Page 239 - DMGT507_SALES AND PROMOTIONS MANAGEMENT

Unit 13: Broadcast Media and Media Planning

Determining the Relative Cost of Media Notes
In evaluating media alternatives, media planners must compare the costs of media and the
media vehicles within these media.
1. Cost Per-thousand (CPM): Magazine space is sold primarily on the basis of pages or some
increment of a page. CPM has been used by magazine industry as a standard method to
provide cost breakdowns on the basis of cost per page per-thousand circulation, and is
used to compare the media costs of different vehicles.
Cost of ad space
CPM = ×1000
Circulation

Example: The circulation of Reader's Digest is 3,725,000 (National Readership Survey
1999), and suppose the cost per page is 8, 000, the CPM calculation would be:

8000
CPM 1000 2.14
3,725,000
Circulation of Competition Success Review is 3,536,000, and if we suppose the cost per page is
6000, the calculation would be:

6000
CPM 1000 1.7
3,536,000
We see that (all other things being equal) Competition Success Review is a more cost-effective
media vehicle alternative than Reader's Digest.
2. Cost Per Rating Point (CPRP): This is used to compare cost figures of same-medium
broadcast vehicles and is also referred as cost per point (CPP). One rating point means 1%
of a broadcast station's coverage area. The calculation is based on the following formula:
Cost of commercial time
CPRP =
Programmer rating

Example: If the cost per spot of 10-second of Star Sports is 120, 000, and the programme
rating is 30, the calculation would be:
120,000
CPRP 1000 4000
30
3. Milline Rate (MR): Media buyers use the milline rate to compare the costs of space in
newspapers. A milline rate is the cost in rupees per line of standard dimensions to reach a
newspaper circulation of one million. Alternatively, to calculate the cost of space, rupees
per square inch or square centimeter is used for media buying. Newspapers with higher
circulation figures charge more per line or per unit space. The formula used to calculate
the costs is:

1000,000×Rate per agate line
MR =
Circulation

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