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For Advertisers: Shop Around for Advertising Using the Cost Per Thousand Method
Shopping around. It’s smart, necessary to run a successful business, and just makes sense all around. We all want the best deal on everything we purchase, so before we put down our hard earned money we shop around to make sure we get the best price. Now, with access to the internet at our fingertips at all times, we can simply type in information about a product we are looking for and with a mere keystroke get the best prices available. Shoppers are more informed than ever before with a method that works great for physical products like computers, cars and washing machines…but how do you shop around when you decide you need to invest in advertising? If two ad sales representatives are standing in front of you, both holding a similar looking product in their hands, how do you determine which is giving you the best value?
I hear of this dilemma frequently from business owners I work with, and unfortunately many times it comes down to whatever price the sales rep is quoting. However, it’s not always the case that the lower “price” is the best value. A simple formula that professional advertising agencies and media buyers use daily (but most business owners who purchase their own advertising aren’t aware of) is called Cost Per Thousand (CPM…”M” stands for mille which is Latin for thousand). The CPM is the “Great Equalizer” that puts the base price of advertising on an even playing field, so a business owner can make an informed decision.
No need to break out the fancy calculator. The CPM is straightforward, reflecting the cost for your ad to reach 1000 potential advertisers. To figure the CPM all you need to do is take the cost of the ad and divide it by the distribution (thousands only).
For example, if an ad costs $1000 and the distribution is 23,000 here’s what you do:
1. Divide $1000 by 23.
Yep, that’s it. What does it mean? It means your cost to reach 1000 potential customers is $43.47. Using the CPM, the base value when comparing advertising will become very apparent to you.
I mention advertising base value because, just like add-ons to other products, there are added value features in advertising that you must also take into account when considering the full value of your advertising. The quality of the publication, brand awareness, direct mail vs. rack distribution, in state vs. out of state distribution and readership numbers all add to the value of that base number.
Buying advertising doesn’t have to be a shot in the dark if you ask the right questions and use CPM to ensure you are getting the best value for the money you are spending.
I would be interested in advertising my business this way and keeping the cost as low as I can. I can do a coupon for tattoo removal. Of all my services this one cost me the
least, but if the client comes in on a coupon they are likely to buy other services I offer, or at least know I am there to tell others.
I would be interested in the South grouping to advertise.