Question

Nielsen ratings are very important to both advertisers and television programmers because the cost of television advertising time is based on these ratings. A show’s rating is the number of households in Nielsen’s sample that are tuned to that show divided by the number of television-owning households—120.6 million in the United States. One rating point represents 1 percent of the households (HHS) in the TV market. Nielsen’s TV ratings are referred to as C3 and measure viewers who watch commercials live or watch recorded commercials up to three days later. A common measure of advertising efficiency is cost per thousand (CPM), which is the ad cost per thousand potential audience contacts. Advertisers also assess the cost per rating point by dividing the ad cost by the rating. These numbers are used to assess the efficiency of a media buy. Use the following average price and rating information for programs that are shown at the 8:00 p.m. hour on network television to answer the questions:

Program	Cost per 30 second spot	C3 Rating
Sunday Night Football	$594,000	7.9
The Big Bang Theory	$317,000	5.1
The Voice	$264,575	3.9
How I Met Your Mother	$168,435	3.2
Agents of S.H.I.E.L.D.	$169,730	3.1

1. How many households are expected to watch each program?

2. Calculate the cost per thousand (CPM) and cost per point (CPP) for each program. How should advertisers use these measures when planning a television media buy?

Answer 1

1) Households expected to watch program = 120.6 *1/100 = 1.206 households

2)

		CPM		CPP
Sunday Night Football	(594,000/1000)	594	(594,000/7.9)	75189.87
The big bang theory	(317,000/1000)	317	(317,000/5.1)	62156.86
The voice	(264,575/1000)	264.575	(264,575/3.9)	67839.74
How I met your mother	(168,435/1000)	168.435	(168,435/3.2)	52635.93
Agents of S.H.I.E.L.D.	(169,730/1000)	169.73	(169,730/3.1)	54751.61

Advertisers use CPM AND CPP to assess the efficiency of a media buy.

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