TV advertising’s cost per viewer

Long ago and far away in a galaxy called Broadcasting 101, the ability to grow revenue was based on ratings. Apparently, that’s not the case in our contemporary world, because this most basic assumption of mass marketing for television doesn’t seem to be working anymore.

While summer ratings for the networks are off by double digits this year, what’s known as the “scatter market” — ads that are purchased close to the time they’re supposed to appear — is up double digits.

Um, go figure.

So apparently, television is still the best bang for the buck, even though the cost-per-viewer keeps going up, up, up. Broadcasters are still making tons of money and that helps buffer overall media company losses.

Some day, somebody’s going to take a real close look at this cost-per-viewer thing, and it will not be pretty. But Madison Avenue loves the 30-second ad paradigm; hell, it’s a $70 billion industry! So don’t expect the research to begin there.

Comments

  1. I’m so glad someone with some readership clout raises this issue. It’s one I’ve been writing about for some time. The television advertising buying system is rigged to support the status quo. And who are the real losers? Viewers you say?? Nah. The people writing the checks take first place in fleecing line. There are two compelling reasons for the fleecing: 1) CPP and CPM are reach metrics. And I don’t care if you’re the media director for Y&R or local yokel & associates; reach is your hot button. You’ll pay a premium for anything with an above average audience reach. 2) Agencies have historically been paid on a percentage of the client’s billing. So the more the client pays, the more the agency makes. Think about that, then ask yourself why any commissioned agency would really want a client to spend less. And even if the agency is not paid on billing, agencies still measure their success using the billing metric. So what incentive does an agency have to recommend a client reduce their spending?

    As Google has shown so well, reach is not the path to media nirvana. Most agencies and the cohorts in fleecing choose to just continue down the path of status quo. We’ll see how long that strategy works.

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