Question

A company that specializes in pool and spa installations plans to buy TV commercial time during a home improvement program on a local TV station. The company has learned the show has a rating of 20, reaches 10,000 people in the primary target audience, and a 30-second spot costs $700. What is the cost per rating point (CPP)?

Answer 1

Answer:

The answer is: $35

Explanation:

The cost per rating point is calculated by dividing the total cost of a commercial and divide it by the show's rating:

CPP = $700 / 20 points in rating = $35

Shows that have higher ratings usually charge a higher fee for airing commercials than those shows with lower ratings. The CPP is generally similar between shows, what makes the difference in costs is the shows' rating numbers. For example, a show with 10 rating points will charge $350 for a 0 second commercial, but a show with 30 rating points will charge $1,050 for a 30 second commercial.