Beating the $100 CPM: How to keep your marketing effective and affordable
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Media is fragmenting. Ad prices are rising. You need to change your strategy and you need to do it now.
I need to lead with that fact that this column was inspired by a recent edition of the excellent newsletter State of the Screens by Michael Beach. “$100 CPMs and the Future of TV Ad Prices” inspired me to write my take, and I’m going to borrow a few of Michael’s charts here. If you’re interested in the media ecosystem and how to advertise within it, you have to read State of the Screens.
It’s no secret that the old ways of reaching mass audiences are in decline. Television viewership is down dramatically, and even when people are watching, they’re watching all different shows in all different places. Track The Gauge and you’ll see these trends as clear as day.
As monoculture decreases, advertisers struggle to find ways to reach the individuals they want to reach. Demand for the limited amount of advertising that does reach mass audiences increases, and so do the prices.
As Michael Beach wrote in State of the Screens, this is a simple case of supply and demand. Even as streaming replaces broadcast and cable, the fact that streaming - even ad supported - has less ad inventory means there will be fewer opportunities to reach audiences.
Streamers continue to layer on features like contextual advertising and targeting by IP address, building their advertising capabilities and justifying their right to charge premiums over broadcast and cable. They also invite in local business who do not and would not advertise on cable or local TV, which casts too wide a net, but are happy to advertise on streaming with hyper-targeting layered in.
This means that the increase of ad prices is not just subject to run of the mill inflation. There are fewer ad slots. There are more advertisers. Efforts to reach premium audiences in premium places are going to cost a very pretty penny. Or, maybe better said, 10,000 pennies.
At first, it seems as though Brands will find an easy solution to this problem through the platforms. If YouTube, TikTok and Reels are the new TV, then simply adjust your spend accordingly. Shift it to the platforms. They have excellent targeting and virtually bottomless inventory, right?
The issue is, you run into far more noise on the platforms and many, many other advertisers. Plus, for all the changes that have happened to media consumption, ads on the platforms are just not as effective as ads on television. They don’t play long enough. It’s not a “lean back” environment. People do not particularly want to see ads in their feed. On TV it’s expected - especially when people elect to pay for advertising supported tiers of streaming services. Try as they may, other environments are just not the same.
If you’re not convinced, imagine yourself proposing to your CFO that you’re going to spend a TV size ad buy on social and social only. TikTok, YouTube, and Meta. No accompanying 30 second hero that will run during their favorite TV program. How did the pitch go for you, champ? Has the laughing stopped?
Here’s another thought experiment. Think of the last time you were scrolling through your social feeds or watching YouTube. Do you watch the ads you see? Do you linger on them? Do you click past them as fast as possible?
Lastly, the platforms have proven time and again that they are no friend to the advertiser. They will give you good results, but they’ll make you pay for it, and the rate you pay is going to increase substantially over time. Depending on who you’re trying to reach, you may already be seeing significantly higher CPMs on the platforms.
What is a Brand to do in such an environment? You must adapt. You must stop seeking to reignite the monoculture with a catch all buy and instead invest in a variety of niches that will return value to you over time. This will take more work up front, but it will ultimately give you more efficiency with a higher return on investment.
Instead of looking to all tier 1 advertising, you have to start to understand where your brand overlaps with high impact niches that have outsize influence. Find creators and personalities within these areas and begin to work with them, develop relationships, and partner so you can get in front of their audiences in a meaningful way. Take several second and third tier entities and work with them simultaneously.
Develop a campaign that can flex across different individual properties while still calling back to core tenets. Instead of seeking a large campaign with one large buy, flex into several and build them together.
The cost of doing business with these entities will be less from a dollars and cents perspective. You’ll pay with your time and consideration. You’ll also need to get into the weeds, understanding nuances that will be challenging to understand if you’re not familiar with the areas you might move into.
This is more than just hiring an agency. You need to look into these areas yourself. Spend time with the content and the branded segments. Read the comments. Then you will know who is a fit for you and who is not. This is how you’ll win. If you’re interested in reading an extended take on this, I wrote one for The Rebooting last year.
Also, be prepared for not everything to be a perfect fit. The method of gathering passionate niches together will mean you pay much lower rates for each of them. Some will deliver a really impressive ROI. Some will not. You’ll have to handle this strategy with some significant dynamic planning, finding what works and adjusting as you go.
However, doing this right will deliver massively positive network effects for you. Your partners will be authentically connected to your brand and deliver outsize impact. Their audiences will see you as more than just another brand. If you do this right, you’ll be a true, value-adding part of their experience. Partners with adjacent audiences will collaborate. You’ll establish a place in culture for yourself.
Again, let’s step back into our every day lives to test this theory. Think of your own media consumption habits. If you really want to scare yourself, think of the habits of people who are younger than you. What kinds of products do you like? Why? Where did you hear about them? Are you more interested in products when your favorite creators endorses them and it’s clear it’s a real endorsement, not just a #PaidPartnership?
This trend will continue. We will still gather around the TV for a few big events. The NFL. Some awards shows. Nathan Fielder’s next appearance on CNN. But these opportunities are fewer and farther between. They cost more and more and truthfully even their ability to perform - with the exception of the NFL - is in question.
Media is fragmenting and there are fewer opportunities to get in front of large audiences. Those that are left don’t provide a way to reach influential audiences authentically. You can’t do that with one sweeping ad buy. You have to begin to build your high impact niches. Now.
Your choices are to begin riding this new wave or to continue to pay higher and higher CPMs for less and less ideal situations. While the platforms might provide a brief reprieve here and there, a place to throw large amounts of money to gain scale quickly, no platform where brands spend advertising money is looking out for them first. You need partners. Real partners.
Why should you care?: It is a strategic necessity to look to improve the efficiency and effectiveness of your advertising model. To pivot from the traditional model into a new model of many medium sized partners who can deliver outsize impact. Begin your changes now, even if you do it a few hundred thousand dollars at a time, or suffer the consequences of a CFO scorned.
Have a great rest of your week!
