Offline media pricing models explained

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digital media pricing modelsAs with online media possibilities, offline media each have a few pricing models they regularly use and it is important for digital sellers and marketers to be familiar with them in order to better relate how they work with their digital counterpart. It is also interesting to see that digital didn’t reinvent any wheels here but adapted existing offline models to digital platforms taking advantage of what can be measured.

Offline pricing models

Let us ensure we all have similar background knowledge… Offline media pricing models are quite limited. Each individual media offers up to four possible models.

Flat fee:  In print (newspapers & magazines) this is the cost per page or any subset of it. In broadcast (radio & TV) it is the fixed cost per spot. In directories and classifieds it is the cost to insert a listing. For out of home, it is the cost per billboard or ad surface.

Cost per agate line: Newspapers subdivide their page into columns and lines. Each is called an “agate line” and often the “page cost” or any other subset is actually the cost for the number of agate lines that fit within the desired space.

CPP: The cost per point is the pricing model used when buying GRPs. This is predominantly applied to broadcast media but also to out of home. Essentially one GRP is obtained when 1% of a fixed population (for example adults 25-54) in a fixed geography (for example, your closest “central” metropolitan area. Points vary greatly throughout the hours of a day, each season, channel, market and desired demographic group.

One “spot” will vary greatly as well in how many GRPs it individually generates. It will thus also vary in the number of impressions it generates.

CPM: Cost per thousand (mille is Latin) is sometimes used in broadcast media and out of home when you pay per bundles of thousand individuals reached by a campaign – regardless of how many spots, boards or pages are used to achieve the impression goal. A few spots in prime time shows can generate many hundreds of thousands of impressions, while it may take many daytime or weekend spots to achieve the same about of impressions.

Performance: Performance pricing in offline media is rare but does exist. For example, TV runs “DRTV” spots, or direct response ads, usually late at night. You can recognize these as the phone number or operator number you are prompted to call will change from one channel to the next. This is how the advertiser counts “calls”, the offline equivalent of online “clicks”. The channel is either only paid on the number of calls generated or with a hybrid model.

As you can decipher from what’s above, each offline media uses a few different pricing models. Usually it’s the advertiser or their agency that will pick one to use for a particular media that makes sense for them or they’re comfortable with. Sometimes they will vary pricing models from one campaign to another depending on their objective, but that’s rather rare.

Hopefully this post help clarify some of the pricing models you’ve heard about but weren’t quite certain what they meant or how they worked.

Please do not hesitate to contact me if anything isn’t clear, either in the comment section below or in the contact section of my site.

In an upcoming post I will address more advanced digital pricing models such as hybrid, eCPM and dCPM.

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