Today’s assignment: determine the most efficient use of our client’s money
for a radio campaign.
Our market is a Southern city. Our client is a grocery store. Here is some
ratings information from four stations we’re considering:
|KCCC||Hot Adult Contemporary||15,800||193,900||27.00|
|KDDD||Adult Album Alternative||8,200||62,700||15.00|
One of the most common ways to compare audiences is to calculate the cost to
deliver the message to them… or more customarily to 1,000 of them. Let’s work
out the Cost Per Thousand (or CPM in AdvertSpeak) for each of the stations we’re
For broadcast media* CPM is equal to the cost of a single ad, multiplied by
1,000, then divided by the number of persons reached.
|KCCC||Hot Adult Contemporary||15,800||27.00||1.71|
|KDDD||Adult Album Alternative||8,200||15.00||1.83|
On the surface, it appears that KAAA is the most efficient buy. Howver, I
think we can all agree that a single exposure to an ad has little or no effect.
In a 1979 study commissioned by the Association of National Advertisers, Mike
Naples determined that the minimum frequency of exposure was 3 times in a 7 day period.
Humm. Do we have enough data to determine this?
Yes, we do.
It’s called TurnOver Ratio (T/O) and is simply the Cume Persons divided by
the Average Persons. Think of T/O as the number of DIFFERENT groups of people
who tune in to the station we’re calculating.
Shall we figure TurnOver Ratio for our stations?
|KCCC||Hot Adult Contemporary||15,800||193,900||11.64|
|KDDD||Adult Album Alternative||8,200||62,700||7.65|
Can we just multiply the T/O by 3 to figure the appropriate number of ads?
Almost. Due to the lack of perfect matching between groups, the actual
multiple is 3.29.
|KCCC||Hot Adult Contemporary||11.64||38|
|KDDD||Adult Album Alternative||7.65||25|
Let’s pause for just a moment and note that it takes only 25 ads per week to
effectively reach KDDD’s listeners, but to reach all of the listeners of KBBB
requires 59 ads.
Our original efficiency question requires two more steps. The
first takes into account the cost per ad.
|Letters||Format||Of Ads||Per Ad||Ad Cost|
|KCCC||Hot Adult Contemporary||38||27.00||1,026.00|
|KDDD||Adult Album Alternative||25||15.00||191.25|
Our final step is to calculate the “Optimized” schedule cost – the cost of
reaching the audience** of each station a minimum of three times each.
|KCCC||Hot Adult Contemporary||1,026.00||193,900||188.99|
|KDDD||Adult Album Alternative||191.25||62,700||327.83|