CPM versus ER: How advertisers prefer to buy ads on CTV

As many experts foresee India's emergence as a significant contender in the global Connected TV (CTV) markets, advertisers are increasingly recognising the unmissable potential within this space with the surging popularity of CTVs as an advertising platform in India.

According to various marketers, this trend allows them to target specific audiences more precisely by delivering advertisements directly to households based on specified demographics, interests and behaviours.

They buy CTV advertising both on CPM (cost per thousand impressions) and slot basis or effective rate (ER). BestMediaInfo.com explores the buying behaviour of top advertisers on CTV.

CPM or ER: How do advertisers choose to buy ads on CTV?

Shashank Srivastava

Shashank Srivastava, Senior Executive Director, Marketing and Sales, Maruti Suzuki, said, “As an advertiser, both CPM and slots are important to us. It depends on the type of programmes/activity. For example, on marquee sports events – which pan for a good duration of time, probably we will prefer to go with spots as it ensures consistency in brand visibility. On a CPM – basis, the same may not be ensured as depending on the concurrency numbers and other factors, you might get few spots at best. However, for GEC or impact shows – CPM may work better as we would like to showcase brand visibility when viewership is high.”

Rajiv Dubey

Rajiv Dubey, Head of Media at Dabur, said that the choice between CPM and slot-based advertising depends on various factors like advertising goals, target audience, budget flexibility and overall campaign strategy. Both have their advantages and limitations. If the primary goal is to achieve visibility and reach, maximise awareness and is not time-sensitive then the advertiser can choose CPM.

"If the campaign objective is to show campaigns in a specific time slot or for a specific event to a specific set of audience, then slot-based advertising would be more appropriate. As it allows for strategic placement to reach a more engaged audience," he added.

BK Rao

Meanwhile, BK Rao, Senior Category Head at Parle Products, explained that these are independent and a crucial aspect still absent is the effectiveness. For example: When planning a campaign with 100 or 1,000 GRPs and desiring to incorporate CTV, the ability to measure the impact of CTV becomes essential. If after incorporating CTV, the campaign generates an additional 50 or 100 GRPs, it becomes significantly more measurable and actionable.

“Unfortunately, in the current landscape, obtaining such metrics is challenging. Therefore, lacking these metrics makes it challenging to definitively determine if CPM is superior or if a standard rate for a 30-second ad is the more favourable option,” he added.

Siddharth Dabhade

Siddharth Dabhade, Global Commercial Board Member and Managing Director, MiQ India, said, "We recommend a unified media buying approach on CTV, taking an audience targeting approach instead of a platform approach. We use CTV, OTT platforms and YouTube to maximise reach with an optimal frequency of ads being shown without over-exposing ads on a particular platform. Typically, the cost of ads varies according to ad format and platform and is determined by CPM and CPV (cost per view), but it can vary depending on the type of ad format used. A typical instream video ad runs between 6 and 30 seconds. On OTTs, non-skippable ads are the primary type of advertising. On YouTube, ads can be either skippable or non-skippable, giving marketers greater flexibility in their advertising campaigns."

IPL’s CTV slot rate was quoted as Rs 6 lakh per 10 seconds versus Rs 16 lakh on Star Sports. On being asked if this applies to big-ticket events such as IPL or World Cup as well, Srivastava highlighted that currently, it seems that slot rate on TV is slightly more expensive than slot rate on CTV.

“However, that is only in the case of big-ticket events like the IPL and World Cup. But the way media buying and deal is constructed, by and large, the impressions are secured/protected even if spot buys are considered instead of CPM,” he added.

Meanwhile, Dubey of Dabur said that it depends on the objective of the advertisement.

“Whenever we get ad space it’s never CTV alone. Depending on the campaign and objective it’s a mix of mobile+CTV,” he said.

Dabhade of MiQ said that it’s no surprise that TV viewership peaks during tentpole sports events and it’s attracting more and more advertisers.

“Programmatic CTV ad inventory for tentpole events like IPL is more cost-efficient for advertisers if you want to reach more urban and affluent audiences, who are cutting the cord and prefer to stream their content. If TV offers mass reach, CTV offers advertisers to reach their most relevant audience at a competitive price point,” he added.

On being asked how advertisers decide to pay a premium, Srivastava said, “Advertisers sometimes pay a premium on CTV basis CPM buys and that’s solely from targeting and reach purpose. For example, Wimbledon on CTV may help us reach the niche audience which otherwise is difficult to target via normal ad spots and hence, based on the nature or objective of the campaign and the targeting involved thereof, we advertisers are open to paying a bit of premium on CTV, however, this is not a standard practice.”

According to Dubey, the acceptance of paying a premium will depend on several factors, like:

1. CTV offers a more interactive and immersive experience as compared to traditional, if an advertiser believes there is value in a more engaging experience for users, they may be willing to pay a premium.

2. Similarly, CTV provides targeting based on user behaviour and interests that are more precise than traditional TV. If an advertiser wants to reach a more specific set of audience, they might be okay with paying a premium.

3. CTV also provides insights as well as a detailed analysis of user behaviour, if advertisers prefer the data measurement capabilities of CTV, then too, they might be willing to pay a premium.

Dabhade emphasised that CTV advertising offers access to affluent audiences that are hard to reach over linear TV. During big ticket events, with limited ad inventory available advertisers may be willing to pay a premium for CTV ads if the platform allows them to reach a highly targeted and engaged audience.

Info@BestMediaInfo.com