Whether it be CPTs (Cost Per Thousand) in linear radio or CPMs (Cost Per Mille) in digital audio, many buyers are fixated on them as a key buying metric. While these numbers are important, the comparison between them can be misleading, particularly when you’re buying broad demo or geo-targeted campaigns. More often than not, this results in a false comparison, as the wider the reach, the more inevitable wastage is inherent into the equation.
For those new to media buying or unfamiliar with the terminology, here’s a quick refresher:
CPT (Cost Per Thousand): This is the cost for every thousand impacts, or times your commercial is predicted to be heard, across the linear radio campaign period.
CPM (Cost Per Mille): A similar concept in digital audio, where “mille” is Latin for a thousand. It refers to the cost for every thousand impressions your commercial is predicted to generate during a digital audio campaign.
Large-scale national and international ad campaigns often focus on reaching as many people as possible across broad geographical areas. For these campaigns, it’s about scale, and the CPT/CPM may be lower to accommodate a larger, less targeted audience.
However, for local or regional advertisers, it’s all about precision – speaking directly to a defined audience within a specific locality. While more work and detailed targeting are required, this approach can drastically improve the effectiveness of your campaign. Many publishers still steer local advertisers toward generic, broad packages to maximise their reach, but be cautious: the lower the CPT/CPM, the higher the likelihood that you’re paying for impressions that fall outside your target audience.
Here’s where it gets tricky: is the cost saving from a lower CPT/CPM enough to offset the wastage in reaching people who are never going to engage with your product or service?
Take this example (for illustrative purposes only)…
Let’s take a business based in Leeds targeting homeowners with properties valued over £1m in specific Leeds postcodes.
Scenario 1: You have the option of a linear broadcast radio campaign that reaches a broad area (beyond your target postcode) and can only be segmented to an ABC1 demographic, priced at £5 CPT.
Scenario 2: You could run a digital audio campaign that precisely targets homeowners in the West Yorkshire region, tailored to your £1m+ property audience, with a higher CPM of £25.
At first glance, the linear option is 80% cheaper. But here’s the rub: the data tells us that your target audience makes up less than 10% of the total radio audience. This means 90% of the impressions in the radio campaign won’t reach your ideal customers.
Your effective CPT on the radio campaign, therefore, becomes £50 – not £5 – when accounting for wastage.
So, what’s the cost of wastage? In this case, it could be as much as half of your campaign budget!
