2. 1) Budget Consideration?
• Cost Estimating
2) How can a value of an media strategy be determined?
• By how well it delivers the message to the audience with the lowest cost and
the least waste. The factors that affect the decision are reach,frequency and
availability.
3. ABSOLUTE COST
Advertising and promotional costs can be categorized in two ways.
ABSOLUTE COST
of the medium or vehicle is the actual total cost required to place
the message. Example: a full page 4 color ad in Newsweek
magazine costs about $2,10,000
COSTS
RELATIVE COST
Is the relationship between the price paid for advertising time
or space and the size of the audience delivered.
4. RELATIVE COST
Why Relative Costs are important?
Because managers must
try to optimize audience
delivery within budget
constraints.
Alternatives are available for
delivering message therefore
the advertiser must evaluate the
cost associated with these
choices
5. DETERMINING RELATIVE COSTS OF MEDIA
1) Cost Per Thousand (CPM).
2) Cost Per Ratings Point (CPRP).
3) Daily Inch Rate.
6. CPM is used by Internet marketers to price
ad banners. Sites that sell advertising will
guarantee an advertiser a certain number
of impressions (number of times an ad
banner is downloaded and presumably
seen by visitors.), then set a rate based on
that guarantee times the CPM rate.
What is Cost Per Thousand (CPM).
CPM =Cost of ad space (absolute cost)
1,000/circulation.
7. 2) Cost Per Ratings Point (CPRP).
The cost of reaching one percent of the target population. The cost per rating point
is used to estimate the cost for TV advertising on several shows.
CPRP =Cost of commercial time/Program rating
8. 3. What is Daily inch rate.
For newspapers, cost effectiveness is based on the daily inch rate, which is the
cost per column inch of the paper.
Television: Cost of 1 unit of time × 1,000/ Program rating
Newspapers: Cost of ad space × 1,000/Circulation
9. EVALUATION AND FOLLOW UP
Marketers must consider two factors to measure the effectiveness of media
plan
(1) How well did these strategies achieve the media objectives?
(2) How well did this media plan contribute to attaining the overall marketing
and communications objectives?
10. BUDGETING FOR YOUR ADVERTISING CAMPAIGN
If there is a golden rule for running an advertising campaign, it is that
you have to stick to it.
Sustained Advertising = Recognition = Trust = Sales.
Advertising campaign is a long-term investment that takes time to
show a return and budget must reflect this reality.
11. METHODS COMPANIES USE TO SET THEIR ADVERTISING
CAMPAIGN BUDGETS
1. The Percent of Sales Method: The advertising campaign budget is a constant
percentage of desired sales
2. The Task Objective Method: How much money do you need to spend to reach the
specific goals you have outlined for the advertising campaign?
3. The Historical Method: How much did you spend to reach your sales goals in
previous years or periods?
4. Competitive Parity: With competitive parity you spend in equal amounts to your
competitors as a percentage of market share
5. The Combination Method: The best advertising campaign budget you can set will
be based on some combination of all of the previous models.
