Cost Per Thousand

Cost per thousand (CPM) is a generic term for cost calculations relating to audience, circulation or some other other unit of measurement. The M in CPM stands for the Latin 'Mille', or thousand. It is a very common method of establishing comparative cost efficiency.

Warning! Cost per thousand reduces cost to Rands per thousand of a unit. It is never a measure of effectiveness unless the 1000's of units being measured are those of a response measurement eg., sales, coupons or conversions.

Typically audience research surveys such as All Media & Products Survey (AMPS), Radio Audience Measurement Survey (RAMS) and Television Audience Measurement Survey (TAMS) display audience figures in thousands. In such instances divide the advertising rate by the estimated audience thousands to arrive at the cost per thousand figure.

Example: the following costs for a thousand audience of All Adults is calculated:

Channels on Station A Rate 30 seconds Audience
(ave 1/4 hour)
Calculation CPM audience
all adults
06h00-08h30 R8,600 88,000
(displayed as 88 in surveys)
[8,600] ÷ [88] = R97.73
08h30-10h00 R7,000 75,000
(displayed as 75 in surveys)
[7,000] ÷ [75] = R93.33

This table reads: Channel 08h30-10h00 is more cost-efficient because it has a lower cost per thousand (CPM) audience.

Warning! Be careful not to make direct comparisons between stations or channels when cost per thousand audiences are derived from different universes, eg., comparing the cost per thousand of a channel using All Adults against another channel using Adults 16-24. More tightly defined Universes have smaller audiences. Hence compare like with like.

Furthermore be careful when mixing different durations in a comparison (eg., 30 seconds vs 60 seconds). Although there is no difference in individual channel's average 1/4 hour audience, cost per thousands will differ because costs of spots differ.

Printed media circulation figures are whole numbers. Thus divide the circulation figure by one thousand (just move the decimal point three places to the left), before dividing the result into the advertising rate.

Example: the following cost for a thousand circulation is calculated:

Medium Rate Circulation
ABC J-J 2004
Calculation CPM circulation
Newspaper A R19,000 76,154 [19,000] ÷ [76.154] = R249.49
Newspaper B R6000 28,377 [16,000] ÷ [28.377] = R211.44

This table reads: Newspaper B is more cost-efficient because it has a lower cost per thousand (CPM) circulation.

Warning! Be careful when mixing Audit Bureau of Circulations (ABC) figures with claimed circulations and print orders. Claimed figures may (or may not) be inflated and hence give an unjustly competitive comparison against audited figures. Print orders are most usually higher than actual copies placed into the hands of readers (net circulation), especially for those titles with a high proportion of street and retail sales.

Furthermore, be careful when mixing different sizes and colour. Large sizes and additional colour (eg., a double page spread vs full page, and full colour vs black and white) will yield increased cost per thousand compared to smaller sizes and no additional colour. This is additionally complicated when comparing differing sizes between publications.

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