1. Understanding media costs
CHAPTER 6
Media Planning & Buying in the 21st Century

2. Understanding Media Costs
Media Planning & Buying in the 21st Century

3. Media Costs
Media Selection Criteria
Cost
Audience
Impact
Media Planning & Buying in the 21st Century

4. Agenda
 Cost is no expense
 Unit prices
 Media cost efficiency
 Television
 Radio
 Magazines
 Newspapers
 Internet
Media Planning & Buying in the 21st Century

5. 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

6. 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

7. 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

8. 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

9. TRPS vs. CPM
Will a bag of
CPMs work?
Captain,
marketing
need s an
infusion of
TRPS
Media Planning & Buying in the 21st Century

10. 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

11. Comparison of Media Efficiencies
Media
Vehicle
Price of
Ad Unit
Audience
(Adults)
CPM
CPM
Rank
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

12. 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

13. Example of Television Costs
2011 Network Upfront
Cost/:30
Program Network
(000)
A25-54
Rating
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
Media Planning & Buying in the 21st Century

14. 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

15. Example of Radio Costs
MSAs
% US HH
CPP
A25-54
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
CPP
M25-54
CPP
W25-54

16. 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

17. Examples of Magazine Prices
Magazine
Circulation
Cost P4C
CPM Circ.
CPM
Adults
Entrepreneur
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

18. 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
Daily Newspapers (PB/W)
Magazines (P4C)
Media Planning & Buying in the 21st Century
CPM Circulation
$150-1000
65 - 135

19. Examples of Newspaper Pricing
National Rates
Full 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
Newspaper
Media Planning & Buying in the 21st Century

20. 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
Media Planning & Buying in the 21st Century