Cost per point is the cost of reaching to 1% of population of the targeted segment. In other words, it is cost of buying 1 rating point. The mediums could be TVC, print, radio etc. The rates are usually fixed for any medium. The media agencies have a rate card with different rates for different times and areas.
This is a planning tool that media planners use to calculate the efficiency and cost of using any particular medium like TV or radio or newspaper. For example the rate for advertising in Times of India is Rs 3500 for 5 lines in Mumbai Classifieds whereas it is Rs 450 for Ahmedabad. Thus a marketer would compare the CPP by calculating the cost of advertising in TOI and circulation of the newspaper and dividing it by the amount of people that it is targeting in both these areas.
Pros: Since the rates are fixed and easily available on the media agencies sites it is easy and fast to calculate the budget for any advertisement to reach to the targeted audience. It gives a broad idea to the marketer about the number of people who will consume the advertisement. It is also one of the standard tools that marketers use.
Cons: There is no guarantee that the targeted audience will definitely read the ads. This is a generalized assumption and the sole controller of the rates is the media agency which might not give the correct number.
Ideally a marketer should do a market research first before deciding whether to advertise or not. Based on the research only they should narrow down on the medium and the amount of advertisements required for the targeted market.
Hence, this concludes the definition of Cost Per Point along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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