cost per thousand –
CPM
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In developing measures for
media buying many advertisers use cost per thousand
CPM as a metric for determining media buying effectiveness. But how effective is
this metric in providing insights into the media planning
and buying processes of your agency? In this edition,
Mark Chesterfield of P3Media
discusses the limitations of CPM.
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what does cpm really
cost you?
In attempts to measure and benchmark the
effectiveness of their media planning and buying, many
advertisers are using cost per thousand measurements. Some
have even used this measure as the basis of their remuneration to
their media agency. But how effective is this in determining
media efficiency and effectiveness?
Defining the
measure
As the name suggests CPM has two variables, cost and audience
delivery. Cost is affected by supply and demand, with lower
rating and less popular programs (and possible lesser quality
environments) being offered at a lower cost by the networks. Audience
delivery is a measure of average viewing levels in thousands.
Therefore, it is possible to reach an audience using lower
cost and possibly lower quality programs to achieve a lower cost per
thousand. But at what cost to the campaign?
Reach and frequency
In this discussion, many advertisers say they have strict
reach and frequency objectives to be achieved, including
both net or 1+ reach goals and so-called ‘effective reach’ goals such
as 3+, 4+, etc.. But even within these parameters a buy can
be planned that delivers this audience reach and frequency but
reduces the CPM by up to 50% through the selection of lower cost
programs. Off peak and low rating programs can be used to
build reach but maintain low CPM by avoiding the premium rates
associated with popular programs. The problem is that this strategy
will correspondingly increase your 10+ reach and therefore
represents significant media wastage.
CPM based remuneration
Obviously if you are remunerating your media agency on CPM
performance there is a huge incentive for them to use this strategy.
So while the CPM measure was implemented to encourage greater
efficiencies, it ends up providing the agency with the incentive to
increase media wastage. Rather than allowing the agency to
provide you with the best possible media solution for your
advertising, it provides a contrived and largely flawed measure of
media efficiency and effectiveness.
Measuring media efficiency
While some have promoted CPM as a panacea for
measuring media efficiency, it provides more limitations to
achieving the goal than benefits. Instead, media
efficiency should be measured against the media objectives and the
market trends.
P3Media, with many years
experience and the latest market intelligence can assist you in
providing process to guarantee the delivery of more effective
media planning and buying more cost efficiently. To find out
more about how P3Media can help you contact media@p3.com.au
| P3Media measuring up |
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P3Media offers
benchmarks to measure your
1. Media Process
2. Media Agency Remuneration
3. Media Negotiation
4. Media Buying
5. Media Agency
Account
6. Research, Design, Implementation
7. Media & Event Sponsorship
8. Media Negotiation Strategies
9. Media Campaign & Strategy
Contact Mark
Chesterfield at media@p3.com.au
or see www.p3media.com.au |
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marcomm |
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