Manage media planning and placement to enhance return

on marketing investment

3.08

Determine ADVERTISING REACH

and MEDIA COSTS

ADVERTISING REACH• WHAT: Number of PEOPLE THAT ARE EXPOSED to your

message:– CALCULATION (%):Divide the target audience exposed to an ad by

the total target audience• There are 1,500,000 fans of Tar Heel Football. A recent

advertisement was viewed by 375,000 of them. (375,000/1,500,000 = 25% ADVERTISING REACH)

• WHY: Determines if ad targeted the right audience effectively.

• HOW: RESOURCES– Circulation numbers (newspaper)– Subscriptions (Magazines/Email)– Rating points (Radio/TV)

FREQUENCY and REACH

• FREQUENCY :Number of times you expose each person to your message

Reach WITHOUT Frequency = Wasted Money

Factors that Influence Advertising Costs

• Circulation Size – Larger audience = more $$$• Production Costs - $$ varies per media• Preferred Space Positions – Higher visibility = $$$• Available Discounts – Advertisers have sales too!• Demographics – Targeting costs more• Editorial Climate – More credibility?– New York Times vs National Inquirer

• Reproduction Quality – Higher quality = more $$

NEWSPAPER MEDIA COSTS– Factors affecting COSTS (Lower than most media):

• Lower production costs• Position and color of ad • Split-runs (print different ads for the same product)• National ads cost more than local

– Types of RATES:• PREFERRED POSITION: ads placed in location with best exposure for

their target market (Ex: Sports ad in the Sports section instead of Garden section)

• Flat: one time only• Sliding scale/ VOLUME DISCOUNTS: more published = cost less per ad• Combination: ads and inserts

• Rate Cards – provide price lists showing rates for time and space

MAGAZINE MEDIA COSTS

– Factors affecting COSTS (Higher than Newspaper):• CIRCULATION: Number of people reached• Preferred Position (How much for a cover ad??)• Spreads – Two full pages• Split-runs – Different ads in different editions• Gatefolds – Fold out from magazine covers• Bleed Pages – Ad runs all the way to the edge of a page with no margin

– Types of RATES:• Size• Frequency• Combination

TELEVISION MEDIA COSTS– Factors affecting COST:

• RATINGS FOR CERTAIN SHOWS– Determines which shows attract a high volume of viewers

• Time availability – High demand for time during peak seasons

• Length of commercials– More time = more money and more production costs

– Types of RATES:• Set according to “GROSS RATING POINTS” (GRPs)

– GRPS = REACH X FREQUENCY

• RUN OF SCHEDULE (ROS)– Ad is run at the station’s convenience for lower cost

RADIO MEDIA COSTS

– Factors affecting COST:• “DAYPART”

– Morning drive time, Evening drive time, Daytime, Nighttime

• Length• NUMBER OF LISTENERS

– Types of RATES:• Typically offer the most discounts• RUN-OF-SCHEDULE (ROS)• TOTAL AUDIENCE PLANS (TAPs)

– PACKAGED PLANS offer reduced rates when purchase a series of commercials instead of just one

INTERNET MEDIA COSTS

– Factors affecting COST:• Creative type (Text, image, sound, multi-media)• Size (banner, floating, pop-up)• Placement

– Types of RATES:• COST-PER-THOUSAND (aka) COST-PER-MILE (CPM)– Cost per every 1,000 people that view the ad

• COST-PER-CLICK (CPC)– Yes, for each click!

OTHER MEDIA COSTS

OUT OF HOME– Factors affecting COST:

• Size of the space• Length of time • Production costs• Sign Illumination

– Types of RATES:• Determined by:

– Visibility– Location– Population

DIRECT MAIL– Factors affecting COST:

• Production costs• Mailing list costs• Labor costs

– Types of RATES:• Postage• Shipping

CAN TARGET A SPECIFIC MARKET

ABSOLUTES vs. RELATIVE MEDIA COSTS

ABSOLUTE COSTS

TOTAL COST to run an ad

= Cost of production + Cost for time/space purchased

RELATIVE COSTS

Determines which one media is most cost effective

• COST PER THOUSAND (CPM)• Cost per GROSS RATING POINT

(GRP)

“You Do”- FOLDABLES: How are Media Costs Determined?

• Circulation (size of the audience)– Circulation is the most significant factor affecting media costs.– In most cases, the larger the media vehicle’s audience, the higher the cost of advertising space or

time will be. • RATE CARDS: Price lists showing rates for space or time• Production costs

– High-quality television and magazine advertisements can cost a great deal to produce.– On the other hand, local radio and newspaper advertisements are relatively inexpensive to

produce.• Preferred space positions

– Airing an advertisement at a specific time or running it on a particular page generally costs more.• Available discounts

– Discounts are often offered on the basis of size, frequency, or dollar volume.• Demographic makeup of the medium’s targeted audience

– You can typically expect to pay higher advertising rates in media vehicles that have narrowly defined audiences than in ones that are targeted at general audiences.

• Reproduction quality– Magazines with excellent reproduction quality, such as The New Yorker, can command higher rates

than publications with lower-quality reproduction.• Gross Rate Point (GRP) = Reach x Frequency• Cost Per Thousand (CPM) =(Cost of the ad × 1,000) ÷ Target audience

SELECT ADVERTISING MEDIA

IMPORTANCE OF SELECTING ADVERTISING MEDIA

• Media cost is the largest cost of advertising

• Complex selection process

• Must select the most effective media to reach

target market

SITUATIONAL FACTORS to CONSIDER • OBJECTIVES (Goals) of the advertisement• TARGET MARKET

– Identify what media the target market uses to most • Limit WASTE CIRCULATION (Number of people exposed to an advertising message

who are not target market)

• COMPETITION– Use the same advertising media to reach same target market

• BUDGET– How much money can you spend?

• PRODUCT• DISTRIBUTION

MEDIA FACTORS to CONSIDER• Cost

• Media Coverage– EXTENSIVE COVERAGE: reaching a large audience (REACH)

– INTENSIVE COVERAGE: reaching a smaller audience more often (FREQUENCY)

• Geographic Coverage

• Lead Time– Amount of time required to place an ad by the media

• Radio has shortest

• TV and Magazines have longest

QUANTITATIVE & QUALITATIVE FACTORS

Quantitative Qualitative

•Reach

•Frequency

•Cost-per-thousand (CPM)

•IMPACT • Impression an ad will make

•Credibility

•EDITORIAL ENVIRONMENT • Management and talents of staff

STEPS TO SELECTING ADVERTISING MEDIA

1. Identify SITUATIONAL FACTORS

2. Identify MEDIA FACTORS

3. SELECT the MEDIA OUTLET

4. Determine the TIMING STRATEGY– CONTINUOUS (Steady, regular pattern)

• Frequently used/purchased products

– FLIGHTING (During peak sales periods ONLY)– PULSING (Bursts of advertising)

“You Do”: PROJECT

1. Each group will be assigned one of the following: Radio, Direct Marketing, Outdoor, Newspaper or Magazine Advertising.

2. You will need to research and identify the following information:– Pros of using your media for advertising– Cons of using your media for advertising– Types of Costs using your media advertising

3. Organize information above in a POWERPOINT Presentation to be presented to the class.4. CREATE an advertisement for your media

– Radio- Needs to be a SCRIPT read to the class Identify which station it will be on and what time of day it will be played. WHY? (Hint- needs to reach your target audience)

– Magazine- Needs to be a full-page ad. Identify which magazine it will be in and what day/month subscription. WHY? (Hint- needs to reach your target audience)

– Direct Marketing- Who is on your mailing list and when will you be mailing it out? (Define the target market) (Hint- needs to reach your target audience)

– Outdoor- Which road/physical location will it be located and for how long and what time of year? (Hint- needs to reach your target audience)

– Newspaper- Needs to be a full-page ad. (You chose if it is color or not) Which newspaper will it be in and on what day? (Hint- needs to reach your target audience)