Only 20 percent of a magazine's readership has a firm's target market characteristics. The circulation of this magazine is 1,000,000 and the cost of a full-page ad is $60,000. The real cost per thousand is $60.

Question

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The real cost per thousand (CPM) targeting the firm's market is calculated by dividing the cost of the ad by the number of targeted readers in thousands. Since only 20% of the magazine's readership matches the firm's target market, that's 200,000 readers (20% of 1,000,000). The cost of reaching these targeted readers is $60,000. To find the CPM for the targeted audience, divide $60,000 by 200 (since 200,000 readers are equivalent to 200 thousand readers), resulting in a real CPM of $300.

Only 20 Percent of a Magazine's Readership Has a Firm's