TEMECULA, Calif., September 13, 2006
Author: Joseph Gray
As a follow up to the recent article written by Kiran Aditham entitled, “Will CPA Stamp Out CPM? Industry Pros Argue Why Per Action Makes a Better Impression,” it is interesting to note that CPA is also gaining ground in other advertising mediums such as television. While CPA is not nearly as prevalent on Television as on the Internet, there is one company looking to change that. REVShare - television’s largest cost-per-action advertising network has spent 17 years building relationships with more than 1000 television properties that engage in a television version of CPA Advertising.

Recently, I wrote about one of the more serious challenges that lie ahead for the television industry and the important role that CPA will play. An already embattled television industry is now bracing for the inevitability that will come as of February 17, 2009. This is the final transition date set by Congress for U.S. television broadcasters to revert to broadcast digital signals. While the benefits of this technology, such as HDTV, are well known, many in the advertising world are cringing at what Multicasting — the new ability for broadcasters to deliver multiple channels of programming — will mean for an industry already struggling with media fragmentation.

One example of Multicasting comes from our friends at PBS who are already offering consumers a choice between children’s programming, do-it-yourself shows, adult education, popular documentaries, or other programming — all from the same broadcaster.

As new channels of programming are rolled out by thousands of local broadcast stations across the U.S., the amount of television advertising inventory, and competition for eyeballs, will increase to an unprecedented level in the history of the medium. This technology showdown may very well represent a checkmate for today’s two major television advertising models, Nielsen’s CPM model and Direct Response Television, both of which face their own unique challenges.

How Nielsen will rate all the new channels, afforded by such breakthroughs in technology, is the subject of much debate. What is clear is that after 20 years, Nielsen is still struggling to rate local cable programming which really only began the current media fragmentation tidal wave. As local phone companies are building yet another platform for television distribution, and on the eve of the Multicasting evolution, many television advertisers are feeling very boxed in by Nielsen’s apparent struggle to navigate these new waters.

As an alternative to CPM television buys, many brand advertisers have begun to utilize the Direct Response Television (DRTV) approach. Once the favored television advertising model of hucksters selling widgets late at night, DRTV has not only grown at an explosive rate, but it has become mainstream among traditional advertisers over the last decade. One of the major factors behind this growth can be attributed to the additional metrics advertisers receive in the form of consumer response.

DRTV has also freed advertisers to be early adopters of new television advertising opportunities who otherwise would be restrained by Nielsen’s inability to quickly quantify viewership across many new forms of television distribution and programming. However, DRTV has its shortcomings, too.

The DRTV model’s biggest detriment is that it is an incredibly labor intensive model which requires constant measurement and management to insure media plans are achieving the advertiser’s goals of reaching relevant consumers cost effectively measured through response and resulting cost per lead. While the overhead of managing a DRTV campaign makes sense on larger network properties, it has remained a challenge for DRTV agencies to execute the model with smaller media venues where the return on investment becomes marginal. As television continues to fragment into a larger number of smaller channel opportunities all vying for the same eyeballs, the DRTV proposition is further weakened.

What is desperately needed is a new approach. Wouldn’t it be incredible if there was an easy and automated way for DRTV campaigns to do business with an unlimited number of television properties? While many might think that an online auction approach would be best, I believe a CPA model for television is a better long term answer. As a backwards adaptation of the traditional DRTV model, stations running DRTV campaigns on a CPA basis would guarantee the advertiser’s cost per lead. From an agency or advertiser perspective, this is a practical way to work with all the media that exists in a fragmented television universe.

A truly scalable CPA television model would automate DRTV media management, ensuring that stations are consistently optimizing their CPA media investments. Campaigns would end up being aired in the most relevant programming based on response and CPA yield measurement.

Agencies and advertisers would be provided reporting in order to track how the CPA yield of their campaigns compares against market competition. Campaigns willing to raise the bid rate per lead, in order to increase the CPA yield of the campaign, would receive more airtime while underperforming campaigns would receive less airtime — exactly emulating the way the traditional DRTV bid environment works today.

For over 17 years, my company, REVSHARE, has been building the model described above. REVShare’s television bid environment is a unique way for stations to auction off media, but even more simplified because agencies and advertisers receive exactly what they desire — guaranteed performance. And, unlike auction site models, REVShare’s model is proven and a model which stations have been supporting for many years.

So, will CPA Stamp out CPM on television, too? I don’t think so. I see advertisers continuing to utilize measurement models like Nielsen, and others, in tandem with CPA similar to the way many television advertising agencies are executing and posting DRTV buys against Nielsen providing advertisers with the best of both worlds.

I also believe that television advertisers will ultimately be able to execute CPA buys across menus of different demographically targeted programming segments representing the diversity that exists across today’s multi-channel television universe — thus making television CPA buys even more flexible than today’s DRTV buys. In this way I view CPA as simply a better way to execute the DRTV model and one that I feel will ultimately be more efficient for advertisers, agencies, and media. CPA is really just another tool for how media can be packaged and sold in a changing world where traditional models such as Nielsen and DRTV are running up against practical limitations.

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For more information on REVShare, please contact Gail Gessert - Director of Marketing & Communications: gail@revshare.com or 1-800-819-9945, ext. 485.