The Value of Ad Media

Effectiveness of Advertising
The Value of Ad Media
Article No. 2 (by Hideaki Koizumi)

It sounds like a very simple question, "Which is cheaper, TV or newspaper advertising?" But, unfortunately, there is not a simple answer. Whenever a client advertiser would ask me this question, my answer was always, "It is not so simple to answer. I can't definitely say either one."

Then, the advertiser's next question would always be, "By CPM, which cost is cheaper?" CPM stands for 'Cost Per Mill'. Mill is a Latin word meaning '1,000'. Thus, CPM means 'the cost of reaching 1,000 people' or more simply 'cost per thousand'. CPM is a popular index (unit) for judging the value of ad media. We can easily calculate CPM, for example, by using a newspaper circulation number from the Japan ABC Association with the ad rate chart issued by the Japan Advertisers Association (JAA). The ad rate is divided by the circulation number, and then multiplied by 1,000 to determine CPM. If the CPM is lower for one newspaper over another, this simply means that the cost of reaching 1,000 people is lower for that newspaper over the other.

Initially, this index looks to be very convenient. However, it is a little more complex for when trying to compare two different mediums such as TV and newspaper. Chart #1 below shows CPM based on ACR (survey) data conducted by Video Research for various media. As you can see, generally speaking, CPM for a TV Program ad is lower than for a TV Spot ad. Also, CPM of magazine/newspaper is higher than for TV. But is this always the case? Is it really cheaper to use a vehicle with a lower CPM? Is TV advertising really cheaper than newspaper advertising? Answers are 'no'. Chart #2 below compares CPM for two targets (age generations) for various media. It shows that there are some significant differences depending on the target, even for the same medium. For instance, for 'FM Radio', CPM for 'seniors' (those aged over 50) is much higher than CPM for 'teenagers'. So, in short, we always need to think about CPM by target when comparing the value of two media.

The ACR survey is conducted only once a year. But, fortunately, it is very detailed research. It covers demographic data (gender/age), frequency of media exposure, and usage of over 2,000 products. Therefore, advertisers can get an idea of their target's daily activities, such as the medium they are most frequently exposed to (e.g., their target reads the Mainichi newspaper everyday, etc.). By doing so, it is possible to compare different media with each other to some extent. But is CPM analysis only sufficient for properly judging the value of ad media? I'll explain the issues related to this question in my next article.

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