Broadcast Media (Part One).

Adman — Mon, 04 Aug 2008 05:57:00 GMT

In my last blog, I mentioned that it is appropriate to think in terms of Gross Rating Points (GRPs) – not the number of spots to be purchased – when planning broadcast media buys. Here is a short demonstration using "WXYZ TV" a mock, top-ten ACNielsen DMA network affiliate.

Suppose you want to advertise a new anti-aging, fat-burning, sun-screening, appetite-reducing, muscle-toning, beautifying, sun-tanning, skin cream product (using all natural ingredients, of course) that is proven to eliminate cellulose, varicose veins and love-handles while adding years to one's life. Extensive research indicates that the primary target market is Women 18+, stay at home moms. Your client wants to first run the ads in a top-ten, spot television market before going national.

So you call the network affiliates in your test market and request availabilities (avails) in the DMA for the Female 18+ demographic -- believing that you need to run the commercial 30 times because your client -- who recently attended a one-day beauty business seminar -- told you so. You take a look at the Morning and Daytime day-parts for your Female 18+ demo for the fourth quarter.

[Television viewers are typically loyal to programs as opposed to stations. Nevertheless, I am using availabilities from a single station for demonstration purposes. The numbers are representative of an actual "top-ten" broadcast TV market.]

As you can see in the above "avail," the Female 18+ demo has dramatically different ratings and rates depending on the program. The cost per rating points (CPPs) are also quite different...even among programs specifically targeted to women.

In the avail, Program "A" (top-rated morning show 1) and program "B's" (morning show 2) adjacent time periods have different numbers when comparing 9a-10a (1.9 rating) vs. 10a-11a. (1.4 rating). The gross rate for the 9-10a slot is $350, considerably higher than the $265 rate for the 10a-11a time period... yet the CPP and CPM are lower for the 9-10a slot. This is a better buy for the Female 18+ demo as you would be reaching 44.2 thousand vs 32.1 thousand at a lower ($7.92 vs $8.26) cost per thousand (CPM).

An even better comparsion is made when comparing Program "F" (soap opera) vs Program "G" (homemaking show) which represent programming specifically targeting women. Program "F" gets a 2.7 rating for Females 18+ (reaching 64.4 thousand) while Program "G" only gets a 0.7 rating for the same demo (17.4 thousand). Program "F" has a lower CPP of $203.70 vs $250.00 for Program "G" So, Program "F" is a much better buy -- if you can afford it at $550. This simple comparison should be enough to discredit the absurd idea of buying media based on a predetermined number of spots for the simple reason that the same number of spots on one program vs another can yield vastly different reach at dramatically different costs.

A far more viable approach would be to determine how many viewers you can afford to reach with effective frequency. Since the minimum generally accepted frequency is three times, you might want to consider shooting for an even better frequency of four times. If you bought 400 GRPs, you could reach virtually 100 percent of Females 18+ viewers in your DMA with an average frequency of four times. Assuming an average morning and daytime CPP of around $220 (based on your avails) your budget would be $88,000. It would be much more common (trust me) to purchase around 100-150 GRPs per week. So, let's assume that you propose to your client that they purchase 250 GRPs for a two-week flight. At an average CPP of $220, this would result in a budget of $55,000.

A much quicker method for determining average CPPs would be to refer to SQAD. Since SQAD (pronounced "squad") is based on actual buys, it has the added benefit of providing you with a good indicator of what is actually being negotiated and paid vs what is presented by the respective stations on their avails. In addition to being a helpful negotiating tool, SQAD might also be helpful in determining desirable test markets based on average CPP data -- in consideration of buying power index data and other marketing research. At Davis Advertising, Inc., we strive to beat SQAD by a significant amount.

Your job as a media buyer is now cut out for you -- get your client as much "bang for the buck" as possible by negotiating rates and developing a schedule -- using avails from a variety of broadcast (and cable) stations -- that will improve the numbers significantly, maximizing effective reach and frequency...based on both quantitative and qualitative insight. That will be the subject of an upcoming blog.

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I was honored to serve as the final judge in the 2008 DECA, International Career Development Conference (ICDC) in Atlanta this past Monday and Tuesday in the “Advertising Campaign” category. The events were held at the Georgia World Congress Center and the awards session was at the Georgia Dome.
It was an awesome experience. On Tuesday, I evaluated twenty 20-minute advertising campaign final presentations from the top high school marketing students in the world.
This was a truly humbling experience and I was impressed to say the least. It was virtually impossible to determine which of these student teams best deserved to be in the top ten -- much less the top three finalists! But, ties were not allowed and there had to be three top teams selected. ALL of the students who made it to Atlanta should be VERY proud!
There was a relatively clear first place winner. This team's "situation analysis" actually included a “SWOT” (Strengths, Weaknesses, Opportunities & Threats) analysis based on their "secondary research." As did most of the others, they defined their primary and secondary target markets in demographic, psychographic and geographic terms. Their objective was specific, workable, measurable and attainable. Their budget was realistic and comprehensive -- including development costs, production costs, media costs and agency commissions. They certainly showed evidence that they understood some of the basics of the “Journey from Concept to Creation!”

Of course, I was thinking about how these high school students could have REALLY impressed me if only they had been reading my blogs! Hopefully next year’s students are reading?

One thing that really impressed me, in addition to the SWOT analysis, was that they mentioned running television spots in the “early fringe” time period. Plus, they actually spoke in terms of FREQUENCY! – gasp! They also referred to radio formats as Contemporary Hit Radio (CHR), Adult Contemporary (AC), Album Oriented Rock (AOR), etc. They certainly knew how to impress the Adman with advertising industry terminology.
Regarding my blog topic -- I am convinced that there are gazillions (possibly even googillons) of dollars totally wasted by those who are not educated on a few basic principles of media planning and buying. I have heard comments from inexperienced prospective clients (who could use a lesson or two from high school DECA kids) that go something like, “We think we should buy 30 spots on WXYZ TV.” After recovering from my “client from hell red flag alert,” I attempt to educate them. Puhleeze listen carefully -- it AIN'T about how many spots you are buying! 30 spots on one station is NOT the equivalent of 30 spots on another. Plus, different dayparts (Early Fringe vs Primetime for example) can reach dramatically different numbers of viewers! It IS about how many impressions (as measured by ACNielsen) you are making on your target market (reach). And it is also about reaching your target market a sufficient number of times (frequency).
This leads to the basic, fundamental formula of broadcast media buying – Reach x Frequency = Gross Rating Points (GRP’s). So, when establishing a broadcast television media budget, it is prudent to first determine the average cost per rating point (CPP) for your target market in your market(s) -- as defined by the Nielsen Designated Market Area (DMA). Then determine how many impressions you can afford to make with sufficient frequency (generally a minimum of three times). Then figure on the conversion rate (generally in the two or three percent range) that is typical for your industry…while considering the added value of BRANDING your product or service in the market.
Now, when I hear something like, “We are budgeting for XXX GRP’s per week, based on the average CPP of $XXX (according to SQAD) in the target DMA for our Adults 25-54 demo…” I am as pleased as a DECA student after winning first place in the DECA ICDC awards session at the Georgia Dome in the Advertising Campaign category... celebrating by getting wet from the fountains at the Centennial Olympic Park after visiting the Georgia Aquarium and the World of Coke... with a front row seat at the NBA playoffs in the Phillips Arena watching the Atlanta Hawks beat the Boston Celtics... while enjoying Georgia peanuts and a Coke... with tickets for the studio tour at CNN..followed by tickets for "The Lion King" at the Atlanta Civic Center... or perhaps another show at the Fabulous Fox Theater...or Six Flags over Georgia...or the Stone Mountain Laser (and fireworks) Show? -- While it may sound like alphabet soup to you -- to the seasoned media professional it is music to the ears…

To be continued...

Journey from Concept to Creation : DECA

Broadcast Media (Part One).

Media (Introduction).