CPM (cost per thousand impressions) and ad rates


#1

Hello Frank,

I’m new to this forum but I have been reading all your articles and relevant info so I can start a billboard business up here in Ontario, Canada. I have found that billboard companies up here base their advertising rates on CPM, or cost per thousand impressions.

Have you ever used CPM for your ad rates on your billboards? Is it an accurate way to calculate ad rates for a billboard

Also, the standard CPM rate up here seems to be approximately $3.75 per thousand impressions. That would mean that a main road in a medium sized town with a traffic count of 11 000 cars a day (308 000 cars a month) could justify an ad rate of $900 - $1000 a month. But you’ve stated in previous posts that that would be too high for a road with that traffic count.

Pls explain. Thank you for your time.

Regards,
Sam


#2

Sam,

Don’t rely too much on CPM, as there are many factors that are more important to an advertiser than CPM. One factor is quality of traffic. An advertiser will pay any price to reach traffic which is critical to his business – such as billboards on Hollywood Blvd. reaching movie producers. Also, an advertiser will find a billboard infinitely more valuable if it is near his exit and can say “exit now” as opposed to being a mile. CPM is only really of value on a macro scale – comparing types of advertising vehicles.

Canada is a much different market than the U.S. The billboards are traditionally smaller and made of less expensive materials than the monopole that is prevalent in the U.S. This is because traffic counts are lower, as are rents. All of the basics that work in the U.S. apply in Canada, but the industry there has morphed to meet the market specifics.


#3

Thank you for your prompt response Frank.

The areas I am looking at are medium sized towns (with populations of 30,000 to 40,000) located well outside the big cities but are experiencing exponential growth.

Since Canada is a different market from the USA, what other ways are there to determine the ad rate for billboards I put up in these towns? Also, can the same ad rate be charged to a local advertiser as a national advertiser?

Btw some of these towns already have a few billboards that appear to have been once owned by independents but are now owned by big companies like Pattison and CBS.

Thank you again.

Regards,
SAM


#4

To get the rates, call the other companies in the market and see what they are asking. You might also call a couple of the advertisers and see what they are paying (in case it’s a lot less than the rate card). Local advertisers have much smaller budgets than national advertisers, and you will have to adjust the pricing accordingly.

A lot of large companies have been buying up their smaller competitors for several years now – both in Canada and the U.S.