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The Case for Spot a TVB presentation Produced in collaboration with Erwin Ephron
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“ nline advertising companies are increasingly desperate to use geographic targeting tools to reinforce their client's faith in Internet marketing... O
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“In short, for a growing number of companies, this will be the year when the borderless Internet economy becomes an outmoded concept.” NEW YORK TIMES, MONDAY, APRIL 2, 2001
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Revitalizing geo-targeting in the current mix of media strategies, is Local Broadcast Television’s challenge to Advertisers and Agencies.
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For 30 years, media plans have been driven more by tight budgets than new ideas.
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The building-blocks have been: EFFECTIVE FREQUENCY TARGETING CPM
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Today we wonder why.
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Is based on a rehearsed learning model (like memorizing a script). Effective frequency
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There is good evidence that repetition alone is not how advertising works to influence consumers.
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Demo-targeting Is often over-valued at the expense of other targeting criteria.
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CPM Is a one-dimensional measure of media performance.
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It focuses on exposure not communication, persuasion or sales.
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In short, many of the planning tools we use are less useful.
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In short, many of the planning tools we use are less useful.
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And some familiar tools we neglect, now have greater value.
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The aim of this new look at media planning is to create a more accountable process.
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It is a point-of-view based on best practices.
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And although the focus is on TV, the principles apply to all media.
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We begin with an old joke...
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"I've got enough money to last me the rest of my life." ”Provided I die at 3 o’clock."
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The media planner’s version is heavier...
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“I've got enough money to run an effective campaign.” “Provided it’s 16 weeks.”
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There’s never enough money to advertise: at effective weight to all of the country for most of the year
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That defines the planner’s assignment. Allocation.
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Spending a limited resource for greatest total effect.
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Think of the budget as...
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A beautiful pie...
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And media planning as...
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Dividing-up the pie...
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The pieces are... WEIGHT TARGETING CPM UNIT SIZE GEOGRAPHY WEEKS
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The size of the portions determines the media plan.
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And the size of each slice will determine the size of other slices.
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1. WEIGHT LEVELS TRP’s, reach and frequency
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Use moderate TRP’s and run more weeks.
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We know advertising has its greatest effect when a consumer is “in the market.”
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It works by influencing which brand is purchased.
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For that reason, when a person gets a message is often more important...
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…than how many messages a person gets.
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It is as if there is a window in front of each purchase...
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The job of the message is to influence that purchase.
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The job of media is to put the message in the window. message
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Because products are bought every day...
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Brands need to remind people of their name and value every day.
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This argues for more weeks of advertising.
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Continuous Presence, not Effective Frequency.
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These new ideas are called Recency Planning.
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Since purchases are made continuously, but we usually don’t know who is ready to purchase...
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REACHREACH The idea is to talk to as many target consumers as possible
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Over as many weeks as possible C O N T I N U I T Y REACHREACH REACHREACH
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PRINCIPLE Today the goal is “reach and continuity,” not “reach and frequency.”
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2. TARGETING Demographics, user, usage
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It’s easy to over-estimate how much demography is worth to a brand.
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Example The target group is Women 18-49. It has a purchase index of 115.
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A smaller target, like Women 18-34 in 5+ households, might index higher...
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But it would not account for enough of a mass brand’s sales to be useful as a target.
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That is the TV targeting paradox.
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Small targets don’t concentrate enough sales.
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But large targets don’t concentrate sales enough.
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The reason is most TV brand demo-profiles are relatively flat.
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That said, there are still targeting approaches which have great energy.
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Recency, receptivity and geography are all powerful targeting tools.
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Targeting Tools Recency - Putting a message close to the purchase opportunity. Receptivity - Reaching consumers who are in the market for a type of product. Geography - Identifying markets with greatest sales potential.
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PRINCIPLE Look well beyond demography to target potential brand purchasers.
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3. CPM VALUE Reach, environment, attention
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This is the twilight zone of media planning…too many conflicting theories.
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Clearly there has been a move to cheaper media. In TV this has meant lower ratings and cable.
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But as we gain in cost efficiency are we losing value?
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There are reasonable arguments on both sides.
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On the face of it, Recency Planning supports the use of low ratings...
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... Recency says reach is bought with dispersion, not high ratings.
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Optimizers have supported this for national television.
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Multi-tasking and repeated commercials result in less attention for all TV, regardless of rating level.
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And some new data suggest rating size does not appear to affect message recall.
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Yet research with Nielsen Quads suggests attention may be a function of rating-level.
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And agency research shows that viewing duration (which favors higher ratings) predicts attentiveness.
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CPM value is still very much under study. PRINCIPLE Be aware of the new data and be wary of CPM as a sole measure.
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4. UNIT SIZE 30 or 15 second messages
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Choice of unit is a creative decision, forced by pricing and budget. 15
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15’s comprise close to one-third of national TV weight. But, there’s a paradox.
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Research usually finds shorter units are more recall effective.
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But sales tracking shows 15-second commercials are less sales effective. Source: Adworks 2
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The conflict may be in the way 15’s are planned.
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Even if two 15’s provide greater recall than a 30...
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One 15 is still worth less.
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Yet plans are written “60 TRP’s/50% 15’s by weight ” which sounds like 15’s are equal to 30’s.
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Sixty TRP’s, half 15’s is at best 50 points in communication value.* * This assumes a 15 has 65% of the effect of a 30.
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Don’t plan 15’s to make a budget appear bigger than it is. PRINCIPLE That does not help a campaign.
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5. WEEKS Scheduling and weight
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Research indicates increasing returns as weeks are added to a schedule. Source: Adworks 2
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This suggests the overwhelming value of continuous advertising for Consumer Package Good brands.
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Recency theory also supports more weeks of advertising.
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The recency goal is to intercept sales with a brand message. The best schedule intercepts the most weekly purchases.
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PRINCIPLE A moderate weekly reach goal results in a better performing schedule.
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It intercepts more purchases, because it allows more weeks of advertising.
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6. GEOGRAPHY National, spot or some combination.
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Before we look at Geography, lets review what’s happened to the pie.
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WEIGHT Should be moderate to generate more weekly reach.
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TARGETING Look well beyond demography to target potential brand purchasers.
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CPM’S Be wary of CPM as a sole measure.
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UNIT SIZE 15’s should not be used to make a budget appear bigger.
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WEEKS Have become highest priority in planning.
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Both weeks and weekly reach are key recency planning goals.
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But most brands can’t afford both when costs are increasing faster than budgets.
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The old trade-offs for buying more weeks Less weight Smaller units Lower CPM’s
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Have been pushed to the limit.
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The remaining option is to target Geography. And that is spot planning.
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“ ne of the most basic pieces of information that Web sites often lack is a visitor’s physical location.” O THE NEW YORK TIMES, MONDAY, APRIL 2, 2001
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6. GEOGRAPHY Targeting with spot
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Every brand has geographic areas of opportunity.
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These are spot markets where advertising is most likely to produce sales.
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They can be identified by BDI, CDI, brand share, growth or absolute volume.
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Let’s begin with the most familiar measure, BDI, the market’s per-capita index of brand purchase.
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BDI is calculated by dividing a DMA’s share of brand sales by its share of US population.
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A market like Dallas, containing 3% of a brand’s sales and 2% of the population would have a BDI of 150.
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For most brands, markets comprising a third of the US, will have a BDI index of 130 or higher.
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This is far greater selectivity than demos provide. Here are a few examples:
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Pasta Sauce Source: IRI Infoscan special tabulation/MRI The best 1/3 of the US indexes at 135 The best age demo only indexes at 112
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Chevy Blazer Source: Polk Special tabulation/MRI The best 1/3 of the US indexes at 156 The best age demo only indexes at 122
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Financial Planning Source: MRI Special tabulation The best 1/3 of the US indexes at 140 The best age demo only indexes at 114
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Barbecue Sauce Source: IRI Infoscan special tabulation/MRI The best 1/3 of the US indexes at 133 The best age demo only indexes at 106
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And there’s a bonus.
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Since geography and demography aren’t linked, the benefits are cumulative.
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A brand with a BDI of 115 for Men 18-49 and 130 for Boston...
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Will index at 150 among Men 18-49 living in Boston (1.15 x 1.30).
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When demography is coupled with geography, brand sales benefit.
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“ f baseball fans are your target, you may want to consider geo- targeting your online advertising to Cleveland, Atlanta and Boston.” I JUST AN ONLINE MINUTE, APRIL 4, 2001
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Using BDI spot is one dimensional. A brand, depending on it’s circumstances, should consider targeting...
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Category sales (CDI) Competitive vigor (share) Brand growth (% change) Brand volume (dollars) Alone, or in combination.
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An example: TVB was supplied with real sales & marketing data for a DTC allergy relief brand.
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DTC Allergy Relief Source: IMS prescription data, MRI The best 1/3 of the US indexes at 148 The best age demo only indexes at 111
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This brand has 50 high BDI markets with an average index of 148. Source: IMS prescription data Index 148 US Average 100
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These are markets where brand sales are strongest.
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Source: IMS prescription data Index 157 US Average 100 This brand has 100 high CDI markets with an average index of 157.
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These are markets where sales potential is greatest.
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Source: IMS prescription data Index 132 US Average 100 This brand has 50 high share markets with an average index of 132.
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These are markets where the brand is most competitive.
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Source: IMS prescription data US Average 100 Index 164 This brand has 80 high growth markets with an average index of 164.
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These are markets where everything seems to be working.
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The planner can merge market lists to identify DMA’s which meet complex criteria… >
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…in order to focus on markets which have the greatest probability of responding.
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In our DTC example: 6 markets meet 4 criteria 42 markets meet 3 criteria 20 markets meet 2 criteria Resulting in a 68 market customized geography.
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These 68 markets represent 34% of US population, but 48% of brand sales.
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POPULATION Geographic Segmentation DTC Brand, 68 spot markets Balance US 66% Spot Area 34%
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SALES Geographic Segmentation DTC Brand, 68 spot markets Balance US 52% Spot Area 48%
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Providing a spot area sales-to-population index of 141*. *48% sales/34% pop=141
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In the past most spot had been used to heavy-up GRP’s in high BDI or CDI markets.
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There is evidence that spot should also focus on high Share and Growth markets.
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And that it should be used to add weeks, not weight.
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This is a far more advanced approach to spot planning.
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In our DTC example, taking national dollars to buy more weeks in these 68 spot markets will significantly improve the media plan’s performance.
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It will place a brand message close to more purchases.
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Today spot CPM’s are roughly comparable to network, especially when planned to maximize local daypart and program opportunities.
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The selected 68 DTC markets comprise a third of the population.
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So, one week of national TV will fund roughly three weeks of spot.
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And since the value of these spot markets is 41% greater than the national average…
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Spending 20% of dollars 41% more effectively will produce a significant performance gain for the brand.
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The value of spot targeting becomes even more evident when we calculate a CPM based on brand purchase potential of the consumers reached. Consumer CPM
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(This is the same kind of CPM data that is used to plan magazines.)
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Using the DTC example, we can assume equal Network and Spot CPMs. $15.00 CPM target SPOTNETWORK
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The 68 spot market grouping delivers 41% greater sales potential than the national average. 141100BDI $15.00 CPM target SPOTNETWORK
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When you apply this advantage, the Spot CPM is dramatically reduced, relative to Network. $10.64$15.00CPM Sales 141100BDI $15.00 CPM target SPOTNETWORK
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Even when demo CPM’s are similar, Spot’s ability to target geography results in a far more cost-efficient buy than a national TV schedule.
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DMA market-value data for spot planning are now widely available.
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IRI for CPG brands Polk for automobiles IMS for DTC drugs And MRI special tabs for a wide range of products and services.
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TVB can help you locate the data.
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CONCLUDING PRINCIPLE Spot should be used in high potential markets and be planned to add weeks, not weight.
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When demography is coupled with geography, brand sales benefit.
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GEOGRAPHY Is the missing strategy for many brands.
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Thank You
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