Commentary

Explaining CPM Increase: Q&A With SQAD's Marc Krigsman

Marc Krigsman has a deep background in TV, from Fox Cable Network to Turner Networks Group, Cadent and Cross MediaWorks,  becoming CEO of SQAD in 2015. 

So who better to assess the trends and challenges in pricing the media marketplace in 2020?

(Interview has been edited for clarity and length.)

Charlene Weisler: What data does SQAD collect? 

Marc Krigsman: For more than four decades, SQAD has served as the industry source for ad cost data, processing more than $1 trillion in real transaction ad costs from advertising housekeeping system. This data is available through our MediaCosts platform and includes costs for national broadcast, cable, and syndicated television, as well as local broadcast, cable, and Hispanic TV, radio, and out-of-home advertising. 

Weisler: How has audience fragmentation due to streaming, OTT, SVOD and cord-cutting impacted average unit ad costs on broadcast and cable?

Krigsman: It’s an interesting conundrum that we are in right now because as fragmentation occurs and audiences become more scattered, there is still a revenue target outlets need to achieve for their inventory. 

So what is actually occurring is a CPM increase. That is because it is costing more to reach the same audience. 

As fragmentation happens, we’re seeing CPMs and rates go up.  Most in the industry thought that would not be the case, but in fact we are seeing an increase in prices. That also happens when you sell less inventory: CPMs go up. It’s a supply and demand issue. Fragmentation does not equate to a sale or reduction in prices. It is actually the opposite.

 Weisler: What effect will increased audience-based buying and impression-based measurement have on unit ad costs and advertising budgets? 

Krigsman: The more focused and targeted you get, the more you are going to pay for that targeting. For some advertisers, that makes sense. They will pay a premium to reach the audience they want to reach — and only that audience. 

But other advertisers, CPG for example, don’t really care about pinpointing audiences. So for them addressable is not as efficient a buy. 

The reality is that even with targeting, you are still going to have waste. You have to be 100% clear about who the audience is you want to reach. You have to have a lot of audiences in your data to understand who your ideal customer is  — but when you do that, the extras it takes to buy those segments will result in a higher price point. 

For the seller, an advertiser using a targeted campaign to reach a limited HH, that means that they will have to fill their other inventory with other types of advertising if they can. 

The media outlet has to have confidence that the revenue they are getting from the targeted buy will be enough. They have to take into consideration that if it goes for a lower price, this will open an opportunity for bargain hunters looking for a bucket of impressions, not specific ones. Targeted buying could create opportunities for people who are looking for the opposite.

Weisler: What programming types will continue to command the highest CPMs? 

Krigsman: Live shows, special events, news and sports: these are premier events that always command high CPMs because of their unique selling proposition in general. Overall you still have huge prices for traditional TV– sitcoms and other first run programming. But clearly live and special events are unique.

Weisler: How are live programs such as sports and awards shows faring in an environment where audiences are gravitating to watching highlights on-line? Does live programming delivers the most engaged audiences?

Krigsman: Programming that promote itself as unique or “watch it now” has the specialness of motivating viewers to want to watch it while it is happening, which always makes for an engaged audience.

Weisler: What can we expect for the CPMs of news programming as the presidential campaign season heats up?

Krigsman: History has shown that when there is a lot of pressure on inventory, prices go up. From a national inventory perspective there will be a lot of pressure from PACs and other entities looking to support various issues and candidates.

But most presidential advertising will be local rather than national. This will put pressure on local inventory and we will see an increase in those markets, but for only for a period of time,

What traditionally happens is that those markets will go through to a period of  time and some of their core advertisers may not have available to them what they have had before.  But those local stations will then look to make goods following this period to offer to their bread and butter advertisers. 

2 comments about "Explaining CPM Increase: Q&A With SQAD's Marc Krigsman".
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  1. Ed Papazian from Media Dynamics Inc, February 20, 2020 at 7:47 a.m.

    A very good interview, Charlene, and excellent points by Marc. As you may know, I've been saying basically the same things for some time now. Thanks.

  2. Charlene Weisler from Writer, Media Consultant: WeislerMedia.blogspot.com replied, February 20, 2020 at 9:23 a.m.

    Thanks Ed!

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