DECA Sports and Entertainment Marketing Practice Exam

What does the term cost-per-thousand (CPM) refer to?

1. The cost of producing a thousand items

2. The expense of advertising to reach a thousand viewers

3. The price of acquiring a thousand new customers

4. The average cost of goods sold per thousand units

The correct answer is: The expense of advertising to reach a thousand viewers

The term cost-per-thousand (CPM) specifically refers to the expense of advertising to reach a thousand viewers or impressions. This metric is widely used in advertising and marketing to measure the effectiveness and cost-efficiency of an ad campaign. It helps advertisers understand how much they are spending to reach a certain number of potential customers. By calculating CPM, marketers can compare the costs associated with different advertising channels, ensuring they make informed decisions on where to allocate their budgets for maximum reach and impact. The other options discuss different financial metrics that are not related directly to advertising costs. For instance, the cost of producing a thousand items deals with manufacturing, while acquiring new customers focuses on customer acquisition costs, which is distinct from the CPM metric used in evaluating advertising expenses. The average cost of goods sold per thousand units refers to inventory and sales figures rather than advertising reach, further illustrating the specificity of the CPM concept.