Advertising Research

Media Planning & Budgets

Media Planner target media buys to prime prospects. They try to avoid reaching non users of the product to avoid waste. They try to select the media that will appeal to the audience within the constraints of the advertising budget. Increasing media fragmentation and advertising clutter makes the media planner job harder today. The media planner may use a building block strategy to first reach the heavy users and then work down to subaudiences or niche users.The media planner might write up a target market incentive statement that describes in one sentence how a particular group of prime prospects will benefit from the advertised brand in a given product category. This helps to focus the message to a particular group.

Media planners also consider the strengths and weaknesses of each media type. For example TV ads can appeal to a mass audience with humor, action, and music but it has a high cost. Newspaper advertising is cheaper, very flexible and can provide a lot of information or details directed to a local audience. It works well for local retailer, real estate and local automobile sales.
However, newspapers do not reach as many teens and those in their twenties as television does.

Media costs account for 80% to 90 % of most advertising budgets. The traditional agency commission of 15% is based on media costs. Some extras are charged at 17.65%. Some commissions are based on sliding scale for large accounts or for special accounts. Some companies negotiate performance fees for good results.

What are some of the trends in media planning and media buying?

Advertising Spending by Media: Full Year 2006 vs. Full Year 2005¹

MEDIA	FULL YEAR 2006 (Millions)	FULL YEAR 2005 (Millions)	% CHANGE
TELEVISION MEDIA	$65,373.3	$62,103.1	5.3%
· NETWORK TV ²	$22,879.2	$22,313.1	2.5%
· SPOT TV ³	$17,233.7	$15,614.8	10.4%
· CABLE TV	$16,746.0	$16,196.6	3.4%
· SPANISH LANGUAGE TV	$4,279.3	$3,756.1	13.9%
· SYNDICATION - NATIONAL	$4,235.1	$4,222.5	0.3%
NEWSPAPER MEDIA	$27,972.1	$28,645.8	-2.4%
· NEWSPAPERS (LOCAL)	$24,057.5	$24,872.2	-3.3%
· NATIONAL NEWSPAPERS	$3,539.2	$3,427.5	3.3%
· SPANISH LANGUAGE NEWSP	$375.4	$346.1	8.5%
MAGAZINE MEDIA	$29,833.4	$28,738.5	3.8%
· CONSUMER MAGAZINES	$23,190.5	$22,169.1	4.6%
· B-TO-B MAGAZINES	$4,144.9	$4,260.2	-2.7%
· SUNDAY MAGAZINES	$1,881.0	$1,739.4	8.1%
· LOCAL MAGAZINES	$461.6	$428.2	7.8%
· SPANISH LANGUAGE MAG	$155.4	$141.7	9.7%
RADIO MEDIA	$11,054.8	$11,017.70	0.3%
· LOCAL RADIO ⁴	$7,355.3	$7,403.6	-0.7%
· NATIONAL SPOT RADIO	$2,695.0	$2,604.1	3.5%
· NETWORK RADIO	$1,004.5	$1,009.9	-0.5%
ALL OTHER MEDIA TYPES	$15,415.7	$13,303.4	15.9%
· INTERNET ⁵	$9,756.1	$8,318.0	17.3%
· OUTDOOR	$3,831.2	$3,528.8	8.6%
· FSI's ⁶	$1,828.4	$1,456.5	25.5%
TOTAL ⁷	$149,649.3	$143,808.4	4.1%

Source: TNS Media Intelligence
1. Figures are based on the TNS Media Intelligence Stradegy™ multimedia ad expenditure database across all TNS MI measured media, including: Network TV; Spot TV; Cable TV (44 networks); Syndication TV; Hispanic Network TV; Consumer Magazines (212 publications);,Sunday Magazines (6 publications); Local Magazines (27 publications); Hispanic Magazines (26 publications); Business-to-Business Magazines (387 publications); Local Newspapers (145 publications); National Newspapers (3 publications); Hispanic Newspapers (54 publications); Network Radio; Spot Radio; Local Radio; Internet; and Outdoor. Figures do not include public service announcement (PSA) data.
2. Network TV figures include the CW and MyTV networks, both of which launched in Sept 2006.
3. Spot TV figures do not include Hispanic Spot TV data.
4. Local Radio includes expenditures for 34 markets in the U.S.
5. Internet figures do not include paid search advertising.
6. FSI data represents distribution costs only.
7. The sum of the individual media may differ from the total due to rounding.

Important media decisions factors:

Media Planner often want to compare one media vehicle with another. One way of doing this is to examine the cost of reaching a thousand people. This is known as CPM.

CPM = ad cost x 1,000.
Circulation

Other common media decision factors include:

reach- the number of people who are exposed to an ad over a certain time period. Reach can use circulation,viewership or other audiences exposed to the advertisement.

frequency- the number of times someone could be exposed to an ad over a given period.

continuity- the time period that the advertisement is scheduled to run.Different flight schedules can be used such as flighting, pulsing., or seasonal schedules.

Broadcast & Cable-

What are the advertising trends for broadcast TV, radio & cable?
Ratings (program audience / total TV households)
Gross Ratings Points (GRP) = reach x frequency
CUME rating- number or % of different people who listen to a station during quarter-hours or dayparts.
Ratings: Arbitron (local radio) Nielsen (network & local), telephone recall, diary, meters, sweep weeks,
Q rating = % favorite show/ % familiar show
Terms: up front buys, scatter buys, local, spot, national buys

Broadcasting & Cable Yearbook (Ref Desk HE8689 .B77)
Provides market information, radio stations (AM and FM), television stations, radio and TV markets, programming, areas of dominant influence (ADI), a history of broadcasting, and FCC regulations. Ad rates often included, TV sometimes included.

Print Media-

What are the advertising trends for newspaper and magazines?

terms: classified adv., display adv.,total market coverage, zoned editions, SAU- standard Advertising units, cooperative advertising, ROP, preferred position, ethnic press, partial-run editions, split-run editions, two-color, four-color, bleed,
gatefolds, fourth-cover, readership, pass-along readership,ABC., IMC, post-tests (evaluations).

Standard Rate and Data Service (SRDS) has circulation and advertising rates for a variety of media.

Editor & Publisher Market Guide (Ref Desk HF5905 .E38)
Market data for cities or communities in the U.S. and Canada where a daily newspaper is published. Included are population, households, principle industries, climate, retail outlets, newspaper circulation, etc. Ad rates are not included.

Budgets

Ways to determine the advertising budget include:

percentage of sales- the advertising budget is based on a percent of the company's sales. Some companies use a percent of past sales. Even more companies use anticipated sales.

competitive budgeting- What are the ad budgets for the main competitors? LNA Ad $ Summary has information on company and brand advertising spending. Ref X HF 5801 A18

What is the ad budget for that industry grouping? Advertising spending as a percent of sales varies greatly from industry to industry. For example, office furniture dealers spend about 1% of their sales on advertising while beverage producers spend about 7.4% and toy makers spend about 12%. For more information see: Advertising Ratios & Budgets- Ref X HF 5801 A383. An Online summary of some ad ratios are given by Schonfeld & Associates.

task method- The company determines what the goal of the advertising will be and then budgets to obtain that goal. In the task method a list of expenditures ( A+B+C+D = X) is added up and totaled.

Related Infoacrs.com links

Introduction to Advertising

Advertising History Timeline

Advertising Law & Regulation