Cost Volume Profit Analysis (CVP): calculating the Break Even Point
How CPV works
Companies can use CPV to see how much they are spending on each advertisement view. Typically, an advertising platform, such as a social media platform, television network, or video streaming service, allows businesses to pay a certain sum to promote their advertisements. A business can track the number of views an advertisement receives after it has been promoted on that platform, which will enable them to precisely calculate their CPV. By calculating CPV, businesses can better understand their financial situation and base decisions on it, such as allocating funds for marketing.
What is a CPV calculator?
The cost per individual view of an online advertisement is calculated using a cost per view (CPV) calculator. It computes the precise amount that each view of an advertisement costs by dividing the total amount of advertising expenses paid to an advertising agency or advertising platform by the total number of times that a consumer viewed an advertisement. A CPV should be as close to zero as possible.
How to calculate CPV
Follow these steps to correctly calculate CPV:
1. Choose your time period
You must select a specific time period from which to gather the data for your calculations in order to calculate your CPV. Depending on your needs, you can select a shorter time frame, such as one week to a month, or a longer time frame, such as several years.
Depending on how long a platform has promoted your advertisements, you can select a time frame. You can get your numbers from the data gathered during a given month, for instance, if a video streaming platform promotes your advertisements for one month.
2. Calculate your total advertisement costs
Determine the total amount of advertising expenses you paid to a platform or advertising agency during the selected time period. Add up all the costs your business has incurred to promote an advertisement on a platform to determine your overall advertising costs. Make sure to factor in any ongoing expenses, such as monthly payments.
Consider a clothing company that is determining their CPV and needs to determine their total advertising expenditures over the previous two months. They can check their financial records and see that they pay the social media platform $1,000 each month. Their total advertising expense for the two-month period would be $2,000 because $1,000 plus $1,000 equals $2,000.
3. Measure your total number of views
Next, determine how many times your advertisement has been viewed overall during the specified time frame. Make sure to only count instances where a user watched more than 50% of the advertisement in order to measure the number of views accurately. This will allow you to identify the users who actually watched the advertisement as opposed to just skipping it.
For instance, if a gym discovers that a video streaming platform played its advertisement 50,000 times, but viewers watched more than 50% of it 20,000 times, that indicates their total number of views is 20,000.
4. Divide the advertisement cost
Once you have the total cost of your advertising and the total number of views, you must divide these values correctly to determine the CPV. To do this, divide an advertisement’s cost by all of the views, which will give you the CPV. For instance, if a business spent $2,000 on advertising overall and received 10,000 views, the cost per view would be $2,000/10,000. 02.
5. Interpret the results
Correctly interpreting the results is crucial when calculating CPV. The CPV can be understood by considering the outcome as a cash sum. For example, if the CPV is . 02, that means the cost per view would be $0. 02.
CPV formula
Find the analytical data of your advertisement, such as the number of views, the average viewing time, and the total cost a business spent on advertising, in order to complete the CPV formula.
The formula for calculating CPV includes:
Cost per view (CPV) equals the cost of the advertisement / the total number of views
Tips for calculating CPV
Here are several tips to consider while calculating CPV:
Check your numbers
It is helpful to check your numbers again once you have finished your CPV calculations to make sure they are accurate. When checking the calculations for CPV, it’s crucial to pay close attention to detail because the calculations can occasionally involve large numbers or complex decimals. Performing the calculations multiple times to make sure you get the same result each time is a great way to ensure your CPV calculations are accurate. To ensure the calculations are accurate, you can use online software with CPV calculators.
Routinely perform calculations
Since the number of views an advertisement receives can vary depending on a number of factors, such as growing brand popularity and growing social media following, businesses may find it beneficial to routinely calculate their CPV. Try performing the calculations several times per year or sales period to make sure your CPV calculations are current.
Compare CPV to other advertising platforms
Once you’ve calculated your CPV, you can compare your current CPV costs to those of other advertising platforms. Most ad networks can provide businesses with an estimate of the number of viewers their advertisements will receive and the typical cost of advertising. Take that estimate and determine which value is lower by comparing it to your current CPV.
For example, if your CPV is . Though you do the math and discover that a different streaming service would have an average CPV of 02 at your current streaming service, 01, you might want to think about changing to a streaming service with a lower CPV.
CPV example
Here is an example of how to calculate CPV:
A business wants to determine their CPV in order to decide whether or not they want to create additional marketing advertisements. The company currently has one advertisement playing on a movie streaming platform. They choose to gather data from all three months in order to obtain an accurate picture of their overall advertising expenses. They discover that they pay the movie streaming service a total of $500 per month. To represent the payments made over the last three months, they therefore add $500 + $500 + $500, giving them a total of $1,500 spent on advertising.
When they look at the advertisement, they see that it has been played by a total of 25,000 viewers, but that only 15,000 of those viewers have watched it all the way through, making the total number of views 15,000 They divide their total advertising expenditure by the total number of views to complete their calculations ($1,500/ 15,000 = 10. This makes their cost per view $0. 10.
FAQ
How do you calculate CPV?
To do this, divide an advertisement’s cost by all of the views, which will give you the CPV. For instance, if a business spent $2,000 total on advertising and received 10,000 total views, the CPV would be $2,000/10,000. 02.
How do you calculate cost per completed view?
- As an illustration, suppose you are an advertiser who spent $5,000 on a video campaign that attracted 500 views.
- CPCV = $10.
What is a good CPV?
One of the best options for developing a cost-effective marketing campaign is YouTube, with an average CPV of $0. 026. Average view rate: 31. 9% Average view CTR: 0. 514%.
How is cost per video completed calculated?
Calculating the CPCV is straightforward because the formula is fairly straightforward. To determine the number, simply divide the campaign’s budget by the number of completed views. For instance, the CPCV for a $300 video campaign with 1000 completed views would be $0. 30.
