To Buy or Not to Buy…

Michelle Abdow

The Intelligence Behind Sophisticated Media Buying


Michelle Abdow, Principal
08.05.2010

In today’s environment, budgets are limited, and companies are being forced to do a lot more with a lot less. This is very evident in the world of advertising. Often the best advertising campaign can be lost with an ineffective media buy. Now more than ever, much needs to be taken into consideration. Intelligent media buying prevents the ‘throw it at the wall and see if it sticks’ trap that many businesses fall into.

In media, like every business, it’s all about the bottom line. That is why it’s important for an advertiser to understand the ins and outs of the media-buying maze and be able to look beyond the pitches from sales representatives.

In a small market like Springfield, we have the following equation. 4 major TV networks (ABC, NBC, CBS, and now FOX) + more than 10 radio stations + a cable interconnect system + a daily newspaper + weekly papers in just about every town = the marketing playing field. Add to that the national trade publications + interactive Web sites + search-engine marketing + social media + outdoor advertising among and so and and so on… and the question becomes: How does a small to medium-sized business make sound decisions on the best way to promote themselves in a local market when clearly there is just not enough money to go around?

That is where intelligent buying comes into play. Smart buyers have to weigh objectives and complete cost analysis to yield the best return on investment, because the packages most media reps offer typically lack the total quality for the individual advertiser’s objectives.

A Rating Point Is a Rating Point … or Is It?

A term that is shared both by radio and TV is the rating point.

To most, radio and TV are forms of entertainment. But to an advertiser, it should represent a way to target a specific audience that listens to a particular station or watches a specific show. Radio listenership in the U.S. is rated primarily by Arbitron. In most major markets it is done quarterly, most typically by individual household diary surveys. TV viewership is rated nation-wide by Nielsen Media Research. Nielsen is also rated quarterly and conducted by electronic metering technology. The quantitative measures that are derived from both research groups become tools for savvy media buyers to assure proper campaign delivery to their targeted demographic audience.

In radio, a ratings point equals 1% of listeners who are listening to a particular station at a given time. In television, it is 1% of all TV households who are reviewing a particular station at a given time. To the media buyer, it is a metric that is necessary to ensure the success of a campaign.

There are many other terms that come from both the Nielsen and Arbitron ratings. Someone who is buying a large amount of media will want to achieve a specific GRP (gross rating point) delivery, and they will negotiate each point. A GRP represents the percentage of the target audience (eyes and ears) reached by an advertisement, and it is the sum of ratings achieved by a specific media schedule.

If the advertisement appears more than once, the GRP figure represents the sum of each individual GRP. Frequency and reach are also critical terms and lend to the GRP delivery; the more options for a viewer to see or hear an ad (frequency), and how many of those target audience members are actually seeing or hearing the ad (reach), the better the campaign. GRPs are derived from the frequency and reach of the advertisement. In the case of a TV advertisement that is aired five times reaching 50% of the target audience, it would deliver 250 GRPs (5 x 50%).

Although this methodology is basically sound, things can get tricky,and may even stir a debate between the veteran media executive and the seasoned media buyer.

Let’s say an advertiser is considering three options. Each plan delivers roughly 100 gross rating points to reach the target audience. At first glance, 100 gross rating points is 100 gross rating points, right? Well, not really. Consider this. The first option is to advertise one 30-second TV commercial during the Super Bowl, which would reach 100% of the target audience one time; the second (non-Super Bowl) plan would reach 50% of the target audience two times; and a third plan would reach 10% of the target audience 10 times. They all deliver 100 gross rating points, but Plan C would be the most effective because it allows for frequency, or repetition. In the world of advertising, repetition is what drives the message home. It is far better to tell 100 people something ten times than it is to tell 1,000 people something once.

Equal Playing Field

In a world where there are thousands of advertising options, how can one measure the differences in costs between varying media forms? While it is still important in the world of media buying to rely on reach, frequency, and GRPs as the main basis of campaign delivery, there is also a term that allows for comparing costs with varying advertising media.

The CPM (cost per thousand) is the common denominator. CPM answers the question that TV, radio, newspaper, and Internet can all answer: how much is it going to cost to reach each audience of a thousand? CPM has resurfaced as a valuable cost measurement when a campaign consists of many avenues of advertising. To derive a CPM, one would take the audience/circulation of the advertising medium and divide by 1,000. That number would then be divided by the cost of the media schedule. For example, we can compare an online campaign with that of a daily newspaper campaign, both costing $2,250. 1f the online media campaign garners 150,000 impressions, take 150,000 and divide by 1,000 to get 150. That represents 150 thousands of impressions. Divide the $2,250 investment by 150, and that would tell you the campaign would cost $15 CPM. If the daily paper reaches a circulation of 100,000, divide by 1,000 to derive at 100 sets of 1,000. Then divide the cost of the ad ($2,500) by that quotient. The print campaign calls for a $22.50 CPM.

In this example, which is more cost-effective? In using the above example, the online campaign will enjoy 50,000 more impressions for a lower cost per thousand. This is simply a formula of cost measurement to compare varying media platforms within a marketplace. Oftentimes the campaign goals or objectives will dictate which medium is utilized. But one should be careful not to buy media strictly on the cost-per-thousand methodologies. At the end of the day, there are many ways a buyer can dissect a media campaign. The real goal should be to maximize the advertising budget and reach the target audience with some frequency.

In the end, advertising is just a way to invite people to do business with you… so inviting the people you want multiple times and then reminding them to come is far better than mentioning it to them only one time in passing.

It may be a buyers’ market, but beware of what you are buying. When you maximize your budget, you will be more effective. In the end, media buying can be very confusing, so don’t feel that you must go it alone. Hiring a firm that specializes in media buying can help you spend your marketing dollars in the most cost-effective ways — and likely save a company money in the long run.

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