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Will CPT be the way forward for TV media buying?

Will CPT be the way forward for TV media buying?

Author | exchange4media News Service | Monday, Oct 17,2016 8:02 AM

Will CPT be the way forward for TV media buying?

The debate over which is the better mechanism to measure television audience, the current Cost Per Ratings Point (CPRP) or the globally more accepted Cost Per Thousand (CPT) system has been simmering in the background for quite a while. It’s no doubt that broadcasters have been pushing for CPT as it’s based on the absolute number of people reached. It effectively takes into account the sharp increase in the number of Indians watching television. CPRP, on the other hand, is a relative measure which has the backing of advertisers and media agencies, where the money is spent to reach a certain proportion of the audience. As CPRP, the buying metric for TV, takes into account the percentage of the base which has been exposed to the communication, it is less impacted by the ever changing universe.

However, when Shashi Sinha, CEO, IPG Mediabrands India, addressed the elephant in the room at The Advertising Club’s annual Media Review last week, broadcasters couldn’t help but heave a sigh of relief. Sinha had said TV buying needs to shift from CPRP to CPT as it has outlived its utility. He emphasized on the need for a common currency and felt that CPT can be the new metric.  In his view, the current CPT of channels in India presents a big opportunity to drive growth.

CPT Advantages

According to Sinha, “CPT has many advantages and the first one is that today there is so much focus on inter-media comparisons, especially with video, people are talking about video, whether television or digital. Our tools and metrics are designed to compare and look at multimedia reach and various other comparisons we do. So, in that case you need a common metric and CPT is a very powerful one. Secondly, people realise that big markets internationally like US, UK and Germany have moved to CPT. The third thing is that fairness demands that finally you have to reach eyeballs and India is a growing market, plus it is underleveraged and the inventory is huge in this country compared to most markets in the world but the value is less. Moreover, the penetration of television has still a long way to go, especially in the rural India. I think with CPT coming in, you will find that there will be value for the whole ecosystem all around.”

Sinha further went on to say, “My take is that, yes, a lot of people feel that with CPT will the rates go up? I feel that it is an absolutely mistaken notion because finally rate is something which is decided by supply and demand. It depends on the inventory, and whether CPRP or CPT, as more advertisers come, the inventory becomes valuable and the rates go up or if more broadcasters come and more inventories are available the rates will come down. So, I think rates going up and coming down because of CPT are false notions as there is no connection between the two. It’s just that it is a better metric. I think the way India is evolving, and with all the research bodies in place, at some point when we will have an integrated system in place, whenever it happens, I think the only way to measure is CPT.”

Consensus on CPT

We also spoke to broadcasters and media agencies to get their views on the comment. Broadcasters definitely were more gung-ho about it. A CEO of the one of the leading channels who didn’t wish to be named explains, “In the last eight years, TV households have grown from 123 million in 2008, to the current 153 million, and is projected to grow further to 183 million by the end of the year. For this reason, even in developed and saturated markets like the US, the buying and selling happens using CPT, which is calculated on the basis of the actual Impressions (TVT) that a campaign reaches. This is an ideal methodology for calculating cost benchmarks in growing markets, as it captures the incremental viewer base. This ensures fair share for the broadcaster, who is not shortchanged for possible loss in percentage rating points despite growth in the universe and the actual viewer base.”

 He adds, “The CPT methodology becomes even more relevant in India, in light of the added eyeballs being measured by BARC vis-à-vis the erstwhile measurement body TAM. The BARC universe has increased almost 2.5 folds from a cable and satellite base of 267 million on TAM to 674 million base now, with the addition of the Rural universe. The CPT methodology will capture this growth in its true sense, which the CPRP methodology may not necessarily.”

More importantly, he believed that industry needs to stand united on this matter. “For the TV space to grow, broadcasters need to benefit from the growing audience base which it is reaching out to. And once the Indian broadcasters get a fair share of the eyeballs they offer, they will be in a position to invest back into the business to better the standards, deliver world class programming and drive the growth of this sector to match up to the levels of the developed countries.”

Rohit Gupta, President, Network Sales & International Business, Sony Pictures Networks, puts his point across, “It has been a long standing issue for last 6-7 years. CPRP is not the true reflection of the growing universe. The fact that millions of eyeballs are added every year that benefit is not coming through CPRP. Globally the measurement is CPT. Global media agencies are anyways using it. When discussion was started around four-five years back on CPT that when BARC as a new measurement system comes in we will gradually upgrade to CPT, it got shelved. Now BARC has been there for a year and half. It’s high time that India moves towards that as CPRP is archaic.”    

MK Anand, MD and CEO, Times Network, shares similar views, “CPT is the currency in developed markets. Digital and print are always sold on CPT. While CPRP helps understand an additional dimension of engagement through time spent, advertising efficacy really depends on reach and quality of the ad content and not platform TSV. CPT therefore is a better measure. CPRP can lead to wrong cost allocation. The collateral benefit of moving to CPT would be that content design would not be so TSV focused. Reach targeted platforms will have to be richer in format. Overall this will benefit advertisers and viewers. "

Nikhil Gandhi, VP - Revenues, Media Networks, Disney India agrees with Sinha, “I agree that we need to move to CPT. With India getting digitized and measurement increasing efficiency the number of homes in absolute viewership terms have increased many fold. Pure reach in 1000s signifies the potential of the platform which should form the basis of price and that can further be layered with strength and popularity of content.”    

Anupriya Acharya, CEO, Publicis Media believes that while the market can move to CPTs, the actual movement to CPT may not be so easy. “This is a very old debate. You can derive one from the other - it is fairly simple mathematics. For cross channel/multiscreen planning one has to look at CPTs any case. So yes, the market can move to CPTs. However, the actual movement to CPTs is a bit more complicated than this straight statement. For trained media professionals navigating CPRP-CPT is easy. However, there are thousands of advertisers on TV and not all the TV budgets pass through trained professionals. Quite a bit of the markets still is traded directly, or through agencies that may not have the most trained resources. Hence, the two currencies have been co-existing. It is important that all stakeholders get comfortable with CPTs.”

Ashish Bhasin, Chairman and CEO of Dentsu Aegis Network South Asia puts forth his views. "Whether we go by CPT or CPRT, the quality of BARC rating needs to reach at an industry accepted level first. Issue with BARC needs to be stabilized before any decision can be made because at the moment the variations emerging between pre and post evaluation plans are unrealistically high. This is causing a huge concern to the industry. BARC is aware of it and has set up an Industry Committee to look into it. We need to make sure the ratings that we are getting are of high quality, stable and variations if any are explainable. Once we have a proper accepted industry rating system and ramping of people’s meter is being planned then it’s the right time to open up this discussion," he said.

"CPT does have merit. Universe is expanding and it will capture that properly. But I don’t think it will be at the cost of rating. So rating should still be there and we should have access to both. But both should be stabilized so that there is no doubt on the efficacy on the currency being used to measure. According to me, we are one step away from getting on to that," he concludes.

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