Every CPM Has a Story

By Anna Sunshine, Oxford Road Podcast Media Supervisor

What if somebody told you that an increasing CPM isn’t necessarily a bad thing? Would you believe them? Probably not.

The podcast world is well into 2021 planning, and whether we’re renewing tenured campaigns with longstanding partners or vetting new opportunities, we’re always looking for obvious signs indicating that we’re setting ourselves up for another year of success in the medium — and fluctuations in CPM have traditionally been the best barometer.

But this year, we’re seeing more CPM fluctuations than ever before. Many of the top podcasts in the space are “network hopping”, converting from “baked in” to dynamic insertion, and/or fundamentally changing their buy structure altogether. This is driving an unprecedented level of CPM fluctuation that’s creating concern for our team and the performance advertisers that have grown to rely on these shows as stable assets to their advertising portfolio.

CPMs are trending up, but why? The Podcast channel as a whole is seemingly moving more and more towards packaging opportunities perfect for big brand advertisers and away from those looking for performance. Shows that have been in the marketplace for years are increasing their CPMs year over year, and new, buzzworthy personalities are launching with high CPM, 6-figure sponsorship packages, sight unseen. While there’s undoubtedly some level of branding achieved, and it’s oftentimes possible to implement a brand lift study for an additional cost, these big-ticket opportunities are usually a high-risk test for those of us who care about metrics like CPA and ROAS. But while big brands are coming into the space and driving CPMs higher, there’s more going on than meets the eye. 

We believe clear and measurable ROI can still be accomplished if you know how and where to find the shows that genuinely care about making their ads work. In these cases, the strongest relationships we’ve forged over the years have a mutual level of trust and transparency, which includes sharing insight and working towards the common goal of making every ad work, knowing that it ultimately helps everyone in the long run. Not to say that there isn’t a place for building a diversified portfolio with the right mix of high reach and smaller performance-based shows (we can tackle that at a different time), but it’s from these trusted network partners that we’re able to peel back what’s really going on. 

This is especially the case with CPM fluctuations. And this is where it gets a bit more nuanced because a drop in estimated downloads doesn’t necessarily mean the show is losing listeners — in fact, it’s often the opposite.

There have been plenty of new download measurement guidelines and challenges that have factored into CPMs fluctuating over the past few years, and while it’s better than it was, it’s still not perfect. As the podcast marketplace went from an unregulated to a (somewhat) regulated marketplace, we have to be mindful that what appears at first to be a decrease in listenership isn’t always the case. It’s likely a change in how the networks are tracking their show’s size.

Oftentimes, when a show adjusts its download numbers lower, it’s because their network has implemented stricter rules from the IAB in an attempt to report the most accurate number of downloads possible. Some networks use a 5-minute measurement window, others a 60-minute window, and others still, a 24-hour window according to the IAB’s standards.

One of our longstanding network partners has been using a 5-minute window to measure podcast downloads for years. This means that every time a listener pauses a show and comes back to play the same episode, 5 minutes later (or more), they would be defined as a ‘new listener’. This resulted in the downloads being exaggerated since many people listening to a single episode were counted multiple times. 

Starting next year, this partner is moving to a 24-hour window instead of 5. Therefore, the reported downloads will decrease, driving the CPM through the roof, but ultimately the unique listeners to each show will remain about the same. Although it seems like the podcast is jacking up their CPM while reporting fewer listeners per show, all other things equal, performance should theoretically continue to be the same. We might even suggest that it’s a sign of health as the industry continues to refine its approach to measurement. 

As to which lookback window we should use, the jury is still out. For now, it’s up to the networks themselves to choose. If a show jumps from one network to another, or, like in our example, a network changes their lookback window from 5 minutes to 60 minutes, the estimated downloads may change drastically — and while the CPM will be affected, the true listenership is likely about the same as it has been.

CPM, while an indicator of potential, is not the “be all, end all”. Our network partners run the gamut here, and we see podcasts across the CPM spectrum driving strong response, so it’s important to stay relatively impartial and let the performance speak for itself. Shows with low CPMs may drive zilch, while shows with the CPMs 3x that amount can have the most responsive audiences we’ve ever seen.

Every CPM has a story if you dig deeper, and it’s not always the one you would expect. So if you see a drastic change in CPM on your 2021 podcast renewal, don’t be so quick to cut the show from your plan. It’s important to understand the full context of why the CPM changed and more importantly, how it will affect your performance. If you have an agency, they’re already doing this for you, but if you’re going at it alone, stay informed and try to understand if it’s a true CPM increase or simply a change in measurement.