advertising budget methods

Advertising Budgeting, Media, and Media Planning

Setting the BudgetPercentage of SalesPayout PlanCompetitive BudgetingThe Task or Objective Method What’s the objective? What type and how much media needed? Can we afford it?

Arbitrary

Administering and Protecting the Budget

The Advertising Budget

Media Planning

Media Planning = Selection + SchedulingFactors Influencing Media Planning Decisions Target Market Profile Looking at Brand/Product Dynamics The Creative Execution Budget Considerations and Media Deals The Competitive Situation Availability and Timing Considerations Cost Efficiency (CPM = Cost per thousand

(CPM): cost of reaching 1,000 members of target audience with media vehicle(s) or plan.)

CPM Formula and Example

CPM = Cost

AudienceX 1,000

A-- :30 TV Commercial in “Friends”

Which is more cost efficient on a CPM basis?

CPM = $250,000

20,000,000X 1,000 = $12.50

B-- :30 TV Commercial in “Monday Night Football”

CPM = $300,000

30,000,000X 1,000 = $10.00

Media Selection

Media are evaluated based on selectivity.There are two types of selectivity: Class Selectivity is the ability of a medium to

reach the target market without waste. Geographic Selectivity is the ability of a

medium to cover a particular geographic area without spillover.

How would you rate the different major media in terms of class and geographic selectivity?

Media Scheduling

Reach(% of target audience with opportunity for exposure

to media vehicle(s) or media plan in a given time frame)

+Frequency

(average number of times target is likely to be exposed to the ad in a given time frame)

100%

The Difference between Reach and Frequency

Media Scheduling (continued)

Reach+

Frequency

+Continuity

(how long the campaign runs—continuous vs. flighting vs. pulsation)

100%

Reach, Frequency, and Continuity Relationships with a Fixed Budget

Media Scheduling (continued)

Reach+

Frequency+

Continuity+

Dominance/Impact(the attention-getting ability of the media

vehicle(s) selected to run the ad)

100%

Evaluating the Media: Key Terms Rating point: the % of a given population group that

uses a specified media vehicle. Share: Households/persons using television (HUT,

PUT): % of homes or people watching TV at a given time.

Gross rating point (GRP): total number of ratings for different media vehicles.

Gross impression: translation of GRPs into people; number of audience exposures x number of times they will see or hear vehicles.

Cost per rating point (CPP): cost of buying one rating point in a given media vehicle or type.

Audience: number or % of homes or persons using a media vehicle.

Coverage: Same as reach – the % of homes or persons receiving broadcast signal within specified area, or receiving specific magazine or newspaper.

Evaluating the Media: Key Terms, Continued

Circulation: Total number of copies of a publication sold through various forms of distribution.

Readers per copy: average number of people who read each issue of publication.

Types of Media Plans

Geographic Local, spot, key market Regional National International

Selective Combination

Sample Flowchart of a Media Plan

Evaluating the Media Plan

Follow up—getting make-goods, tearsheets.

Measuring the impact: Test consumer awareness of campaign

before, during, and after. Sales data. Compare actual reach/frequency figures to

proposed estimates.

Syndicated Media Research Services Nielson, Arbitron, Simmons, Audit Bureau of

Circulation