Measuring DM results: Cost Per Thousand.
By Alan Sharpe
Cost Per Thousand (CPM) is one of the most common
measurements in advertising and direct marketing.
It tells you how much you must spend to communicate
your sales message to one thousand people. By the
way, the M in CPM stands for Mille, the Roman numeral
used to represent 1,000.
CPM is a useful way to compare your direct mail costs
with other promotional costs. You can compare the costs
of trade advertising, direct mail and online advertising
using this simple measurement. But be wary of how you
interpret the results.
CPM can be a misleading number. You may know how much
you must spend to reach one thousand people with an
advertisement, but you do not know how many of those
people are likely to buy your product or service
(consider all the unqualified buyers who see a newspaper
ad on a given day, for example).
And in direct mail, your CPM is always much higher
than in advertising. CPM in advertising is under $100,
but CPM in direct mail is often over $1,000, once you
total creative costs, list rental costs, mailing costs,
mailing house costs and so on (the end result usually
being $1 per letter or package).
Another thing to remember in direct mail is that the more
you spend to reach one thousand prospects (assuming you
are mailing to a good list), the higher your response rate
is likely to be.
My advice for you direct mailers is to make sure you
always know your CPM, but don't use it as your only
measure. It measures your investment, not your return.
Next Monday, I'll look at a more useful measurement,
Cost Per Inquiry.
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Alan Sharpe is a direct mail copywriter. Alan helps hi-tech businesses generate sales and secure sales meetings with qualified
prospects using cost-effective, compelling direct mail marketing.
Subscribe to "Sharpe & Direct," his weekly
direct mail marketing newsletter
at www.sharpecopy.com. Browse the best direct mail books,
business-to-business direct marketing books,
and sales lead generation books at Alan's
online bookstore.
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