CPV Calculator: What It Is and How It Works
CPV calculators are a useful tool for companies to better understand the total cost per view that they receive on an advertisement. By measuring the number of views on an advertisement, and the total cost spent on advertising, you can calculate the cost per view of a specific ad. Learning what a CPV calculator is can help you better understand exactly how much money you're spending for each viewer that sees your advertisement. In this article, we discuss what a CPV calculator is, discover how CPV works, learn how to calculate CPV and provide an example of how to calculate CPV for a business.
What is a CPV calculator?
A cost per view (CPV) calculator determines the individual cost per online advertisement view. It divides the total sum of advertising costs paid to an advertising agency or advertising platform, by the total number of times that a consumer viewed an advertisement, which gives individuals the specific number of how much each view costs. The goal for a CPV is to be as close to zero as possible.
How CPV works
CPV allows companies to see how much they're paying for each view of their advertisements. Generally, an advertising platform, like a video streaming service, social media platform or television network, allows companies to pay a certain amount to promote their advertisements. Once that platform promotes an advertisement, a company can measure the number of views the advertisement receives, which can help them accurately calculate their CPV. Calculating CPV can help companies better understand their finances and make decisions based on their CPV, like establishing a marketing budget.
To complete the CPV formula, first find the analytical data of your advertisement, like the number of views, how long viewers watched the advertisement, along with the total cost a company spent on advertising.
The formula for calculating CPV includes:
Cost per view (CPV)= cost of advertisement/ total number of views
How to calculate CPV
Follow these steps to correctly calculate CPV:
1. Choose your time period
To calculate your CPV, you must pick a specific period that you want to pull the information for your calculations. You can choose a shorter period of time, like one week to a month, or you can choose a longer period of time, like several years, depending on your needs.
You can choose a time period based on how long a platform has promoted your advertisements. For example, if a video streaming platform promotes your advertisements for one month, then you can pull your numbers from the data collected during that month.
2. Calculate your total advertisement costs
Calculate your total number of advertising costs paid to an advertising agency or platform during the period of time you've chosen. To calculate your total advertisement costs, add up all expenses your company has paid to promote an advertisement on a platform. Be sure to account for any recurring bills, like monthly payments.
For example, say a clothing company is calculating their CPV and needs to find their total advertisement cost during the last two months. They can look at their financial documents and see that they pay $1,000 per month to the social medial platform. Since $1,000 + $1,000= $2,000, their total advertising cost for the two-month time period would be $2,000.
3. Measure your total number of views
Next, measure the total number of views that your advertisement has received during the specific time period. To measure the number of views accurately, be sure to only include times when a user watched more than 50% of the advertisement, which can help you determine which users actually watched the advertisement rather than skipping it.
For example, if a gym finds that a video streaming platform plays their advertisement 50,000 times, though viewers watched over 50% of their advertisement 20,000 times, that means their total number of views is 20,000.
4. Divide the advertisement cost
Once you have the value of your total cost of advertising and the total number of views, it's time to perform the proper division to find the CPV. To do this, divide the cost of an advertisement by the total number of views, which gives you the CPV. For example, if a company's total cost of advertisement is $2,000 and their total number of views is 10,000, then the CPV is 2,000/10,000=.02.
5. Interpret the results
An important part of calculating CPV involves interpreting the results properly. You can interpret the CPV by viewing the result as a cash amount. For example, if the CPV is .02, that means the cost per view would be $0.02.
Tips for calculating CPV
Here are several tips to consider while calculating CPV:
Check your numbers
After you have completed your CPV calculations, it's useful to double-check your numbers to ensure your calculations are correct. CPV can sometimes involve large numbers or complex decimals, so it's important to have a close attention to detail when checking the calculations. A great way to double-check your CPV calculations is to conduct the calculations several times to ensure you have the same answer every time. You can use online software that has CPV calculators so that you're certain the calculations are accurate.
Routinely perform calculations
Companies may find it beneficial to routinely calculate their CPV, since the number of views an advertisement receives can fluctuate based on a number of factors, like growing brand popularity and increased social media following. To ensure your CPV calculations are up-to-date, try performing the calculations several times per year or sales period.
Compare CPV to other advertising platforms
Once you have your CPV calculations, you can evaluate how much your current CPV costs compared to other advertising platforms. Most advertisement platforms can offer companies an estimation of the amount of views their advertisements can receive, and the average cost of advertising. Take that estimation and compare it to your current CPV to see which value is lower.
For example, if your CPV is .02 at your current streaming service, though you perform the calculations and find that a different streaming service would have an average CPV of .01, then you can consider switching to the streaming service with a lower CPV.
Here is an example of how to calculate CPV:
A company currently has one advertisement being played on a movie streaming platform and they want to understand their CPV so that they can decide if they want to develop more marketing advertisements. They decide to pull information from all three months to get an accurate picture of their total advertising costs. They find that they pay a total of $500 a month to the movie streaming platform. So, they add $500 + $500 + $500 to represent the payments made during the past three months, which gives them a total of $1,500 spent on advertising.
Upon looking at the advertisement, they find that a total of 25,000 viewers have played the advertisement, though only 15,000 viewers have watched the advertisement for past the halfway point, making the total number of views 15,000. To complete their calculations, they divide their total cost of advertising by their total number of views, which is $1,500/ 15,000 = .10. This makes their cost per view $0.10.
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