Why Cost Per Point Doesn’t Matter

helloPlanning media budgets is one of the most difficult aspects of marketing your business in Houston. Although you want to get your name and message out to the masses, you also don’t want to spend thousands of dollars on a marketing strategy which includes advertising that doesn’t yield any results. In the past, many Houston businesses relied on cost per point (CPP) calculations to help them to reach their target audience, but even this isn’t a fool-proof method. So what should you do? In this post we will explore how to get the most out of media budgets and advertising in Houston by saying ‘goodbye’ to CPP, and ‘hello’ to market research and analysis.

Cost Per Point is a Flawed System

In theory, CPP should be a great tool for planning media budgets. And in fact, CPP can be effective when doing large, cross-market buys that don’t need to be targeted to a specific audience, which is why many ad agencies still use this as part of their media buying analysis. In reality, however, it’s really just another stab in the dark.

Basically, CPP represents that amount of money that you will need to spend in order to reach 1% of your targeted audience. In media jargon, this 1% is referred to as one “rating point” (sometimes abbreviated to GRP for “gross rating points.”) As an example, let’s say that your target audience is 94,000 people, and your CPP for a specific TV or radio station is $12. This would indicate that it will cost you $12 in order to reach 940 people at one time.

Sounds great, right? Unfortunately, there’s a problem with the system. The truth is that CPP cannot ensure that you will reach 940 different people at one time, or just a single person 940 times. And that’s a big problem. Ultimately, the best use for CPP is to treat it only as a cost comparison tool. CPP can tell you how much you will need to spend in order to (theoretically) reach your designated market audience (DMA) for various media platforms.

In this way, you can start to work out your media budgets with an idea in mind of how much it will cost you to advertise on radio station X vs TV station Y. Beyond this, however, CPP will not provide any added value to your marketing campaign, and relying upon it could result in lost dollars and sales.

Market Research Provides Solid Answers

If you want to get the most out of your media budgets in Houston, you’ve got to find concrete, accurate answers to questions like:

  • Who is receiving your message?
  • How often is your message being received?
  • How well is your message being understood?
  • How is your audience responding to your message?
  • Which media platforms are yielding the best results for your message?

Which brings us to yet another question: How can you obtain the best answers for these important questions? The solution is through incorporating market research and analysis into your media budgets and typically your media partners should be able to provide you with free, unbiased market research as well. If they aren’t you might want to ask yourself why.

Market research can help you to determine the reach of your advertisement (or how many people are hearing your message at one time,) and how frequently the message is being transmitted. It can also help you to study the outcome of your marketing campaign. You may consider working with a firm that specializes in testing how much of your ad that your Houston audience has understood, the impact it has made, or the audience ability to recall the message a day after viewing or listening to it. All of this is essential to ensuring that your message is not only seen or heard, but that it is actually absorbed by your DMA. After all, this is what will compel your consumer base to make a buying decision and drive sales.

The moral here is that if you’ve got a great market research team, CPP doesn’t matter. Spend your media budgets wisely — on analysis which will yield actual results.