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Media Planning & Buying in the 21st Century
CHAPTER 6
Understanding media costs
Media Planning & Buying in the 21st Century
Understanding Media Costs
Media Planning & Buying in the 21st Century
Media Costs
Audience
Cost
Impact
Media Selection Criteria
Media Planning & Buying in the 21st Century
Agenda
Cost is no expenseUnit pricesMedia cost efficiencyTelevisionRadioMagazinesNewspapersInternet
Media Planning & Buying in the 21st Century
Cost is No Expense
Price What sellers ask for their inventory Verbal or on rate card
Cost What buyers pay sellers for time or space Typically negotiated with seller May be less than seller’s initial price
Expense Dollars spent to achieve an objective
Media Planning & Buying in the 21st Century
What is a media unit worth?
Unit Prices All media have unit prices-- a :30 in NCIS or a four
color page in Tennis Magazine However, without more information, we don’t know if a
$10,000 per unit asking price is high or low What’s the size of audience? The right audience?
Cost Efficiency – a better measure of price Two measures of media cost efficiency
CPM - What is the cost per 1000 impressions in a media vehicle?
CPP - What is the cost per rating point? How does it compare to other programs or stations?
Media Planning & Buying in the 21st Century
Cost per Thousand (CPM)
Cost per thousand (CPM) is a rudimentary measure of media value received per dollar-- based on audience and cost.
Media people believe that the cost of audience is an important purchasing criterion.
CPM = Cost/Audience x 1000
Example: If the price of an ad is $10,000 and it reaches 25,000 persons, the CPM is $66.67:
$10,000/25,000 x 1000 = $66.67
Now compare this CPM to the other media options!
Media Planning & Buying in the 21st Century
Cost per Point (CPP)
Cost per point (CPP) is a second measure of media efficiency, i.e., “what does it cost to reach 1% of a target market in a geographic area?”
Spot buyers use CPP to cost out plans and to compare the efficiency of alternative programs and buys
CPP = Cost/TRPS
Example: If the price of an ad is $10,000 and it reaches 10% of the target audience, the CPP is $1000
$10,000/10 = $1000
Now compare this CPP to your other options in the same geographic area!
Media Planning & Buying in the 21st Century
TRPS vs. CPM
Will a bag ofCPMs work?
Captain, marketingneed s an
infusion ofTRPS
Media Planning & Buying in the 21st Century
Are CPM and CPP Interchangeable?
Yes and No Yes, if the audience base is in exactly the same
area. e.g., metro area, DMA No, if using total survey audience for CPM vs.
DMA audience for CPP
Media Planning & Buying in the 21st Century
Comparison of Media Efficiencies
MediaVehicle
Price of Ad Unit
Audience(Adults) CPM
CPMRank
A $187,000 10,841,000 $17.25 5
B 267,000 44,707,000 5.97 2
C 94,000 8,436,000 11.14 4
D 165,000 16,429,000 10.04 3
E 90,000 22,206,000 4.06 1
Media Planning & Buying in the 21st Century
Television Pricing/Costs
Television prices are affected by many variables Geographic coverage area Commercial length (e.g.,:60 vs. :30 vs. :15) Day part/Time of Day Audience size Individual programs Supply & demand conditions
Media Planning & Buying in the 21st Century
Example of Television Costs
Program
NetworkCost/:30
(000)A25-54Rating CPP
60 Minutes CBS $92.2 9.0 $10,244
Glee FOX 272.7 5.1 53,470
College Ftbl
ABC 92.2 3.5 26,340
NCIS CBS 150.7 5.5 27,400
Idol FOX 400.0 12.0 33,333
Lie to Me FOX 100.8 2.0 50,400
2011 Network Upfront
Media Planning & Buying in the 21st Century
Radio Pricing/Costs
Radio costs are affected by similar factors Geographic coverage area Commercial length Daypart Station Size of audience Supply & Demand Conditions
Media Planning & Buying in the 21st Century
Example of Radio Costs
MSAs % US HHCPP
A25-54CPP
M25-54CPP
W25-54
Top 10 26 $4600 4400 5500
Top 20 35 6600 5450 6200
Top 40 47 8600 8850 10,100
Top 60 54 11100 10600 11900
Top 80 59 12300 11400 13000
Top 100 62 13000 12200 14000
Top 200 72 16200 15200 17700
Media Planning & Buying in the 21st Century
Magazine Pricing
Magazine ad pricing Creative unit – single page vs. spread Size of ad – Full page, spread, fractional page Bleed – Color to edge of page Geographic or demographic edition Circulation rate base Size of audience What the market will bear (publishers)
Media Planning & Buying in the 21st Century
Examples of Magazine Prices
Magazine Circulation Cost P4C CPM Circ.CPM Adults
Entre-preneur
618,000 $84,000 $136.00 $37.53
Forbes 937,000 115,000 123.00 20.91
Fortune 877,000 119,000 136.00 29.62
Inc. 721,000 74,000 103.00 50.51
Black Enterprise
507,000 42,000 83.00 10.80
U.S. News 1,486,000 90,000 61.00 8.04
Time 3,445,000 288,000 84.00 14.26
Newsweek 2,523,000 165,000 65.00 10.06
Media Planning & Buying in the 21st Century
Newspaper Pricing
Newspaper rate cards - extremely complex National vs. local rate differential (often 100%+) Product category discounts, e.g., auto dealers Rate differentials by sections Classifieds and classified display Supplements, e.g., a TV Guide or a Home Living
section – different rates
Prices extremely high for national advertiser CPM Circulation
Daily Newspapers (PB/W) $150-1000Magazines (P4C) 65 - 135
Media Planning & Buying in the 21st Century
Examples of Newspaper PricingNational Rates
NewspaperFull Page
B/W Circulation
CPM
Wall Street Journal 223,000 1,722,000 130.00
USA Today 120,000 1,900,000 63.00
New York Times (M-F)
142,000 928,000 153.00
LA Times 155,000 658000 236.00
Chicago Tribune 121,000 466.000 260.00
St. Louis Post Dispatch
204,000 214,000 953.00
Charlotte Observor 54,000 168,000 321.00
Hartford Courant 62,000 144,000 360.00
Media Planning & Buying in the 21st Century
Internet Pricing Models
Three Pricing Models CPM Impressions
Example: 100,000 impressions x $5.00 CPM = $500.00 Suggestion: estimate cost per click based on CTR
history
CPC/PPC – Cost per click/pay per click Cost per click a function of bid and budget Example: 10,000 clicks x $.75 CPC = $7500
CPA – Cost per Action (Purchase, inquiry, etc.) Some sellers offer CPA as alternative to CPC Example: 1000 conversions x $10 CPA = 10,000