By Simran Sabherwal & Shobhana Nair
Is the industry better off adopting the Cost Per Thousand (CPT) system, based on absolute numbers, over Cost Per Ratings Point (CPRP), a relative measure, to gauge television audiences?
Even as the industry witnesses a tumultuous argument over the efficacy of the current system of television audience measurement in the country, and broadcasters outright reject TAM Media Research - the sole agency measuring reach of television - what emerges is a hot debate over the very matrix of such measurement. An issue that has been simmering in the background for a long time is the debate between broadcasters and media agencies/advertisers over which is the better mechanism to measure television audiences - the current Cost Per Ratings Point (CPRP) or the globally more accepted Cost Per Thousand (CPT) system.
While CPRP has been under fire for a long time (low ratings could directly impact the broadcasters’ leveraging power with advertisers and media agencies, and thus lower revenues), both sides have differing views on what methodology should be used to measure the all-important RoI of media spends.
While digitization was a high point, bringing industry stakeholders together to embrace the new broadcast regime, the Telecom Regulatory Authority of India (TRAI)’s recent mandate to limit advertising on TV to 10+2 minutes per hour has had the opposite effect, dividing the industry. Effective October 2013, when broadcasters no longer have the luxury of 15-20+ minutes of advertising inventory per hour on TV, the accent will be on utilizing the allotted time to the maximum. While broadcasters will look to show more reach – supported by CPT – advertisers will demand maximum bang for the buck spent on television supported by an efficient rating mechanism.
CPRP VS CPT
CPT is the cost to reach one thousand members of the target audience through a given advertising medium. It scores over CPRP as it takes into account absolute numbers, which could have increased because the overall base being measured has increased, and not because the viewership of a channel has improved. The other advantage of CPT is that it has the ability to handle multimedia metrics which currently CPRP does not offer. However, on the downside, as several industry stakeholders have rejected TAM data as not being robust, CPT calculations show variances for channels that don’t have high viewership numbers.
CPRP is a relative measure, where the money is spent to reach a certain proportion of the audience. As CPRP takes into account the percentage of the base which has been exposed to the communication, it is less impacted by the ever changing universe measured by TAM. In other words, CPRP is based on GRP/TVR which is a percentage and is rating sensitive. CPRP also does not account for growth in Cable & Satellite (C&S) homes.
While CPRP has the backing of advertisers and some media agencies, broadcasters want the measurement matrix changed to CPT, so that they get paid for the absolute number of people who watch the channel. However, as most TV plans have GRP objectives, CPRP becomes a more robust metric when buying TV GRPs and it is due to this that GRP delivering channels like GECs are bought on the basis of CPRP.
CASE FOR CPT
It is estimated that the C&S Universe has grown by over 60% in the past five years and the C&S penetration has jumped from around 70% in 2009 to over 90% in 2013. However, despite the expanding universe, many broadcasters, particularly GECs have witnessed a fall in their TRP numbers. The main grievance of broadcasters is that despite the increase in audience size and more people tuning in, particularly for big ticket properties, the benefit of growth of overall viewership doesn’t accrue to the broadcaster in the CPRP module. Broadcasters feel, because of this it is now time to move to the more effective CPT model which reflects the universe gain in actuals as against continuing with the archaic CPRP model because the advertisers’ main aim is to capture eye-balls.
Rohit Gupta, President, Network Sales, MSM Network says, “Increasing number of television channels has led to fragmentation and the ratings are coming down, But, even though ratings are decreasing the universe is growing and the absolute numbers are growing. And it is this reach that the advertisers buy.” Gupta adds, “Brands pay a premium for IPL because of the reach and not for the rating. They pay me because I reach 180-200 million people.” Drawing a comparison with the Superbowl, broadcasters say the property commands a premium because of the reach and not because of the rating point.
The general consensus is that CPT will help broadcasters unlock value. An analyst explains that if a programme draws a consistent rating of 2 over a period of five years, it means that the viewership has increased (due to the changing universe) over the time period. However, broadcasters are unable to leverage this addition as advertisers and media planners insist on going by the TVR rating of 2.0, though the audience delivered by the channel to the advertiser has multiplied. And, it is this additional viewership that the channels are looking to unlock as they believe that they are getting compensated for only a fraction of their entire television viewing audience. Anand Chakravarthy, EVP, Marketing and Business, RBNL said, “In the current scenario, CPT is far better than any other mechanism. At the end of the day, advertisers need exposure and that is accurately measured in CPT model. The mechanism is not only accurate but also in tune with modern needs. CPRP is an old mechanism of measurement.” Broadcasters also emphasize the point that as CPT is the standard procedure for measuring RoI globally, it is high time that India also falls in line with global practices.
Ashish Sehgal, Chief Sales Officer of Zee Entertainment Enterprises Limited, says, “Moving to CPT in the right way would definitely garner higher revenues not only to our network but to the industry at large. It is not about more revenues, it is about fair revenues as the industry is under-valued despite being the largest medium of reach in India.” The other point to be kept in mind is that the yields in the TV industry have dropped year-on-year. K Subramanium, President of ETV, adds, “CPT system will help broadcasters realize their true value. TV media efficacy is hugely under-valued through CPRP model. CPRP does not consider the Y-o-Y growth in absolute reach of a channel in C&S households. Over the years, the prices of audience measurement have remained mostly flat due to CPRP methodology, as it focuses more on time spent and stickiness than absolute reach.”
BATTING FOR CPRP
While analysts agree that CPT is probably more accurate, they add that it is better to be cautious and continue using the CPRP methodology until a robust ratings system is put in place in the country, and there is better clarity and understanding of the CPT matrix first.
Media planners argue that India is still not adept at measuring media spends via the CPT module and reiterate the point that higher reach, courtesy better distribution, does not necessarily mean that more viewers are tuning in to watch the channel and by default, the advertisement. Mayank Shah, Group Product Manager, Parle Products says, “Broadcasters are trying to justify the increase in their prices through CPT model. It is easy to increase prices in the CPT model as compared to CPRP. In the CPRP model, more weightage is given to the amount of time and stickiness of the audience. I am not against CPT, but we need to have a robust ratings mechanism in place first. There is a huge question of the stickiness factor in the CPT module. CPRP takes care of stickiness or the amount of time audiences spend watching the advertisement.” Pitching for CPRP, media planners add that though CPT measures reach, the TVR measures audience visibility, which is lacking in CPT. Analysts also caution that while CPT is beneficial to channels with a high reach, the same probably cannot be said for niche and special interest channels.
CPT – THE FUTURE?
With the impasse over TAM ratings continuing and a possible hit in revenues due to the ad-cap, a move to CPT could work to the broadcaster’s benefit. However, the simple fact is that whether the methodology used is CPT or CPRP, the basic yardstick for both is the same – rating, the only difference is the calculation. Shripad Kulkarni, CEO, Percept Media believes, “CPT is of course important, especially for cross media efficiency. But CPT computations are tricky. Only a planner worth his salt can handle CPT on the fly. Sellers too will need an orientation. All in all, I don’t really see CPT becoming the buying currency in the near future.”
Media planners add that though CPRP has its limitations, it is the right methodology for the moment as even if CPT is implemented, it will not solve all the problems. CPT by itself may not adequately reflect reality in a highly fragmented environment. While both the methodologies have their advantages and disadvantages, the bigger issue currently is that of data stability and data integrity. Experts feel that while a move to CPT is unlikely, its advantages needto be looked at and the industry needs to arrive at a possible resolution where both methodologies can be captured and co-exist.
The focus should be to get all the constituents of the industry to work together to sort out issues and move ahead. Ashish Bhasin, Chairman India & CEO South East Asia – Aegis Media says, “The reason we haven’t had any sensible conclusion on the CPRP v/s CPT debate so far is because, as an industry, we are very short term focused and stop addressing issues that are not of immediate concern. We wake up to issues only when they become a crisis. According to him, there is a trust deficit building between industry bodies and all efforts to have joint resolutions seem to get hijacked by vested interests on either side. “We need to have several Joint Industry Bodies (JIBs), which have representation of broadcasters, advertising agencies and clients, to address such issues on an ongoing basis. Only then will we have any meaningful progress,” Bhasin says.
Feedback: simran.sabherwal@exchange4media.com
