In the advertising world stations/networks price their spots using rate cards. “Rate card” was a term created by the agencies and stations back in the 70s. It was supposed to list all of the rates for one station on an easy to read card. Simple enough, in theory.
In the USA there are approximately:
6,000 Broadcast Radio Stations
1200 Broadcast TV Stations
225 Cable Systems/grids
140 National Cable Networks
2 Satellite Television Providers
1 Satellite Radio Provider
Every single one of those companies listed sell advertising and almost every single one of them have a least three rate cards. Today I am going to talk about rate cards for broadcast radio and broadcast television. The three most commonly used are:
#1 The Local Rate Card – average pricing is $9-$12 CPM (cost per thousand)
#2 The Agency Rate Card – average pricing is $7-$10 CPM (cost per thousand)
#3 The Direct Response Advertising Rate Card (D/R card) – average pricing is $5-7 CPM
#4 The Remnant Advertising Rate Card (which this post was written before it was popular, so you can click on the hyperlink to learn about it).
The CPM levels listed above are based on our analysis of station spot pricing over the last ten-years. Obviously, stations do not voluntarily list rates based on CPM. Stations sell to people based on price per spot.
The Local Rate Card was initially designed for local businesses located in the market/DMA that the station is located in. Every station in every market has certain time periods priced much higher than $9-$12CPM. Usually it is the timeframes that are in the highest demand. The timeframes that they label as “prime” (another clever marketing term). However, some radio stations in smaller markets are notorious for pricing their run-of-the-mill “non-prime” spots for $20 CPM. I cannot even begin to elaborate how much of a rip-off that is. We consider the average $10 CPM rate to be very overpriced. However, $20 CPM, is absolute robbery. If your small business has one or two locations (like say a pizza shop, or car dealership) you will be thrown into the “local rate card” box.
The Agency Rate Card was designed for advertising agencies or media buying firms. Stations allow advertising agencies to place spots for their clients at approximately 10-20% less than the typical Local Rate Card. On top of that the advertising agency then receives a 15% sales commission from the station for booking the spots (in the advertising world then call it an “agency discount” instead of a sales commission). The average CPM level for the agency rate card is usually between $7-$10 CPM. It is important to remember that the agency rate card is not set by the agency. It is set by the station and given to the agency. The higher the rate you pay the more commission the agency makes.
Just like the Local Rate Card, the agency rate card is overpriced. Big brands that sell products that can be purchased repeatedly like: Pepsi, Doritos, Coors Light, etc. can usually make agency rates work. However, it is very hard for small businesses to run a profitable campaign paying agency rates of $7-10 CPM.
The Direct Response Rate Card was invented by stations for Direct Response Advertisers. I would say that 75% of stations in the U.S. have a D/R Rate Card. The premise behind the D/R rate card was that stations knew people selling phone order products on TV (like the greatest love CD, Snuggie, Time Life books, etc.) could not make local or agency rate cards work. So they offered a lower price per spot for these types of clients, provided they had unsold inventory to allocate their way. The D/R CPM range is usually between $4-7 (depending on length of spot, timeframe and many other variables). Back in 1996 one out of five direct response advertisers could make these rates work. In 2008 only one out of ten D/R advertisers could run a profitable campaign paying $5-$7CPM. In the decade 2020 we estimate only one out of twelve D/R advertisers can make it work now.
In reality, the type of rate card does not matter at all. They are just clever marketing terms. There is an old saying that goes something like this “You can put lipstick on a pig, but you are still kissing a pig.”
When purchasing TV & Radio advertising we try to keep it simple. The only thing you should be concerned with is the number of impressions you are receiving per spot and how much are you paying for those impressions.
If you would like to learn more about TV and radio media buying please check out these two popular blog posts:
Tips for Buying TV and Radio Airtime
Define why Synergy is Important in Advertising Campaigns