Media Buying Simulation: An Introduction to Real World Media Buying and Selling

Objectives of the MBS Familiarize you with the art of negotiating and buying media Help you practice and appreciate the importance of good written communication skills in a mock business setting Give you practice calculating various media metrics Encourage strategic thinking to improve your ability to succeed in media planning

MBS Overview 16 teams of 2 students each 8 ad agencies will be buying rating points (TRPs) in the form of media time –Agencies will be given a budget, a rating points goal to meet for two dayparts, and a media planning objective 8 cable networks will be selling spots –Network teams will be given a number of spots to sell across two dayparts and a breakeven figure for the inventory of spots All teams have access to –ratings of all 8 cable networks during each daypart (Appendix D) –Descriptions of the cable networks –Descriptions of the agencies including the client they represent

MBS Rules All communications between groups MUST be through Teams must respond to all contacts and requests from other teams within 15 hours exception: requests made between 12pm Friday and 9pm Sunday must be responded to by 12pm Monday Any price or inventory offered to another team must not change during this 15 hour period. All purchases and sales must be verified with a written communication ( ) –While I do not need to receive initial offers or negotiation s, I do need to be copied on sales verification s Each agency must buy time from at least two different cable networks for each day part All business is to be conducted in a professional and courteous manner

Concepts and Terms Target Rating Points (TRPs) –Like gross rating points, but only for specific target audience –If a cable network offers a spot with a rating of 4.0, and the agency purchases 5 spots, the agency has purchased 20 TRPs. Cost per rating point (CPRP or CPP) –Cost of the spot(s)  TRPs for the spot(s) Cost per spot (CPS) –Cost of one unit of avertising –Often multiple units are purchased together, so CPS is: total schedule cost  number of spots in the schedule

Examples MTV has 100 primetime spots available with a rating of 0.8 MTV needs to generate $250,000 with those spots CPS = $250,000  100 = $2,500 TRPs = 100 X 0.8 = 80 CPP = $250,000  80 = $3,125 If an agency wants to buy 20 TRPs, they would need to buy 25 (20  0.8) spots.

Examples (cont.) An agency needs to buy 250 primetime TRPs with a budget of $850,000 MTV has offers primetime CPS of $2500 with a rating of 0.8 CPP a = $850,000  250 = $3,400 CPP m = $2,500  0.8 = $3,125 Since you can spend $3,400 on each TRP, $3,125 may be a pretty good deal Of course you would still want to get quotes from other cable networks to see if there is an even better deal

Cable Networks In addition to your inventory and sales goals, you will receive the names and addresses of all agencies –It will be beneficial to you to make distribution lists of all agencies and your own team to facilitate communication There are eight agencies that you are trying to sell to There are seven other cable teams also trying to sell inventory You are competing against each other to try to maximize profits Soon you will receive a “hello” message from each agency; please reply to each of these Your reply may include information about the network and preliminary prices for your spots; it’s never too early to start selling! Remember all communications are sent as a team, so only one person from each team need reply, but every member of your team should get copied on every sent

Cable Networks When the MBS starts, you may contact the agencies to see if they have a response to your initial pricing; again coordination of s should be evident…you don’t want to sell the same spots more than once! You must respond to all contacts made by the agencies within 15 hours (weekend excluded); quick communication is often a key to success in this game Any price you offer must stand during this 15 hour time frame, so be sure of your price before you send it to the agency After negotiating the deal, you will receive an “intent to buy” notice (Appendix E)

Cable Networks You must confirm the deal with a “Confirmation” (Appendix E) The sale is NOT complete until you have confirmation, meaning that unless you have a copy of the agency’s reply to the confirmation, there is no sale If all inventory is sold before the end of the simulation, you must send an to all agencies stating that you are sold out Once complete, summarize all sales using Appendix F and attach the printed s of confirmation notices and receipt replies for each sale

Agency Teams You will receive a budget and a buying goal for each of two dayparts, and a media planning objective; in addition you will receive the names and addresses of the cable networks you can buy from –Make distribution lists for all cable networks as well as your own team There are eight cable networks to buy from There are seven other agencies also trying to buy time from the same networks You are competing against each other to make the best buys and stay under budget, while meeting TRPS and planning goals Immediately send a “hello” message to each cable team to verify your distribution lists and to ask for initial prices for their inventory While only one member of each agency team should send these (and all) messages, be sure to copy all members of your team so everyone knows what everyone else is saying

Agency Teams When the MBS starts, you can consider making buys; either accept the initial pricing and make an offer, decline outright, or begin negotiating You must respond to all contacts and requests made by the cable team with 15 hours (weekend excluded) Quick communication is key to succeeding in this game If you make an offer to buy for a certain price, you may not change that offer within the 15 hour timeframe unless you have spent all of your budget or you have reached your TRPs goal Once you agree to terms with a cable team, you must send them an “intent to buy” (Appendix E) The cable team will reply with a “Confirmation”; for the sale to be complete, you must reply to this confirmation Once your team has made all buys needed, complete Appendix G to summarize the buys made, and attach the printed confirmation s for every buy

Grading The simulation is designed so that all budget and sales goals can be met Every group who turns in all properly executed and documented sales/buys, and meets their budget/sales goals will get a passing grade Extra credit may be awarded to teams who perform exceptionally Failure to meet budget/sales goals through a lack of effort, or breaking any of the rules may result in a failing grade. This includes the rule!

Timing Beginning now, teams may begin communicating, but only in an introductory manner and to test distribution lists No sales, offers, or negotiations of ANY kind may begin until the start of the simulation The simulation will begin at noon (after class) on Friday 11/10 The simulation will end one week later, at 9:00am on Friday 11/17 Your reports are due to me no later than 9:00am on Friday 12/1 –If you complete your sales/buys before 11/17 you are encouraged to turn in the report during class on 11/17