Monday, January 22, 2007

CPM....

"What's that?" Beth asked referring to the item I'd just put in our shopping cart.

"It's a great deal," I said proudly. "Our usual brand is $3.99. This one's almost twice as big for only a nickel more."

"What about the quality?" she replied. "Do you know if will work as well as our usual brand? Which one will work best?"

I put it back.

Advertisers often make the same mistake I did in buying ad space.

Ad agencies use a formula called CPM or Cost Per Thousand to compare media outlets. (The M represents the Roman numeral for thousand.) It's simple: just divide the cost of ad space by the circulation and multiply by 1,000.

For instance, a $1,200 ad in the Sun-Times with a 500,000 circulation has a CPM of $2.40. That sounds cheaper than an ad in the Tribune that costs $3.40/M.

But, this thinking fails to address several issues:

1.) Audience. Many ad agencies use segmentation with the CPM formula. For instance, if my target market is mothers 21-35, I want to know how much I’m paying to reach that specific audience. In this case an ad in Chicago Parent might be more effective.

2.) Impact. Different media have a different impact. Traditionally free publications get less readership than paid ones. Certain titles have a much higher loyalty and readership scores. And people usually read more of less frequent and thinner publications. For instance, Beth reads our weekly local paper cover-to-cover, but could never do that with the Chicago Tribune everyday.

3.) Clutter. It’s usually a lot cheaper to advertise in an ad-focused publication like the old Penny-Saver. But with so many ads and little editorial, it’s easy to get looked over. Some publishers brag about how many ads they have. Often I see it as a downfall.

These are just a few things to consider beyond the cost per head you pay to reach customers. When choosing media, it's not about cost, it’s about cost-effective. To quote Beth: "Which one will work best?"

-Phil Sasso

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