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NONE: Re: CPM clarification
Re: CPM clarification
David S. Roberts (droberts_at_wizardsoft.com)
Fri, 16 Aug 1996 09:51:24 -0400
>
>It all depends on the magazine and its audience. I'm sure that FORBES
>can charge more for the same ad (per copy distributed) than TIME
>because Forbes has "better" readers. Magazines with narrow demographics
>(food service management news, Oak & Pine Wood Wholesalers, etc.)
>will always command a premium over general-circulation magazines.
>
Not necessarily. While *Forbes* would be the medium of choice for someone
peddling investment banking, for a purveyor of modestly-priced clothing,
*Time* would be more attractive for the larger numbers. Since there are
many more businesses involved in selling modestly-priced merchandise, and
since *Forbes* must scramble to sell its space to fewer prospects, it's
possible (though unlikely) that *Time* commands a higher CPM (Cost Per
Thousand) than *Forbes*.
Readers of this list want to find a mathematical model to solve the
question, *what do I charge?*, and it isn't going to happen. The cost of
print advertising is nebulous and _arbitrary_, not arrived at through some
formula, and is based on (1) circulation, (2) its history--high rates have
inertia, a life of their own), (3) whether it is a paid or free product,
(4) its readership (not necessarily the same readers-per-copy or of the
same quality as its competitors), (5) the perceived prestige its editorial
content adds to the environment, and (6) the competition. This, of course,
is aside from issues like added color, ad position, varying overhead and
the publisher's greed. And while it's not as likely that the CPM of *Time*
and *Forbes* would be compared, it is_certain_that if an advertiser were
considering *Time*, the media buyer would be comparing its CPM with that of
*Newsweek* and *U.S. News & World Report*: apples vs apples. So in some
measure one's rates are derived from its competition's rates. All media are
constantly looking at where their rates are relative to their competitors.
As a rule, it's better to set one's rates too low at the beginning. You can
always raise them; that's expected anyway, and projects the aura of
success: *I'm growing, hence can charge you more.* But to lower them is a
signal that the publisher has a made a pricing blunder or that the
publication is failing.
Dave Roberts
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