Transcript MEDIA COSTS

MEDIA COSTS
Newspaper Rates
• Classified 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)
Example #1
• Cost is $17.00
per column
inch
• Ad size is 4”
long and 3
columns wide
ANSWER
4” X 3 columns X $17
12 column inches X $17
$204.00
Factors Affecting Newspaper
Rates
• Run-of-paper rate vs. guaranteed or
preferred
• Color vs. black and white
• Frequency (more = less)
– Contract rate vs. Open (non-contract)
rate
– Contract guarantees space purchased
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
Example #2:
• Cost of ad =
$1200
• Circulation =
222,000
• What is the
CPM?
ANSWER
Cost of ad X 1000
Circulation
1200 X 1000
222,000
1,200,000 = $5.41
222,000
Example #3:
All other things being equal, which
newspaper would you choose?
Constitution
• Cost = $500
• Circulation = 500,000
Times
• Cost = $400
• Circulation = 300,000
Cost Results
Constitution
Tribune
$500 X 1000
500,000
$400 X 1000
300,000
500,000
500,000
$400,000
300,000
$1.00 per 1000 readers
$1.33 per 1000 readers
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 is added
– Price increases as color added
– Four-color – a.k.a. “Full-color ads”
• Premium position – where ad placed
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
• Cash Discount (2/10 net 30)
Example #4:
ANSWER
• Four-color rate =
$23,300 x .15 = $3,495
$23,300
• Bleed = 15%
$23,300 + $3,495 =
• What would the
ad cost?
$26,795
Example #5:
• Four-color ad
with bleed =
$26,795
• Commission =
15%
• Cash discount is
2/10 net 30
ANSWER
$26,795 X .15 =
$4,019.25
$26,795 - $4,019.25 =
$22,775.75
$22,775.75 X .02 =
$455.52
$22,775.75 - $455.52
= $22,320.23
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
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
Television Rates
• Rates vary with
time of day
– Prime-time 7-11
p.m. most costly
– a.k.a. Class AA
time
Selection of Media
• Reach vs. cost
• Ability to illustrate product
• Ability to present adequate selling
message
• Special problems with media?
• Flexibility for last-minute changes
• Ability to use with special promotions
• Image of business/desired image
• Coverage of targeted area