Will CPA Stamp Out CPM on Television, Too?

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As an alternative to CPM television buys, many brand advertisers have begun to utilize the Direct Response Television (DRTV) approach. Once the favored television advertising model of hucksters selling widgets late at night, DRTV has not only grown at an explosive rate, but it has become mainstream among traditional advertisers over the last decade. One of the major factors behind this growth can be attributed to the additional metrics advertisers receive in the form of consumer response.

DRTV has also freed advertisers to be early adopters of new television advertising opportunities who otherwise would be restrained by Nielsen’s inability to quickly quantify viewership across many new forms of television distribution and programming. However, DRTV has its shortcomings, too.

The DRTV model’s biggest detriment is that it is an incredibly labor intensive model which requires constant measurement and management to insure media plans are achieving the advertiser’s goals of reaching relevant consumers cost effectively measured through response and resulting cost per lead. While the overhead of managing a DRTV campaign makes sense on larger network properties, it has remained a challenge for DRTV agencies to execute the model with smaller media venues where the return on investment becomes marginal. As television continues to fragment into a larger number of smaller channel opportunities all vying for the same eyeballs, the DRTV proposition is further weakened.

What is desperately needed is a new approach. Wouldn’t it be incredible if there was an easy and automated way for DRTV campaigns to do business with an unlimited number of television properties? While many might think that an online auction approach would be best, I believe a CPA model for television is a better long term answer. As a backwards adaptation of the traditional DRTV model, stations running DRTV campaigns on a CPA basis would guarantee the advertiser’s cost per lead. From an agency or advertiser perspective, this is a practical way to work with all the media that exists in a fragmented television universe.

A truly scalable CPA television model would automate DRTV media management, ensuring that stations are consistently optimizing their CPA media investments. Campaigns would end up being aired in the most relevant programming based on response and CPA yield measurement.

Agencies and advertisers would be provided reporting in order to track how the CPA yield of their campaigns compares against market competition. Campaigns willing to raise the bid rate per lead, in order to increase the CPA yield of the campaign, would receive more airtime while underperforming campaigns would receive less airtime — exactly emulating the way the traditional DRTV bid environment works today.

For over 17 years, my company, REVSHARE, has been building the model described above. REVShare’s television bid environment is a unique way for stations to auction off media, but even more simplified because agencies and advertisers receive exactly what they desire — guaranteed performance. And, unlike auction site models, REVShare’s model is proven and a model which stations have been supporting for many years.

So, will CPA Stamp out CPM on television, too? I don’t think so. I see advertisers continuing to utilize measurement models like Nielsen, and others, in tandem with CPA similar to the way many television advertising agencies are executing and posting DRTV buys against Nielsen providing advertisers with the best of both worlds.

I also believe that television advertisers will ultimately be able to execute CPA buys across menus of different demographically targeted programming segments representing the diversity that exists across today’s multi-channel television universe — thus making television CPA buys even more flexible than today’s DRTV buys. In this way I view CPA as simply a better way to execute the DRTV model and one that I feel will ultimately be more efficient for advertisers, agencies, and media. CPA is really just another tool for how media can be packaged and sold in a changing world where traditional models such as Nielsen and DRTV are running up against practical limitations.

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