Understanding Cost Metrics
There are three main media cost parameters typically used in traditional media. Unit Cost is the actual out-of-pocket cost to buy a unit or package. Cost Per thousand (CPM) is the cost of buying 1,000 impressions. Cost Per Point (CPP), is the cost of buying one GRP/TRP.
Unit costs are based on marketplace conditions such as Supply and Demand, and the overall scale of the market. For example, a bus shelter in a large market, such as New York or Los Angeles may command a $5,000 per unit cost, as compared to a $500 bus shelter in a less populated market like Memphis, TN.
Calculating CPM and CPP
Things to Remember
- Unit Costs are driven by market demands and size.
- The more narrowly defined the audience, the higher the CPM and CPP.
- It's important that the same time period id used when calculating CPMs and CPPs.
- Advertisers use CPMs and CPPs to judge a medium's ability to cost-efficiently deliver a market and audience.
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