Cost Per Thousand Flashcards, test questions and answers

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What is Cost Per Thousand?

Cost per Thousand (CPM) is a key metric used in media planning and buying. It is the cost of reaching 1,000 people with an advertisement or other type of message. CPM can be used to evaluate different types of media platforms for their cost-effectiveness, helping marketers decide which one will deliver the best return on investment.The calculation for CPM involves dividing the total cost of a campaign by the number of impressions it achieved times 1000. For example, if a company spends $50,000 on a TV ad that ran three times during prime time viewing hours and generated 500,000 impressions its CPM would be calculated as follows: ($50,000 / 500,000) x 1000 = 10 CPM.When evaluating media platforms for effectiveness many marketers look at both reach and frequency metrics to determine how successful an ad has been in terms of delivering results. Reach measures how many people are exposed to your message while frequency refers to how often they see it or hear it. A high reach/frequency combination might indicate that viewers are more likely to remember your brand or product over those with lower numbers. The ultimate goal when considering these two factors together is to find an optimal balance between reach and frequency that maximizes ROI without overspending on unnecessary expenses like excessive airtime or clicks etc. This is where CPM comes into play providing insight into whether you’re getting good value for money spent based on each platform’s ability to generate impressions (reach) relative to its costs (CPM).