Local spot TV appears to offer quite a bargain when compared to national scatter market pricing, putting the lie to the notion that one-stop shopping is the only way to fly.
According to new research from the broadcast trade association Television Bureau of Advertising, marketers can usually pick up time in all 210 DMAs for less than the cost of a national network buy.
After crunching the SQAD numbers, the TVB concluded that spot came at a less taxing CPM than scatter among three of four primary day parts—morning (5-9 a.m.), early news (5-7 p.m.) and late night (11:30 p.m.-2 a.m.). Prime time (8-11 p.m.) continues to sell at a lower rate in national broadcast.
In the aggregate, the average network scatter buy in the first quarter of 2012 is fetching a CPM of $101.42, up nearly $10 versus $92.22 in the top 210 DMAs. When the four day parts were averaged out, local CPMs are a little more than two dollars cheaper than network scatter ($23.06 versus $25.36).
All TVB calculations are based on guarantees made around the adult 25-54 demo.
Not surprisingly, prime time is the outlier. Per the TVB’s calculations, the average network scatter CPM in prime is $35.07, or more than five dollars cheaper than spot buys made in all 210 markets. Prime time rates are expected to nearly converge in Q2 2012, when the TVB projects an average network scatter CPM of $48.25 versus a spot rate of $48.62.
Note that a more targeted local strategy comes at a much greater cost. For example, a client making a buy in just the top 10 DMAs can expect to pay an average CPM of $63.87, a 32 percent premium versus broadcast scatter’s $48.25. Reaching the top 20 DMAs comes at a $60.38 CPM.
Broadcast is much higher during the late-night hours. Per the TVB, the average Q2 late-night scatter CPM is expected to add up to $36.11, whereas the cost of reaching one thousand members of the demo in a 210-market patchwork buy will be $19.88.
“The perception has always been, ‘Why should I buy spot when I can buy the top 20 markets and get the rest of the 190 DMAs for free?’” said Steve Lanzano, president and CEO of the TVB. “That simply is no longer the case.”
Lanzano acknowledges that while it may be a bit more taxing to make 210 spot buys versus a single national scatter investment, any complexity should be mitigated by savings.
Last year, spot TV revenues grew 5 percent to $26.3 billion while broadcast TV (ABC, CBS, NBC, Fox, the CW and Univision) improved 1 percent with an aggregate take of $32.6 billion. Automotive (Chrysler, Ford, Toyota, GM) telecom (AT&T, Comcast, Verizon) and QSR (McDonald’s, Yum! Brands) account for the three biggest local categories.