Question

Stu's Mellow Meter Miser (MMM) has recently experienced a sales decline due to the entry of a lower-priced competitor, Kelly's Calorie Counter (KCC). Stu is convinced that an advertising campaign touting the superior design and 3-year warranty will help recover share. He placed advertisements in the New York Times and Wall Street Journal newspapers. NYT claims a single-issue audience of 251,000, while WSJ claims that one issue will reach 203,000. NYT's audience is 11% college professors and only 45% business people. WSJ shows Stu research that business people are 56% of their readership, 18% are farmers, and 5% are college professors. NYT charges $12,000 per quarter page ad, while WSJ charges $8,800. What is the New York Times CPM for college professors

Answer 1

Answer:

New York Times (NYT) Cost per Thousand Impressions (CPM):

Cost per Thousand Impressions = Advertisement Cost / (Impressions / 1000)

Cost per Thousand Impressions = $12,000 / (251,000 /1000)

Cost per Thousand Impressions = $12,000 / 251

Cost per Thousand Impressions = $47.8

NYT CPM for College Professors:

Impressions generated = 251,000 × 11%  

Impressions generated = 27610

CPM = Advertisement Cost / (Impressions / 1000)

CPM = $12,000 / (27610 / 1000)  

CPM = $12,000 / 27.61  

CPM = $434.6