Contents
What is CPP?
CPP (cost per rating point) is a key metric that indicates how much money needs to be spent to reach 1% of the target audience. This metric is one of the most important in media planning, especially in the field of television advertising, where channels set the cost of reaching 1% of their audience. CPP can also be calculated independently to analyze the economic efficiency of advertising campaigns.
The cost of advertising placement directly depends on the rating and the cost of reaching one rating point. CPP serves as an indicator of how effectively and economically the advertisement reaches its audience.
Rating Point and Its Meaning
A rating point reflects the percentage of the audience that saw the advertisement. It equals 1% of the total audience. The term "rating point," or "rating unit," is used in media planning. The total rating, or GRP, of an advertising campaign can exceed 100 due to repeated views. For example, if an advertisement is shown on a channel for three days with a rating of 40% each day, the total rating will be 120% (40 + 40 + 40).
This is the indicator for which the cost is calculated, not for 100% of the channel's audience. In our example, if the media plan shows a total rating of 168 units, it indicates that the advertisement reached a significant portion of viewers.
Why Know CPP?
CPP allows for the assessment of the cost of contact with the target audience, making it an important tool for comparing the economic efficiency of various advertising channels and campaigns. The lower the CPP value, the more advantageous the advertising placement on a specific channel. However, it should be noted that the metric alone does not provide a complete picture: it does not take into account the popularity of the channel, its audience, or the presence of the target group among viewers.
CPP is an important element of the advertising funnel and should be used in conjunction with other metrics, such as CR (conversion rate) and CPO (cost per order), for a more accurate assessment of an advertising campaign's effectiveness.
How to Calculate CPP?
CPP can be calculated for the entire advertising campaign, for a specific media channel, or for a particular output. To do this, it is necessary to know the campaign budget and the total rating (GRP). The formula for calculating CPP is as follows:
CPP (rub.) = Cost of placement / GRP
For example, if the advertisement aired on the "Daisy" channel for a week with ratings of: 15%, 12%, 15%, 11%, 18%, 25%, 19%, then the total rating will be 115%. If the cost of placement was 345,000 rubles, the CPP calculation would be as follows:
CPP = 345,000 / 115 = 3,000 rubles.
Comparing this CPP with the "Cornflower" channel, where the GRP was 218 points, and the cost of placement was 547,000 rubles, we get:
CPP = 547,000 / 218 = 2,509 rubles.
From these calculations, it becomes clear that placing the advertisement on the "Cornflower" channel is a more economically advantageous option. Such calculations allow advertisers to optimize their budgets and choose the most effective channels for advertising placement.