Media Rates and Measurements Businesses need to reach as many targeted customers as possible within limited budgets. It is important to calculate costs and measure media effectiveness to best reach a potential audience. Therefore media planners must concern themselves with the correct medium to use and its costs as well as how to measure overall advertising effectivness.

Selection of Media Reach vs. cost Ability to illustrate product Ability to present adequate selling message Flexibility for last-minute changes Ability to use with special promotions Image of business/desired image Coverage of targeted area What do you think businesses think about before they determine which media they are going to use for their advertising? SHARE RESPONSES. Let’s look at some of the issues that advertisers must consider Review each point: They must determine a good balance between the cost of the ad and the number of people that the advertisement will reach. Do you need visual/animation? Do you need lots of space for explanation, e.g.? Do you need flexibility or can you situate your ad ahead of time? Does the media chosen allow for special promotions, such as including a coupon? Does the media fit with the image of the business? Does the media reach your target market? All of these questions must be answered, but unless the business has found a positive balance of reach versus cost, the media selection will not be efficient. Once again, COST becomes a major issue. In this lesson we will be focusing on how businesses determine if an advertisement is cost effective.

Lesson Objectives Identify media measurement techniques Explain techniques used to evaluate media Calculate media costs Explain promotional budget methods In this lesson, we will be examining what it costs to advertise in various media. Not only will you learn to calculate costs, but you will learn how to determine which media should be used. To understand media measurement, you first need to become familiar with several key terms. Let’s look at these terms.

Media Terms Audience Circulation Impression frequency Number of homes or people exposed to an ad Circulation Number of print media produced for sale and for subscriptions Impression frequency Number of times an audience sees, hears or reads an ad Cost per thousand (CPM) Media cost of exposing 1000 readers or viewers to an ad impression Comparison tool to determine cost effectiveness The audience is the number of homes or people that are exposed to an advertisement. The circulation is the number of print media that are produced for sale and for subscriptions in order to reach the audience. The impression frequency is the number of times an audience sees, hears or reads an ad. Sometimes the impression frequency can be controlled, such as when the advertiser specifies where and when an ad will appear on TV or on the radio. Sometimes it can’t be controlled, such as when an ad appears as users go to a website. The cost per thousand is a comparison tool that is used to determine the cost effectiveness of an ad. It translates the total cost into what it costs to expose 1000 members of the audience to an ad impression. Let’s look at some of the media rates and how they are calculated and evaluated for effectiveness.

Newspaper Rates Classified Ads Display Ads Grouped into categories Paid by word or line Display Ads More creative Generally larger Paid by “column inch” one column wide by one inch deep Inches X columns X $ per column inch There are 2 basic types of newspaper rates. Classified ads are grouped, or classified, into specific categories, such as help wanted, real estate, personals, or auto sales. They are effective for selling everything from services to houses to job openings. People or businesses that buy classified ads usually pay by the word or line of type. SHOW BULLETS: Display ads enable the advertiser to depict the product being advertised. Advertisers use a mix of art or photographs, headline, copy and a signature or logo of the product or business. Display ads are generally larger than classified ads. Their cost is based on the amount of space used and the ad’s position in the newspaper. While Classified ads are usually priced by the word or line, display ads are priced by the column inch. A column inch is equal to one column wide by one inch deep. Let’s look at an example of how a display ad would be priced.

Example #1 Cost is $25.00 per column inch Ad size is 4” long and 3 columns wide 4” Work this problem to see if you can determine the cost of this ad. Share responses. Review calculation.

Answer Allow student to work problem on board.

Other Factors Affecting Newspaper Ad Rates Day of week Run-of-paper rate vs. guaranteed or preferred rate Color vs. black and white The size is not the only factor affecting the cost of an ad. Let’s look at some other factors. Day of week: A newspaper may charge a Monday through Thursday rate of $25 per column inch, but on Friday the rate may be $30, Saturday, $32 and Sunday, $40. Why? What kind of pricing-based strategy is this? DEMAND Run-of-paper: Where an ad appears is another factor. Display ads are usually sold at run-of-paper rates, which allows the newspaper to choose where to put the ad. However, for a higher rate, the advertiser can choose to run ads in guaranteed or preferred locations. E.g if your product is targeted toward higher income, professional readers, you may choose to place your ad in the Business Section to target this audience. Or you may prefer to have your ad “above the fold”, which costs more.

Other Factors Affecting Newspaper Ad Rates Frequency (more = less) Open (non-contract) rate Contract rate - guarantees space purchased Circulation – size of audience The use of color also affects the price of ads. Newspaper ads are sold at BW prices, but for a higher price, advertisers may choose to add color. The frequency of the ad is also a factor that affects cost. Open or non-contract rates are used for businesses that advertisers infrequently. Businesses that advertise frequently in the newspaper may contract to guarantee that they will use a certain amount of space for a specified time period. They are granted contract rates, which are discounted from the open rate.

Cost per thousand (CPM) Cost of exposing 1000 readers to an ad Measurement that allows advertisers to compare costs Formula: Cost of ad X 1000 Circulation In order to determine if an ad rate is acceptable, advertisers will use the cost-per-thousand or CPM method in order to compare costs between media. Show formula. Circulation is the size of the audience. In the case of newspapers and magazines, it’s the number of newspapers sold individually and by subscription. In the case of radio or TV it’s the estimated size of the market that the broadcast reaches.

Example #2: Cost of ad = $1200 Circulation = 222,000 What is the CPM? Using the formula, what is the CPM for this ad? Share responses. Show answer. This means that it costs the advertiser $5.41 to reach 1000 people using this ad in this particular magazine or newspaper. Is this good? We don’t know because it’s a comparative measurement. The advertiser would have to look at the CPM of other ads to see which one is best.

Allow student to work problem on board.

Example #3: Calculate CPM Constitution Cost = $500 Circulation = 700,000 Tribune Cost = $400 Circulation = 300,000 Allow students to calculate and answer. All other things being equal, which newspaper would you choose?

Constitution Tribune Allow student to compute answer on board.

Media Rates and Measurements Businesses need to reach as many targeted customers as possible within limited budgets. It is important to calculate costs and measure media effectiveness to best reach a potential audience. Therefore media planners must concern themselves with the correct medium to use and its costs as well as how to measure overall advertising effectivness.

Selection of Media Reach vs. cost Ability to illustrate product Ability to present adequate selling message Flexibility for last-minute changes Ability to use with special promotions Image of business/desired image Coverage of targeted area What do you think businesses think about before they determine which media they are going to use for their advertising? SHARE RESPONSES. Let’s look at some of the issues that advertisers must consider Review each point: They must determine a good balance between the cost of the ad and the number of people that the advertisement will reach. Do you need visual/animation? Do you need lots of space for explanation, e.g.? Do you need flexibility or can you situate your ad ahead of time? Does the media chosen allow for special promotions, such as including a coupon? Does the media fit with the image of the business? Does the media reach your target market? All of these questions must be answered, but unless the business has found a positive balance of reach versus cost, the media selection will not be efficient. Once again, COST becomes a major issue. In this lesson we will be focusing on how businesses determine if an advertisement is cost effective.

Media Terms Audience Circulation Impression frequency Number of homes or people exposed to an ad Circulation Number of print media produced for sale and for subscriptions Impression frequency Number of times an audience sees, hears or reads an ad (used most often in online media) Cost per thousand (CPM) Media cost of exposing 1000 readers or viewers to an ad impression Comparison tool to determine cost effectiveness The audience is the number of homes or people that are exposed to an advertisement. The circulation is the number of print media that are produced for sale and for subscriptions in order to reach the audience. The impression frequency is the number of times an audience sees, hears or reads an ad. Sometimes the impression frequency can be controlled, such as when the advertiser specifies where and when an ad will appear on TV or on the radio. Sometimes it can’t be controlled, such as when an ad appears as users go to a website. The cost per thousand is a comparison tool that is used to determine the cost effectiveness of an ad. It translates the total cost into what it costs to expose 1000 members of the audience to an ad impression. Let’s look at some of the media rates and how they are calculated and evaluated for effectiveness.

Media Rates and Measurements Businesses need to reach as many targeted customers as possible within limited budgets. It is important to calculate costs and measure media effectiveness to best reach a potential audience. Therefore media planners must concern themselves with the correct medium to use and its costs as well as how to measure overall advertising effectivness.

Magazine Rates Key Terms Bleed – ads printed to the edge of page No white border 15-20% extra for bleeds Color rates if any color added Cost increases as color added Four-color – aka “Full-color ads” Premium position – where ad placed Let’s look at some factors affecting the cost of magazine ad rates. Magazine rates are based on circulation, the type of readership and production techniques. To calculate the actual cost of magazine advertising, you need to become familiar with terms used in the magazine advertising industry. Show first set of bullets. Bleed means that half- or full-page ads are printed to the very edge of the page, leaving no white border. Magazines generally charge between 15 to 20 percent extra for bleeds. Show example of ads with and without bleed. The lowest rates that magazines offer for display ads are black-and-white rates. Color rates are offered for color ads. Each time the magazine adds color to the ad, the rates increase. Why is full-color called “four color”? Red, blue, yellow, black can make any color when combined. 3. Premium position refers to ad placement. Ads placed in premium positions, such as on the back cover or the inside of the front cover are most expensive to buy. Premium position is similar to guaranteed or preferred rate for newspapers.

Key Terms (con’t) Frequency discounts Similar to contract rates for newspapers More frequency, less cost per issue Commission Percentage of sales given by magazine to advertising agency for placing the ad for the advertiser Generally, 15% of ad cost Like newspapers, magazines will offer discounts for advertising more frequently. Frequency discounts are offered to advertisers who run the same ad several times during the year. The magazine may publish an entire schedule of rates for the number of times during the year an advertiser contracts to advertise. The rate per issue decreases as the frequency increases. It’s a type of Quantity discount. Another discount is a commission – a percentage of sales given by the magazine to the advertising agency for placing the ad for the advertiser. A typical commission is 15%. Commissions, too, are also paid when an advertising agency is involved in the placement of the ad for their client. The commission is deducted from the cost of the ad in the form of a discount (like a finders’ fee).

Example #4: Four-color rate = $23,300 Bleed = 15% What is the ad cost? Let’s try some cost problems. Have students calculate, then show answer.

Allow student to compute answer on board.

Example #5: Four-color ad with bleed = $26,795 Commission = 15%

Allow student to compute answer on board.

Radio Advertising Network Radio Advertising Broadcast from studio to all affiliated stations Allows reach to several markets at once National Spot Radio Advertising Used by national companies Allows local station-by-station ad to reach specific markets Local Radio Advertising Used by local businesses Limited to specific geographic area Now let’s look at some key terms and factors that affect the cost of radio advertising. Show 1st set of bullets. WSB radio (750 am) is an example of network radio. Companies that sell in a variety of geographic markets will use this type of advertising. Show 2nd set of bullets. Similar to Network advertising, National spot radio advertising allows national companies to reach only those markets they want to reach. For example, if Goodyear Tire Company is having a sale only in the SE and NE, they could customize their ads through the national network, but only hit those spots for their sale. Local includes a small geographic area and is usually used by smaller, local businesses.

Key Terms in Radio Spot radio – refers to geographic area Spot commercial – refers to length of message: one minute or less Can be carried on network or spot radio Rates based on time of day a.m. and afternoon more expensive Run-of-schedule rates radio station decides when the ad will run Less costly Spot radio – reaching a certain “spot” in the market, geographically Spot commercial – length Why is morning and afternoon more expensive times to advertise on the radio? Share responses. Answer: more people in their cars at that time; therefore, larger listenership Run of schedule rates are like run-of-paper rates for newspaper. If an advertiser specified a certain time then it will cost more than if you let the radio station select the time. E.g. if you are a business that sells lawn and garden equipment, you might choose to advertise during a lawn and garden show. Specifying this slot will cost you more.

Television Rates Rates vary with time of day Prime-time 7-11 p.m. most costly Class AA time TV works similar to radio, but the prime time is in the evening from 7:00 pm to 11:00 pm rather than morning or afternoon. This is called Class AA time

Media Rates and Measurements In this lesson you have learned factors that affect the cost of advertising rates. You have learned how to calculate the cost per column inch for newspaper ads, and you have learned how to calculate the cost per thousand or CPM for magazine ads. You have also learned options that advertisers have such as bleed vs. non-bleed and placement position of an ad. All of these factors affect the rates that advertisers must pay.