Business managers constantly make decisions about where to invest precious marketing budgets, and this often means trying to choose between different print and broadcast opportunities. When trying to decide which media buy is the best deal, one of the most basic measurements is CPM / CPI. CPM and CPI are not the only consideration, but they can certainly help make decisions more rational and help managers get the most out of their marketing budgets. Let's start with a little vocabulary.
In marketing metrics, what is an impression?
An impression is any time a person is exposed to your advertising. Let's say hypothetically, you run a cable ad on the Weather Channel. When the commercial airs at 8:07 PM, 200 people in your market happen to be watching. That's 200 impressions.
In marketing metrics, what is reach?
Reach is the total number of people who receive your advertising. In the Weather Channel example above, the reach is 200 at 8:07 PM. Let's say the ad runs again at 8:32 and the same 200 people are watching. Your number of impressions is now 400, but the reach is still 200. The size of your audience hasn't changed. Those same 200 people can see your ad four times that hour, and the reach will still be 200, because the size of the audience hasn't changed.
What is CPM? What is CPI?
CPM stands for cost per thousand (impressions). CPI stands for cost per impression. They are interchangeable, and modern managers tend to use CPI when the number of impressions is less than 1,000. Calculating CPM is as obvious as it sounds. Simply divide the cost of the advertising campaign by the number of impressions divided by 1,000.
How is this helpful? Consider this. Let's say each ad on the Weather Channel costs $5 in your market and the channel has an average quarter hour (AQH) of 200 viewers in your market. On a per ad basis, you are getting a CPI of 2.5 cents. Now your cable advertising sales rep wants you to increase your budget to add Fox News, saying it has a bigger audience and more potential impact. He is offering Fox News for $25 per commercial. After about a week of twisting the sales rep's arm, he finally reveals that Fox News probably has an AQH of 900 viewers in your market. On a per ad basis, that's a CPI of 2.8 cents. Fox News, in this hypothetical example, costs 12% more per impression. It is likely that demand for the more popular channel has increased its cost out of proportion with its merits. With your finite marketing budget, you can get more impressions on the Weather Channel than you can on Fox News.
Keeping track of the CPI / CPM for each of your marketing investments will help you divert your budget into the most effective media. Brazzell's Facebook Target Marketing program reaches very specific audiences for a median cost per impression of 1.7 cents (all inclusive).