29 Jun BA 390-Nielsen ratings are very important to both advertisers
Question
Nielsen ratings are very important to both advertisers and television programmers because the cost of television advertising time is based on these ratings. A show’s rating is the number of households in Nielsen’s sample that are tuned to that show divided by the number of television-owning households—115 million in the United States. One rating point represents one percent of the TV market, so one point equals 1.15 million households. Nielson’s TV ratings are referred to as C3 and measure viewers who watch commercials live or watch recorded commercials up to three days later. A common measure of advertising efficiency is cost per thousand (CPM), which is the ad cost per thousand potential audience contacts. Advertisers also assess the cost per rating point by dividing the ad cost by the rating. These numbers are used to assess the efficiency of a media buy. Use the following average price and rating information, which was used to pre-sell advertising for the 2012-2013 television season, to answer the questions:
Program
Cost per :30 spot
C3 Rating
Sunday Night Football
$425,000
11.8
American Idol
$475,000
9.0
Grey’s Anatomy
$225,000
5.3
Two and a Half Men
$215,000
6.0
The Vampire Diaries
$75,000
1.2
1. How many households are expected to watch each program?
2. Calculate the cost per thousand (CPM) and cost per point (CPP) for each program. How should advertisers use these measures when planning a television media buy?
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