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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.
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
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.
Top of Form
HUT x Share = Rating (HH)
Bottom of Form
Top of Form
Rating (HH) / HUT = Share
Bottom of Form
Top of Form
Rating (HH) / Share = HUT
Bottom of Form
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:
Top of Form
GRPs = Reach X Frequency
Bottom of Form
Top of Form
Reach = GRPs / Frequency
Bottom of Form
Top of Form
Frequency = GRPs / Reach
Bottom of Form
Points to remember...
BDI and CDI assume that the U.S. population represents the "norm" or base of
"100."