MEDIA Budgeting & Planning

Click to edit Master subtitle style Presented By: Faizan Ahmed Giriraj Chandak Karishma Km. Priti
10/3/12

Budgeting

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It is a simple process, provided one accepts the premise that the best (optimal) level of any investment is the level that maximizes profits. This assumption leads to a simple rule for establishing advertising budgets: continue to invest in advertising as long as the marginal revenue from that the investment exceeds the marginal cost.

Top Global Marketers’ Advertising Spending

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Advertiser P &G Unilever General Motors Toyota Motor corp. Ford Motor co.

Ad spending (in $ million) 4,479 3, 315 3,218 2,405 2,387 Source : Advertising Age, November 10, 2003

Budgeting Methods

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In order to accurately predicting sales response to advertising, companies typically set budget by using judgment, applying experience with analogous situations, and using rules of thumb. Percentage-of-Sales Budgeting The method of objective-and-task Budgeting Budgeting via the competitive parity method Budgeting via the Affordability Method

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Percentage-of-Sales Budgeting 10/3/12
A company sets a brand’s advertising budget by simply establishing the budget as a fixed percentage of past (last year’s) or anticipated(next year’s) sales volume. Example: Company allocates 3 percent of anticipated sales to advertising and the company projects next year sales for a particular brand to be $ 100 crores. Its advertisement budget would be $ 3 crores.

Objective-and-task Budgeting
It follows several steps that begin with

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identifying and ranking specific objectives that a business wants to accomplish through advertising. determine how they will meet their objectives, and which tasks it will require estimates for the cost of performing these tasks, leaders can allocate money within the marketing budget to each task that seeks to fulfill an objective.

Competitive parity method 10/3/12
Examining how much competitors are spending on marketing (and promotion) and matching or exceeding that spend. Advocates of the competitive parity method say that it helps firms determine what their industry as a whole feel needs to be spent on marketing. Example: If HUL is using ‘x’ amount for promotions of its luxury soap brand, P&G will also allocate an amount almost equal to ‘x’ for a similar brand.

Affordability Method

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Advertising-expense budgeting method based on what a firm's owner, or marketing department, believes the firm can afford to spend on marketing. Since such budgets are not based on any definite objective, the firm may spend too little or too much relative to its needs. Or we can say that a firm spends on advertising only those funds that remains after budgeting for everything else

Media planning:

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Media planning is generally the task of a media agency and entails finding the most appropriate media platforms for a client's brand or product. The job of media planning involves several areas of expertise that the media planner uses to determine what the best combination of media is to achieve the given marketing campaign objectives. In the process of planning the media planner

Model of the Media-Planning 10/3/12 Process

Media Planning Process:

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The media strategy consists of four sets of interrelated activities:

Selecting the target audience Specifying media objectives Selecting Media categories and vehicles Buying media

Selecting target audience

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Effective media strategy requires, that the target audience be pinpointed. Four types of information are used in segmenting target audience:
Segmentation Factors

Buyographics

Geographic

Demographic

Lifestyle/ Psychographics

Media Objectives:
Reach Frequency

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Weight

Issues in Setting Media Objectives

Continuity Cost

Recency

Media Objectives:

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Reach: % of target audience with opportunity for exposure to media vehicle(s) or media plan in a given time frame. Frequency: number of times target is likely to be exposed to the ad within a specified time period. Weight: GRPs, TRPs

GRP are calculated by multiplying a vehicle’s rating by the OTS, or number of insertions of an advertisement.

GRPs = Reach x Frequency

The sum of the ratings of a specific demographic segment may be called Target Audience GRPs or more simply TRPs.

TRPs = GRP x % of TG

Continuity: Is the exposure pattern or schedule used in the ad

Media Objectives:
Recency Theory:

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It states that consumers have selective attention processes as they consider advertisements. It suggests that it is a waste of money when ads reach either individuals or businesses that are not in the market for a particular product or have no interest in it.

Cost:

Cost per rating point:

It is a relative measure of the efficiency of a media vehicle relative to a firm’s target market. CPRP= cost of media buy/ vehicle’s rating

Cost per thousand (CPM) = cost of reaching one thousand

Hypothetical media plan 10/3/12 information for select magazines
Magazine
Cost for 4-color full page ad

Total readership (000’s)

CPM total

Target market Rating Cost per rating point (CPRP)

National geographic Newsweek People

3,46,080 780,180 605,880

21,051 15,594 21,824 5,733 13,583

16.44 50.03 27.76 1.98 71.11

16.1 12.2 9.4 2.4 10.5 15.9 2.3

21,496 63,949 64,455 4,738 91,994 83,288 79,659

Southern living 11,370 Sports illustrated Time Travel & leisure

965,940 1324282 183,216

1,324,282 61.69 2,205 83.09

Factors Influencing Media10/3/12 Planning Decisions:

Target Market Profile. Looking at Brand/Product Dynamics. The Creative Execution. Budget Considerations and Media Deals. The Competitive Situation. Availability and Timing Considerations. Cost Efficiency, cost of reaching 1,000 members of target audience with media vehicle.

Neilsen’s Example

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Nielsen Cross-Platform Homes - Extended Screen Ratings Online Measurement - Nielsen

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