Many business owners wonder, “Is advertising worth the investment?” There are many things to consider when answering this question. Generally speaking, yes, it can be very effective when done well and in accordance with your overall marketing strategy.
Assuming you are willing to communicate with your audience by advertising, how do you choose the right vehicle (print, television, digital, etc.) and make sure you’re getting the most bang for your buck?
It is common in our industry to evaluate marketing costs by looking at what is called the “CPM.” “CPM” stands for Cost per Thousand, in which the “M” represents the Roman numeral for “1,000.” In other words, CPM is the amount of dollars it takes to reach 1,000 people in your target area.
How do I Calculate My CPM?
First, find the investment cost for your desired message in your desired media. Next, take this investment amount and divide it by the number of people you are reaching. Finally, multiply this number by 1,000 to get your CPM.
Let’s use our Genesee Valley Penny Saver as an example. Our Tri-County edition has a circulation of 12,985 homes. A quarter page ad in black and white at our open rate is $130.90.
$130.90 (investment) ÷ 12,985 (readership) = .0100 .0100 x 1,000 (M) = $10.00 CPM
In other words, for every 1000 homes where our paper is delivered, the investment will be $10.00. Now, if we upgrade the quarter page ad to a color ad, the open rate is $162.90, and the calculation would be the following:
$162.90 (investment) ÷ 12,985 (readership) = .0125 .0125 x 1,000 (M) = $12.50 CPM
This formula can be applied no matter what the promotional vehicle. Therefore, this formula allows you to compare the true cost of different types of promotional vehicles by the same standard.
What Else Makes GVPS Advertising an Exceptional Value?
Here at GVPS, our CPM is already competitive across promotional vehicle types, and our CPM becomes even more attractive when you consider our incentives for running ads in multiple editions during the same week. For example, we offer a 20% discount to businesses advertising in two areas and a 30% discount to businesses advertising in five areas. We also offer incentives for running ads more frequently, with businesses running for 13 weeks in a year receiving 10% off, 26 weeks receiving 15% off and 52 weeks receiving 20% off.
Bear in mind that these numbers represent the cost per thousand to simply reach your target market. It is also important to know who is looking at your message or responding to it. At GVPS, we are audited by a third-party company called the Circulation Verification Council, a leading auditor for community publications in the U.S. Year after year, their findings have shown that about 80% of the homes that receive our publication also read it, and 80% of those readers respond to our ads in some way.
According to recent data released by Mail Chimp, an email marketing service provider, the open rates for an email marketing campaign typically fall at 25% or lower. For a direct mail campaign, Forbes reports that the recipient response rates are even lower, coming in around 4.4%. This means that our publication generates 18 times the reader response of direct mail and four times the reader response of an email campaign.
The Bottom Line
Although cost alone won’t give you the whole picture, using the methodology above will empower you to calculate the CPM of many different promotional vehicles as you determine which option best meets your business needs.
Remember, the most effective, advertising campaign is created by figuring out a budget with which you are comfortable, then aligning that cost with your marketing campaign goals.