(By Charlie Sislen) They say a little knowledge is dangerous. As marketers are considering their options, many will try to pigeonhole radio and judge each radio station solely on a cost-per-point basis. Even some of those who ask about CPP may not understand the value of judging radio stations by cost per point. More importantly, they probably don’t understand what CPP does not measure.
So what is CPP? Cost per point is simply a mathematical calculation of how efficient a radio schedule is at delivering a demographic group. It reports what a particular radio schedule costs to deliver 1% of the target demographic group. Typically, it is measured against a broad demographic group such as Adults 25-54.
There are many drawbacks to this standard cost measurement.
Broad Demographic Groups: As stated above, cost per points are typically based on a broad demographic group, and rarely does anyone dig deep into what demographic segments are being reached. It is important to make sure that the schedule is delivering the portion of the demographic group that the advertiser wants. This can easily be done, and will be a topic of a future column.
Qualitative Profile: CPP is a measure of how efficiently you are delivering a demographic group. It does not measure how effectively you reach target consumers. Ask you advertiser one simple question: Would you rather reach those who may or may not be interested in your product or service cheaply, or are you willing to pay a little more to reach those who have a higher propensity to buy your product or service?
Reach and Frequency: Since the introduction of PPM in most major markets, the discussion of reach and frequency has diminished. This does not mean that this is not an important measure of a schedule’s effectiveness. Talk about how many bodies your station is reaching or how often the average listener is hearing the commercial message.
Listener Environment: Not all radio stations offer the same listener experience. An advertiser’s message may fit one format or station’s sound, while being ineffective for another one. Matching the message with the station environment is critical for advertising success. This too, is not differentiated in CPP.
Added Value: Added value is often considered an evil term in our industry. However, it is a necessary component. Don’t let this added value be thrown at a low CPP. There is value there – make sure your advertisers realize it.
Yes … there is a place for CPP in the media sales environment. However, it should not be the only factor in the decision-making process. The question you need to ask you advertiser is, “Do you want it cheap or do you want it effective?” If they say both, be prepared to outline the factors that CPP is missing.
Charlie Sislen is a partner at Research Director, Inc. He can be reached at 410-956-0363 or by e-mail at [email protected]. This essay is part of a series titled “Growing the Radio Pie.” To view past articles, visit The Ratings Experts at Research Director, Inc. online here.