Media Planning & Buying Calculators

Media Planning & Buying Calculators

Cost Per Thousand (CPM)

Cost Per Thousand (CPM) allows a media planner to compare media based on two variables: audience and cost. CPM is used as a comparative device. The lowest cost per thousand medium is the most efficient, all other variables being equal. Oftentimes the media with the lowest cost per thousand are selected, but not always. CPM may be computed for a printed page or broadcast time, and the audience base may be either circulation, homes reached, readers, or number of audience members of any kind of demographic or product usage classification.

1. For print media (when audience data are not available):
CPM = Cost of 1 ad x 1000
Circulation
Because many print media do not have audience research data, this formula is often used.

2. For print media (when audience data is available):
CPM = Cost of 1 ad x 1000
Number of prospects reached

3. For broadcast media (based on homes reached by a given program or time period):
CPM = Cost of 1 unit of time (commercial) x 1000
Number of homes reached by
a given program or time period

4. For broadcast media (when audience data is available):
CPM = Cost of 1 unit of time (commercial) x 1000
Number of prospects reached by
a given program or time period

5. For newspaper (when cost of ad is known):
CPM = Cost of ad x 1000
Circulation



Finding CPM from CPP
Cost per thousand for a broadcast schedule can be
determined from the cost per target audience rating point
(abbreviated cost per point or CPP).
Two factors must be known:
1. CPP, which is simply the cost of the schedule
divided by the schedule's number of GRPs.
2. The total population of the target audience.
The formula for finding CPM from CPP is as follows:
CPM = (CPP X 100) / Population
1000
Cost Per Rating Point (CPP)
CPP (cost per gross rating point) = Cost of broadcast schedule / GRPs

or
CPP (cost per rating point) = Cost per spot / rating

Finding CPP from CPM
The relationship between CPM and CPP is expressed in the formula:
CPM = (CPP x 100) / Population
1000

Mathematically transposed, the formula can be expressed to find CPP, given CPM and target audience population:
CPP = CPM x Population
100,000
Comparing CPP and CPM
How does a CPP compare with a CPM for the same station and commercial? The following shows the differences:
CPP
Cost of a thirty-second commercial: $110
Metro rating at 2:00 p.m.: 8
$110/8 = $13.75
CPM
Cost of a thirty-second commercial: $110
Number of households delivered at 2:00 p.m.: 77,000
$110 x 1000/77,000 = $1.43
Ratings, Shares, HUTs and PUTs
Rating is the audience of a particular program or station at a specific period of time expressed as a percent of the audience population. The percent sign is not shown, and the rating may represent household viewing or a specific demographic audience segment's listening or viewing.
Share is the audience of a particular television program or time period expressed as a percent of the population viewing TV at that particular time. Share, then, is a percent allocation of the viewing audience and differs from the rating which is a percent of the potential audience. Share is usually reported on a household basis.
HUT or homes using television at a particular time, is expressed as a percent of all TV homes. HUT differs from rating because it combines all viewing, rather than identifying specific program viewing.
PUT or persons using television at a particular time, is expressed as a percent of all persons in TV homes. PUT combines all persons viewing, rather than reporting specific program viewing. Note that PUT and PVT (Persons viewing television) are interchangeable terms in common usage.
Ignoring variances caused by rating service reporting standards and multi-set viewing, the following mathematical relationships apply after first converting rating, share, and HUT to decimals.
HUT x Share = Rating (HH)
Rating (HH) / HUT = Share
Rating (HH) / Share = HUT


Source: Media Math, NTC Publishing
GRPs, TRPs, Reach and Frequency
The aggregate total (the sum) of the ratings is called Gross Rating Points or GRPs. The sum of the ratings of a specific demographic segment may be called Target Audience GRPs or more simply TRPs. The term GRPs is generic and may refer to household GRPs or to specific target segment GRPs.

Reach is the number or percent of different homes or persons exposed at least once to an advertising schedule over a specific period of time. Reach, then, excludes duplication.

Frequency is the number of times that the average household or person is exposed to the schedule among those persons reached in the specific period of time. Because it is an average frequency, dispersion of frequency of exposure will differ between specific schedules and daypart mixes.

GRPs, reach, and frequency are mathematically related in the following ways:
GRPs = Reach X Frequency
Reach = GRPs / Frequency
Frequency = GRPs / Reach
Source: Media Math, NTC Publishing
Brand Development Index (BDI) and Category Development Index (CDI)
Brand Development Index (BDI) relates the percent of a brand's sales in a market to the percent of the U.S. population in that same market.
Category Development Index (CDI) relates the percent of a category's sales in a market to the percent of the U.S. population in that same market.
Formula:







Points to remember...
• Indexes should be expressed as whole numbers.
• BDI and CDI assume that the U.S. population represents the "norm" or base of "100."
• Markets with the highest index numbers do not necessarily represent
the best potential.
Source: Media Math, NTC Publishing