Media Planning & Measurement MKT 3850 Dr. Don Roy

Media Planning Measures 1.Response Rate 2.Cost per Response (CPR) 3.Cost per Thousand (CPM) 4.Cost per Point (CPP) 5.TV Audience Rating 6.Brand Development Index (BDI) 7.Category Development Index (CDI) 8.Gross Ratings Points (GRP)

Measuring Direct Mail Results Response Rate - What % of customers contacted gave feedback (i.e., responded) to our message to them? # of Responses Response Rate = # of Contacts Made Example: Direct mail campaign in which 50,000 pieces were mailed and 1,550 people responded: 1,550/50,000 =.031 = 3.1% Response Rate

Cost per Response - How much does it cost for each customer who gives the desired feedback? Total Costs of Campaign Cost per Response = # of Responses Generated Example: A direct mail campaign with total costs of $120,000 (including printing, postage, ad agency fees, etc.) and resulted in 1,500 sales: $120,000/1,500 = $80 per sale Measuring Direct Mail Results (cont’d)

Calculating CPR A direct mail campaign by Premiere 6 Cinema is being considered. The direct mail offer is a coupon for a free popcorn and Coke combo with the purchase of 2 regular-price tickets. The cost of inserting the coupon in Clipper Magazine for distribution to 50,000 households is $1,800. The cost of goods sold (popcorn and Coke) to Premiere 6 for each coupon redeemed is $2.00. Assume that 500 coupons are redeemed. What would be Premiere 6’s Cost per Response (CPR)?

  CPM is a measure of advertising cost effectiveness; it allows an “apples to apples” comparison of different media vehicles (The Tennessean vs. Nashville Scene).  It is the primary benchmark used by the advertising industry to assess cost effectiveness. Cost Per Thousand (CPM)

#5 – Media Costs A Cost Effectiveness Analogy Price: $3.99 Size: 17 oz. CPO =.23 Price: $3.49 Size: 13 oz. CPO =.27 vs.

Total Cost of an Advertisement CPM = Number of people in audience (in thousands) $5,000 = 300,000/1,000 = $16.67 per thousand Calculating CPM

Time People Per-page cost $353,000 $ 181,000 Circulation 3.3 million 1.4 million CPM  Given the information above, which magazine would you recommend for an ad buy? Why? CPM Example $107$129

 CPP is a measure of advertising cost efficiency for television; it allows an “apples to apples” comparison of different communication vehicles (ex.- Dancing with the Stars vs. The Voice) Cost Per Point (CPP)

Program rating Calculating CPP CPP = Cost of commercial time

Calculating Program Rating TVHH Tuned to a Specific Program  Program Rating = Total TVHH in Area * TVHH = TV Households (# households that own TV sets) View recent TV ratings (  Rating is a percentage measure but is expressed as a whole number

A Ratings Swoon YearProgramRating 1973All in the Family Minutes Minutes CSI NCIS12.3

 Given the information above, which TV program would be the more cost efficient an ad buy? CPP Example America’s Got Talent So You Think You Can Dance Cost for :30 spot$400,000 $ 350,000 Program Rating CPP $56,338 $59,322

Making Decisions About Where to Buy Media Using BDI/CDI Indexes

Calculating BDI  Oscar Meyer Hot Dogs- Milwaukee Market  Percentage of U.S. Oscar Meyer sales in Milwaukee = 0.7% (.007)  Percentage of U.S. population living in Milwaukee = 0.5% (.005)  BDI = ?

Calculating CDI  Hot Dogs – Milwaukee Market  Percentage of U.S. hot dog sales in Milwaukee market = 1.25% (.0125)  Percentage of U.S. population living in Milwaukee = 0.5% (.005)  CDI = ?

Interpreting BDI and CDI  After calculating BDI for Oscar Meyer in Milwaukee market and CDI for hot dogs in Milwaukee market what recommendations would you have for marketing communication spending by Oscar Meyer in this market? In other words, is this a good market for Oscar Meyer to pursue?

Brand Development Index (BDI)   Used to evaluate the sales performance of a specific brand in a market area Example: Sure Absorb Paper Towels % of brand sales in South Atlantic region BDI = x 100 %of U.S. population in South Atlantic region =.12 x = 75

Category Development Index (CDI)  Used to evaluate the sales performance of a product category in a market area Example: Paper Towels % of category’s sales in South Atlantic region CDI = x 100 % of U.S. population in South Atlantic region =.20 x = 125

Interpreting BDI/CDI Low BDIHigh BDI Low market share but Good market potential Low market share but Good market potential High market share and Good market potential High market share and Good market potential Low market share and poor market potential Low market share and poor market potential High market share but monitor for sales decline High market share but monitor for sales decline Low CDI High CDI

Gross Ratings Points (GRP) GRP = Reach x Frequency Example:  An advertiser plans to runs spots on a radio station with a rating of 8.0 in a geographic market. The campaign calls for 30 planned messages (e.g., once a day for a month): GRP = 8.0 x 30 = 240

GRP Example You are evaluating advertising opportunities for two talk stations WGFX-FM (104.5) and WWTN- FM. You have a desired GRP of 250. What is the required message frequency if the ratings are: WGFX = 2.5 WWTN = 3.8

1.Media planning = Get best “bang for the buck” 2.Cost effectiveness can be positioned creatively by media advertising salespeople 3.Buyer Beware!Buyer Beware! Closing Thoughts