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TV CPMs: Understanding the Cost of Television Advertising

Media BuyingBest Practices

Television ad is one of the most powerful and effective ways to reach a large audience and drive brand awareness. However, the cost of television ad can be quite high, and it's important for businesses to understand the metrics used to measure and price it. One of the key metrics is the cost per thousand (CPM) impressions. In this post, we'll explain what is a cpm, how to calculate CPMs, and how they can be used to make informed decisions about television advertising.

What are TV CPMs?

TV CPMs are the cost of reaching 1,000 viewers or households with an advertisement. The "CPM" stands for "cost per thousand," as in the cost of reaching 1,000 viewers. It's important to note that the "M" in "CPM" is the Roman numeral for 1,000, not the metric abbreviation for "millions."

CPM is often used to compare the relative cost of different media, such as television, radio, and print. It's also used to compare the ad cost on different television networks and programs. It’s typically expressed in dollars, and represents the cost of running an ad on a specific program or network for a specific period of time.

How Are TV CPMs Calculated?

CPM in advertising is calculated by dividing the total cost of an advertising campaign by the number of impressions (i.e., the number of viewers or households reached) and then multiplying by 1,000. For example, if a 30-second ad costs $10,000 and it's expected to reach 1 million viewers, the CPM would be $10.

It's important to note that TV CPMs can vary widely depending on the specific program or network on which the ad runs, as well as the time of day and day of the week. For example, a 30-second ad during the Super Bowl may cost significantly more than the same ad during a daytime talk show. Additionally, they can also vary depending on the demographics of the audience being targeted.

Using TV CPMs to Make Informed Decisions

They can be a useful tool for businesses looking to advertise on television. They can be used to compare the cost of advertising on different networks and programs, and to determine the most cost-effective way to reach a specific target audience.

For example, if a business is looking to advertise to women aged 25-54, they could compare the CPMs of different programs that have a high percentage of female viewers in that age range. Additionally, this metrics can be used to compare the cost of different dayparts (i.e., time slots) and to determine the most cost-effective time to run an ad.

It's important to keep in mind that it is an only one aspect to consider when planning a television advertising campaign. Other factors, such as the reach and frequency of the ad, the quality of the program or network, and the demographics of the audience, can also play an important role in determining the overall effectiveness of an campaign.

In conclusion, these metrics are very important to understand when it comes to television advertising. They provide businesses with a way to compare the cost of different networks, programs, and dayparts and can be used to make informed decisions about where to advertise. While CPMs are just one aspect to consider when planning a campaign, they can be a powerful tool for businesses looking to maximize their return on investment.

Find out how Simulmedia’s unique TV+® platform for TV and streaming advertising provides unified access to premium linear and CTV inventory across all networks and publishers. Request a demo or email us at advertise@simulmedia.com.