Media Planning & Measurement MKT 3850 Dr. Don Roy.

Media Planning & Measurement

MKT 3850Dr. 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 ResponsesResponse Rate =

# of Contacts MadeExample: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 CampaignCost per Response =

# of Responses GeneratedExample:

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 CostsA Cost Effectiveness Analogy

Price: $3.99Size: 17 oz.CPO = .23

Price: $3.49Size: 13 oz.CPO = .27

vs.

Total Cost of an AdvertisementCPM = 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 (http://tv.zap2it.com/news/ratings/)

Rating is a percentage measure but is expressed as a whole number

A Ratings Swoon

Year Program Rating

1973 All in the Family 33.31983 60 Minutes 25.51993 60 Minutes 21.92003 CSI 16.32013 NCIS 12.3

Given the information above, which TV program would be the more cost efficient an ad buy?

CPP Example

America’s GotTalent

So You ThinkYou Can Dance

Cost for :30 spot $400,000 $ 350,000

Program Rating 7.1 5.9

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 regionBDI = x 100

%of U.S. population in South Atlantic region

= .12 x 100

.16

= 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 regionCDI = x 100

% of U.S. population in South Atlantic region

= .20 x 100

.16 = 125

Interpreting BDI/CDI

Low BDI High BDI Low BDI High BDI

Low market sharebutGood market potential

Low market sharebutGood market potential

High market shareandGood market potential

High market shareandGood market potential

Low market shareandpoor market potential

Low market shareandpoor market potential

High market sharebutmonitor for sales decline

High market sharebutmonitor for sales declineL

ow

CD

I

Hig

h C

DI

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!

Closing Thoughts