How do you calculate cost per point (CPP)?

Calculating cost per point (CPP) is a common practice in media planning and advertising, specifically for evaluating the efficiency of an advertising campaign. The correct method to determine CPP is by dividing the total budget allocated for the advertising campaign by the gross rating points (GRPs) that the campaign achieves.

This relationship is important because GRPs reflect the total exposure of the advertisement to the target audience, and the total budget represents the investment made in acquiring that exposure. By using the formula of total budget divided by GRPs, you can ascertain how much it costs to reach one rating point in the target market. This is helpful for marketers as it allows them to compare the cost-effectiveness of various media options or advertising strategies within and across campaigns.

On the other hand, the other methods presented do not yield the CPP measure: multiplying or adding totals will not provide a per-point cost, rather they will result in figures that could misrepresent the efficiency of ad spending when compared to audience exposure.