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Thursday, January 27, 2011
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Announcing: New Radio Industry Pricing Term


Despite the fact that radio web sites have been buzzing with an enthusiasm for years, the reality is the radio industry faces a combination of hurdles in generating revenue from them.

I've heard some outrageous suggestions on how to draw clients to advertise on a radio station web site, yet not one contains the words "show the clients how their ad is performing." Doesn't that sound strange to you in 2011?

" CPLM (Cost per Local Thousands)...

... you decide what the definition of 'local' is."


Recently I attended an online seminar that promised to show how to compete in new media. It didn't. The moderator offered instead many words we've heard before.

One example of the outdated-speak concerned how CPM pricing online won't work, due to the low numbers of people that show up on a radio web site.


Your radio station web site is going to have a tough time drawing a high number of visitors - that's a fact. Having this subject end up in a seminar about new approaches for radio today shows that the radio industry is still behind. So is the suggestion of pricing ad units on your web site in a "package" to avoid talking about low impression numbers.

If you can't deliver a high number of eyeballs or ears, then the least you can do (to the best of your ability) is help advertisers quantify who is receiving their message.

The "online" portion of any ad campaign gives more power for persuasion than ever before. Here's one example: eCPM. It stands for "effective CPM" and is explained by Google this way: "It is calculated by dividing total earnings by the number of impressions, then multiplied by 1000." Notice how eCPM is not selling impressions. It sells "knowing the cost of making a sale."

When selling a national online audience to an advertiser, it's easy to package impressions as either CPM or eCPM (if the product is sold online). If you wish, price the ad campaign on a cost-per-action - which is the essence of accountability. Whatever you do, your objective is to use accurate numbers that work within the campaign's "reach" parameters.

When selling your radio station web site's audience, though, what percentage of its visitors come from your local area? Put another way, what percentage of people seeing that local merchant's ad on your station web site live in another region, state, or country?

To speak with a local advertiser and quote total web site visitor numbers is as misleading as pricing around a "package" because the numbers are low.

To solve the problem, I've created a new term for radio stations to use when discussing their new media numbers: CPLM (Cost per Local Thousands). I'll let you decide what the definition of "local" is.

Here are facts: You have a radio station. You have a web site. The two are perfectly suited for a local merchant to use in drawing attention, then explaining their offer in detail.

The radio industry must use the internet as an adjunct to broadcast - programming and advertisements - and quit trying to outsmart clients for their money.

Smart clients will end up buying accountability and results, so talk to them about "cost-per-local-thousands." You'll appear more transparent, and probably get the buy.















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