Transcript Lecture 9 - Putting it into Practice

INTEGRATED MARKETING
COMMUNICATIONS
LECTURE 9: PUTTING IT INTO
PRACTICE
Objectives
At the end of this input the participant will:
• Understand the issues behind media strategy
& scheduling in relation to spend
• Appreciate key methods of arriving at
budgets (bottom up & top down)
• Appreciate theoretical approaches to spend
• Understand the differences between
advertising and other communication
elements when dealing with appropriation
and budgets
The Media Planning Process
for each Target
Objectives
1. Reach
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2. Frequency } Week 8
3. Weight
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4. Allocation/continuity/
scheduling
5. Expense/cost
4. Allocation
• How should the budget be spent?
• The ‘timetabling’ of the media
– Continuous i.e. spread resources equally over the
time period of the campaign
– Burst i.e. concentrated periods of activity, and others
with no activity
– Drip i.e. intermittent (on/off) activity
– Flighting, short, then heavy intermittent periods of
activity
– Pulsing: some activity at all times, but periods where
the intensity is increased
Media scheduling
• Schedules will often be constructed around
the idea of pulsing. A key question therefore
is ‘how many exposures do we need to
achieve our objectives’, the answer to which
will depend on the nature of the objectives.
– Krugman’s ‘rule of thumb’ of 3
– Naples’ ‘optimal frequency of exposure of 3
5. Cost
• Two main costs to consider:
– Media costs i.e. buying airtime, space etc
– Production costs – making the advert
• Don’t compare actual costs of different
media/promotools, use a CPT measure
Media costs
• Some key issues related to cost/media
choice:
– Creative content has an effect on choice/cost of
media
– Effectiveness would have to be weighted in some
way to be entered into any calculation.
– Audience Duplication
– Loss of domination (if spread amongst too many
different media)
– Additional production costs (if many media used)
– The importance of concentration & repetition
Media strategy
• The media strategy document should
show how media will be selected to
meet objectives.
– For example: "Radio spots will be
purchased every other week to extend
support throughout the period up to and
immediately after Xmas"
Media strategy
• Strategy statements should include
rationale for the use of one medium
rather than another.
– For example: "Television will be used as a
primary medium because it offers the
optimum combination of mass coverage
flexibility in time and place and meets the
creative requirements"
The media plan
• This shows how media strategy is to be
executed in terms of specific purchases. For
example, six one half pages are
recommended in Good Housekeeping
magazine because:
– It provides concentrated coverage of the target
market
– It has minimal duplication with other
recommended media
– The Good House Keeping seal of approval is an
asset in this product field
The media plan
• When evaluating the media plan two
areas for consideration are important as
alluded to earlier:
– the suitability of the various media
categories and vehicles;
– audience research - this should be an ongoing process, especially in view of new
technology and fragmentation
Spend Issues
Appropriation
• Setting budgets is an emotive topic
• ‘Half the money spent on advertising is wasted … the problem is
knowing which half’ attributed to Lord Leverhulme
• Are advertising and other marcomms activities seen as an
investment or a variable cost?
• A key question is 'what should the money be used for?' Should
the organisation spend money on building brand images or
selling products, or both? Such objectives are likely to be
achieved by particular elements of the communication's mix.
This has a bearing on how much is spent on other elements
Appropriation trends
• What is happening to spend overall? E.g.
Brandrepublic (20/4/05) report DM now
has a 23% share of all marketing spend
• UK adspend up 3.3% 2004 (brandrepublic
16/2/05) yet 43 of top 100 cut above the
line spend
• UK top advertiser is P and G (£159m in
2004)
Spend Issues
Budgets
• Budgets are to do with timing of spread of
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financial resources
The size in the end depends on objectives
There is no simple answer to the question
"How much do we spend?”
Approaches to budget setting:
issues
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Custom and practice: what has worked before
Power and politics: e.g. finance and marketing
Persuasiveness of marketing managers
Use of ‘expert’ opinion e.g. agencies
Pressures on managers to set timely budgets
and to prove performance and meet targets
Budget approval mechanism and who is involved
Allocation of spend to each promotool
Spend Issues
The key methods employed are:
• Strategy-based approaches (bottom-up)
• Predetermined approaches (top-down)
• Theoretical approaches
Strategy based approach
• What do we have to spend to achieve our objectives?
• This is also called Task/objective approach i.e. budget
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is based on the objectives that have been set and the
strategies that have been developed to achieve those
objectives
Seen as the ‘best’ approach by many, though difficult to
implement/operationalise
May not be achievable if unrealistic in terms of resources
(objectives or strategies may have to be revised in the
light of this)
Often costs not fully known until end of campaign –
accountants nightmare!
Predetermined approaches
• Top down i.e. set in advance of
objectives/strategies as part of annual
financial planning process
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Inertia
Affordable
Arbitrary
Percentage of sales
Historical
Advertising to sales ratio
Comparative parity
Predetermined: inertia
• No/little change, keep budget the same
• Fairly unusual as most marketing
managers would at least ask for an
‘inflation’ raise (media inflation is often
greater than economic inflation measures)
Predetermined: affordable
• A ‘cost’ (not investment) based approach
• A product oriented, not marketing oriented
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approach
Usually not based on market analysis
Can be viewed as a cautious approach
Difficult to determine budget for new product
launches where considerable investment may
have already been made in product developemnt
Predetermined: arbitrary
• Based on judgement or ‘gut feel’
• Intuitive approach that can be flexible and
responsive to market changes
• Not usually based on analysis, other than
that which is arrived at from experience
Predetermined: percentage of sales
• Links marketing expenditure to sales
• Can use industry averages to set budget –
useful with new market entries as a guide
• Industry averages can range from 1% to
25% (Picton and Broderick) e.g.
– Games and toys: 15%
– Grocery: 3%-7%
– Cars: 5%
Predetermined: historical
• What has been done in the past
• The only increase may be where increases in
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media costs have to be followed, or in line
with inflation.
This might be allied to the affordable
approach, which has clear drawbacks, and is
based on what is left after costs and profit are
subtracted from revenue.
Predetermined: advertising to sales
ratio
• Advertising to sales ratio is based on
maintaining a set ration between the
advertising weight and sales volume
Predetermined: comparative parity
• Competitive parity i.e. spend the same as the
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competition. But trade/consumer mix has to
be taken into consideration so that like with
like is compared and similarly with the
qualitative aspect of the message.
If this is equal then share of voice may be
considered the best option since the weight of
adspend will be the important factor.
Theoretical approaches
• Theoretical approaches include marginal
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analysis and sales response curves.
Overall these are of little use, principally
because they are not real and in any event
the information required is impossible and/or
too expensive to acquire.
The simple, concave sales response curve
follows the law of diminishing returns where
sales and expenditure relationship is
expressed
Theoretical approaches
• The idea that it is possible to predict how
many extra sales can be had from an extra
unit of spend where the point will be reached
where there is equilibrium i.e. marginal
revenue = marginal costs, and p1 is the
optimal level of promotional expenditure.
Theoretical approaches
• There are too many assumptions not least
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of all that promotion is the only cost or
influence on sales, that there is no influence
from competitive action and reaction.
Communications cannot be varied smoothly
and continuously as assumed and not all
messages are standardised
Any Questions?
Next week we start the final
theme: Control