Media-Mix & The Natural Laws of Advertising

One Iron Law of Advertising Ad dollars follow consumers. Ad dollars follow consumers. Often this Iron Law works sluggishly. Often this Iron Law works sluggishly. Ten years ago, few consumers used the online medium. Ten years ago, few consumers used the online medium. Today consumers spend more time online than reading newspapers or magazines. Today consumers spend more time online than reading newspapers or magazines. But, although the fastest growing medium, online still receives fewer dollars than newspapers or magazines (about half in 2007, according to TNS). But, although the fastest growing medium, online still receives fewer dollars than newspapers or magazines (about half in 2007, according to TNS).

Medias Natural Laws Herschel discovered Celestial Mechanics; Newton the Laws of Gravity. Herschel discovered Celestial Mechanics; Newton the Laws of Gravity. We are just discovering Medias own natural Laws. We are just discovering Medias own natural Laws. Recency, Optimizers and Marketing-Mix Modeling all give the same advice: adding too much of anything in media brings lessened response. Recency, Optimizers and Marketing-Mix Modeling all give the same advice: adding too much of anything in media brings lessened response. This phenomenon is called diminishing marginal utility and affects everything that is done in planning. This phenomenon is called diminishing marginal utility and affects everything that is done in planning.

*John Philip Jones, The Ultimate Secrets of Advertising (August publication) Diminished Marginal Utility Regardless of the strength of a medium, adding dollars will usually produce a lessened consumer response - diminishing marginal utility. Regardless of the strength of a medium, adding dollars will usually produce a lessened consumer response - diminishing marginal utility. The sales effectiveness of a medium relates almost inversely to its share of the ad budget.* The sales effectiveness of a medium relates almost inversely to its share of the ad budget.* The more dollars spent, the less response per dollar. The more dollars spent, the less response per dollar. This is why any single medium alone cannot produce the most cost-effective media plan, and its why Media Mix is at the top of every media planners list. This is why any single medium alone cannot produce the most cost-effective media plan, and its why Media Mix is at the top of every media planners list.

Source: Media Mentor; Target: Persons % of Schedules Total GRPs % of Schedules Potential Reach +69% +41% +16% +12% +13% Extra Reach Is Expensive

Media Response Curve As dollars increase, the curve starts to flatten until the last dollars produce very little added response. As dollars increase, the curve starts to flatten until the last dollars produce very little added response. As reach increases, dollars buy less reach and more frequency. As reach increases, dollars buy less reach and more frequency. ResponseMedia dollars Medium A

Mixing media is a simple way to improve response. Mixing media is a simple way to improve response. As response starts to weaken, the media planner shifts to the next medium. As response starts to weaken, the media planner shifts to the next medium. Response Media Dollars Online Television Magazines The Media Mix

In the media mix, television starts building reach cost-effectively. In the media mix, television starts building reach cost-effectively. Adding a second medium will build more reach for less money. Adding a second medium will build more reach for less money. It will duplicate television less than television will duplicate itself. It will duplicate television less than television will duplicate itself. Build Reach More Cost- Effectively Without Duplication

The Cost of Incremental Reach A 30 reach costs $15.00 Reach CPM Five additional reach points - cost more than doubles to $33.00 Reach CPM Five additional reach points cost $44.50 Reach CPM 30 $15.40 $33.20 $ Source: X*Pert Reach Optimization

Source: The Ephron Consultancy Reach % $ Investment Television 1. After a certain reach point, each additional media dollar achieves less consumer response and builds reach at a much slower, and costlier rate Magazines Internet 2. When the reach of one medium starts to flatten in relation to the dollar investment, an effective campaign incorporates another medium, building reach in a cost efficient manner CPM vs. Cost Per Incremental Reach Point

Summary When CPMs reasonably represent media value, spreading the dollars will usually produce a more cost-effective plan. When CPMs reasonably represent media value, spreading the dollars will usually produce a more cost-effective plan. The unprecedented growth of the Internet - fastest of any ad medium on record - has left many advertisers trailing in the consumers dust. The unprecedented growth of the Internet - fastest of any ad medium on record - has left many advertisers trailing in the consumers dust. Why should media dollars be spread as far as online? Because its where consumers are and its where the action is (and online costs less). Why should media dollars be spread as far as online? Because its where consumers are and its where the action is (and online costs less). Add reach and increase efficiency. Add reach and increase efficiency.