• by Lawrence S. Fried , February 10, 2012

Today, though marketers are placing more scrutiny on media costs -- 22% of advertising spent on national TV (about $10.2 billion) was 5% to 20%, above market average price, per SQAD results in NetCosts.

That so many advertisers pay so much, shouldn’t come as a surprise. In buying media, marketers tend to focus on CPM as a measure of cost. But CPMs measure quantity, not price. The reality is, advertisers with low CPMs may still be overpaying for inventory purchased. 

Comparing the inventory purchased with a representative market cost for the exact same inventory is the only real way to determine if fair pricing has been obtained. Just ask any consumer. If advertisers don’t know their price relationship with each vendor, there is a risk of becoming a vendor’s best customer -- a customer that year after year pays above average rates.  

To get the most for each dollar spent, it’s essential that marketers make pricing a part of their ROI analysis by gaining access to a database that aggregates prices and CPMS. Today, price metrics are available to benchmark purchases, measure relationship values to each vendor, and gain bargaining power to negotiate rate adjustments.

No one likes to lose a best customer and it’s often the case that a vendor will agree to a rate adjustment rather than hope another high roller comes along to replace the business.

The bottom line is there is an opportunity for marketers to get up to 20% more advertising for the same expenditure. And the right price metrics provide the necessary bargaining power to capture this opportunity.