Would a national company scoff at the idea of ever paying more than $5 CPM for any outdoor ad?
-- Mike Viscusi
A: The by-product of a free-market society is that nothing (except my gold cufflinks) has inherent value. Everything’s subjective. Advertising’s no different… prices don’t magically appear as engravings on stone tablets, they’re merely a function of what clients are willing to pay at any given time.
If you’re selling advertising on the side of pay phone booths, and both Sprint and AT&T bid up your inventory trying to out-do the other, then lucky you, your static outdoor ads could suddenly be “worth” $30 CPMs. (At least until the telecoms apply for Federal bailouts and you lose both accounts).
As an outdoor media seller, however, you have to remember your prices don’t just compete with freeway billboards and bus panels, you’re judged against all other media forms. If a client is able to afford $30 CPMs – or even $15 CPMs – their advertising agency may recommend spending that money somewhere else, like TV, where you can communicate more information.
Let’s illustrate the difference. Using outdoor advertising, POM antioxidant drink is able to deliver a catchy headline (“Cheat Death”) and a provocative image. But with a full 60-second commercial, you can see how it’s possible to expand on that simple message: pomegranates grown exclusively in California, anti-aging properties, the Ponce de Leon of the 21st Century, the juice is now combined with Ice Tea.
So it’s not that national advertisers naturally scoff at paying over $5 CPMs for static outdoor. It’s that once you start raising those CPMs, people like myself – who plan media for a living – start comparing your service to advertising platforms that allow more creative freedom. And if the price per advertising impression is equal to more dynamic media formats, we’ll usually recommend other options to our clients.
It’s the same reason the Phaeton tanked as a luxury car… anyone who could afford $70,000 for a sedan would typically shop a low-end Mercedes vs. a high-end Volkswagen.
“But we’re really targeted,” goes the argument from specialty outdoor sellers. Well, so is everyone else. To return to the Tee Time example, if I want to reach golfers, I don’t have to advertise on the grounds of the Country Club. I can buy space in Golf Magazine. I can buy a radio sponsorship of Westwood One’s live broadcast of the Masters tournament. I can buy TV spots on the Golf Channel, and only air them around high-priority zip codes.
If I want to find golfers who also happen to be shopping new vehicles, I can work with a behavioral targeting network like Specific Media or Platform-A and have them track internet users who have visited both PGA.com and Cars.com. Then, the next morning, while that person is websurfing over their morning coffee, I can serve up display banner ads across a network of websites for under a $5 CPM.
So, outdoor vendors, that’s what you are competing against, not institutional arrogance. You can only get away with high CPMs if you have multiple advertisers fighting over limited inventory, in which case, pop the champagne and raise a glass to supply/demand economics!
Gregory Huffstutter has been punching Ad Agency timecards for the past dozen years, working on accounts like McDonald's, KIA Motors, Suzuki Automotive, and the San Diego Padres. His first mystery, KATZ CRADLE is on submission while he's working on the sequel. The first 100 pages of his novel are linked here. For general advertising questions, leave a comment or send e-mail to katz @ gregoryhuffstutter dot com with 'Ask The Ad Man' in the subject line.
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