Low CPM can spell bargain for buyers

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On Thursday nights this season, advertisers could pay about $34 to reach 1,000 viewers on "Friends." Or they could fork over $11 for the same number of eyeballs watching "WWE Smackdown!" Which was the real deal?

There's no one right answer. But the contrast in 18-49 CPMs of NBC's high-rated "Friends" with UPN's low-life fiends illustrates a broader point: Advertisers pay a premium for the most coveted shows, so better deals may be found elsewhere.

Advertisers on the 10 broadcast network prime-time shows with the highest-priced commercials this season have paid a cost per thousand viewers (age 18-49, a key target) of about $35. That's based on VNU's Nielsen Media Research season-to-date ratings and Advertising Age's fall 2003 pricing survey, without factoring in make-goods, package deals and other adjustments. Advertisers on the 10 lowest 18-49 CPM shows-from "Smackdown" to Fox's "Cops"-would have paid about $14.

It comes down to supply and demand. "High-demand shows have high CPMs. Low-demand shows have low CPMs," said Doug Seay, senior VP at Publicis Groupe's Publicis & Hal Riney, New York. "It's sort of axiomatic to say the higher the rating, the higher the CPM."

There's another corollary: The higher the cost of a spot, generally, the higher the CPM. Smaller shows with lower costs for 30-second commercials can offer more bang-or at least eyeballs-for the buck. The average prime-time spot this season sold for $115,799, with prices ranging from $12,871 ("UPN Movie Friday") to $455,700 ("Friends"), according to Ad Age's fall survey (AA, Sept. 30). Advertisers pay less than $12 to reach 1,000 of UPN's viewers on Friday, an off-night for prime-time advertising; that's about one-third the CPM of "Friends."

23% premium

For the past three seasons, advertisers have paid an 18-49 CPM premium of about 23% for spots selling above $200,000, vs. the average CPM for network prime time, according to an analysis of Nielsen ratings and Ad Age fall pricing surveys, which are based on data from media buyers with input from networks. Over the same period, CPMs on shows with spots selling below $100,000 were about 20% below the average CPM.

The same analysis, using measured-spending estimates from Nielsen Monitor-Plus rather than Ad Age survey prices, offers the same general conclusion, except the premium for high-priced shows is higher and the discount for low-priced shows is lower.

A similar trend tends to follow for individual networks. At NBC, for example, its three shows priced above $300,000-"Friends," "E.R.," "Will & Grace"-this season commanded CPMs 33% above networks' average CPM while its shows with spots selling for less than $100,000 offered viewers for 17% below the average CPM, based on Ad Age figures.

The six major networks-Walt Disney Co.'s ABC; Viacom's CBS and UPN; News Corp.'s Fox; General Electric Co.'s NBC; AOL Time Warner's WB-declined to comment or said executives were not available because of upfront planning. Several privately dismissed the idea that low CPM shows offer a better deal than high-CPM offerings, disputed the figures from Ad Age's fall pricing survey and noted many advertisers buy packages rather than individual shows.

Some buyers see sweet spots. Mr. Seay, who builds a chart of the buying spectrum with high CPMs on the left and low CPMs on the right, likes to buy some big shows but puts much of his money in the middle. "The best value is the middle third."


Mr. Seay has some favored buying strategies. One: "You take as many new shows as you can, but you take them in first, second and third quarter," after the worst fall performers have been canceled. A new show usually carries a lower CPM, so the early buyer gets a bargain if it's a hit. If a show fails, Mr. Seay said, the advertiser can get make-goods in something as good or better.

One of last fall's big flops was Fox's "Girls Club," which had one of the highest CPMs of the season (setting aside ratings guarantees) because of poor ratings. Advertisers had the opportunity for make-goods in a show that took its slot: ratings hit "Joe Millionaire."

There are numerous reasons to buy top shows, which can command a premium because of ratings, audience demographics, placement in the weekly schedule and ability to generate water-cooler buzz. NBC's Thursday night lineup-home to five of the 10 highest-priced shows-delivers advertisers a huge audience packed with young, educated viewers with money to spend.

"Shows that tend to be the highest rated tend to be around the longest and tend to be the most predictive, and over time they end up getting a premium for that," said Rino Scanzoni, president of the broadcast division at WPP Group's Mediaedge:cia, New York.

One buyer is looking low. "I'm paid to keep CPMs in check," said the buyer, who is trying to convince a big marketer to go on "Smackdown."

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