Mediacorp reboots TV rate card with discounts of 80% to draw in ‘new economy’ advertisers

Singapore giant Mediacorp has torn up its traditional rate card for television, in order to appeal to a new generation of digital native advertisers more used to terms like CPM rather than the old world GRP metric.

It means discounts of up to 80% have been put in place across time slots.

First announced in February this year, Mediacorp claimed the card would offer “greater value, effectiveness and impact with advertising spend” and added “the restructured rate card has been optimised for parity with digital media, resulting in potential savings of up to 80%”.

This was done by introducing a  pricing structure based on the digital CPM model (the cost required to get 1,000 impressions or views of an ad), a shift from the traditional TV-metric of GRPs (gross rating points, arrived at by calculating the percentage of the target market reached by an ad, multiplied by the frequency of their exposure to the ad).

Mediacorp said this would create “a consistent buying language and method, completely aligned to how marketers are thinking and buying media”.

The second key element in the announcement was bringing greater flexibility to its master contracts. Clients who previously had their advertising spends tied to specific media, would now be able to deploy their budget across Mediacorp assets in TV, radio, digital and Out-Of-Home.

To get a deeper insight into just how these benefits would accrue to advertisers, Mumbrella spoke to Mediacorp’s chief commercial and digital officer Parminder Singh.

As per Singh, the starting point for the new rate card was to make television measurable, accountable and flexible.

Getting into greater detail on making television measurable, Singh said: “TV and digital video evolved in different time periods and trajectories and the terminology is very different.

“In a way, CPM and GRP are related. It is all about the effectiveness of ads but so far it has not been directly correlated or compared.”

Mediacorp intended to help advertisers who were used to doing GRP-based buys to get an idea of what that figure would mean in terms of CPM.

Explaining how the process works, Singh said: “Our customer group that works on a programme schedule comes up with projected ratings for different programmes. Depending on the time slot, the kind of programme and genre, the ratings change.

“We have a robust mechanism to project ratings for a programme in the future. We take the ratings, convert that to the expected number of people who would watch a particular programme and that gives us the number of impressions an ad is likely to deliver.

“Based on the number of impressions, we back calculate that into CPM and arrive at the projected CPM for that particular ad.

“It’s a robust system: our customer group gives us ratings, we convert that into impressions and then give the CPM for different ad slots.”

Asked specifically about the savings that are likely to accrue from this system — Mediacorp claimed it could be as high as 80% —Singh said: “Let us take one of our popular channels: Channel 5, for instance. A typical prime time slot in used to cost $4,000 before we put the new rate card in place.

“Now that we have adjusted it and changed the rate card and made it more proportional to the ratings, it could be as low as $800.

“That’s a pretty significant price change. It is more reflective of the audience impression and ratings. The change won’t be the same across slots. But in some of the slots the change is pretty drastic.”

Mediacorp expected the new rates to attract a fresh crop of advertisers. Singh said: “When advertisers know a medium is giving them better ROI and that it is measurable, accountable and flexible, they tend to increase investment.

“Some of the new economy advertisers may have believed TV is something they don’t understand since they are more versed in a CPM language. Or they may have felt a national screen is out of reach. They will now find it affordable. Our message is ‘go big on the national screen.’ We have all the storytelling ability of a big medium like television with all the flexibility and measurability of digital.”

Asked whether Mediacorp would be be able to meet its objective of attracting a wider base of advertisers, Omnicom Media Group Singapore and Malaysia CEO Ranga Somanthan said: “At this stage, we will probably see Mediacorp garner quick wins from mainly small- to medium-sized clients.

“What we are more excited about is the growth potential Mediacorp is creating, as it evolves to a more dynamic biddable pricing system in the next couple of years.”

This was in part a proactive move and in part, a reaction to what agencies and marketers expected. Singh said: “When we decided to use CPM, it was a clear input from our agency partners. They were already converting GRPs to effective CPMs.

“They said it would be great if the broadcaster helps them with that, officially. There is a great demand for CPM as a measure from advertisers.

“We have an inventory of prime and non-prime. In the world of online, it is reservation versus programmatic.

“The industry told us reservation can be equated to primetime and non-prime to programmatic. We can now tell advertisers, if you want to buy a primetime 9 pm drama on one of our popular channels, this is the CPM it will cost you. Compare that to digital video and decide where you’d like to put your money.”

Reacting to Mediacorp’s decision to offer a GRP to CPM conversion, Somanathan said: “Deploying CPM measurement as a benchmark allows Mediacorp to price themselves more competitively against demand and supply pressures coming from digital video inventory.

“They can put themselves back into the media plan from a cost savings point of view, so it is a right step forward for Mediacorp.

“That said, it is paramount that we, as agencies, place more rigour in analysing TV performance, since the tendency to buy more at a cheaper price may not necessarily yield effective deliverables.”

Addressing the creation of the new all-inclusive master contract, Singh said: “Gone are the days when advertisers used to plan for a medium and stick with it. You want advertisers to benefit from the full dynamism of what’s out there and not be stuck to a particular medium.”

This is also a way of encouraging advertisers to experiment with shifting ad dollars from media like TV to Mediacorp’s websites or OTT platform, options that may otherwise have been low on the priority list for marketers.

Mediacorp’s unique and structure — a state-owned broadcaster with multimedia interests — would no doubt have helped it put such a structure in place; a near impossibility in more fragmented media landscapes with a number of powerful private broadcasters vying for a share of the market.

Asked if there were any further expectations the agency and marketer ecosystem had from Mediacorp, Somanathan said: “Meeting agencies’ and clients’ expectations in areas like quality content creation, driving innovative partnerships and the openness to explore new avenues of advertising investment opportunities have placed Mediacorp in a strong place.

“There is always room for further improvement, though. However, I am confident that Mediacorp has the right mindset and resources to continuously evolve and improve the advertising opportunities it provides.”