Broadcast advertising 1

Broadcast AdvertisingBroadcast Advertising

Advertising DefinedAdvertising Defined

• Non-personal CommunicationNon-personal Communication

• Usually paid forUsually paid for

• By an identified sponsorBy an identified sponsor

• Persuasive in naturePersuasive in nature

• About products, ideas or servicesAbout products, ideas or services

• Through various mediaThrough various media

Advertising in the Marketing Advertising in the Marketing MixMix

• ProductProduct– Quality, package, appearance, etc.Quality, package, appearance, etc.

• PricePrice– Deep discount to premiumDeep discount to premium

• PlacePlace– Distribution channelsDistribution channels

• PromotionPromotion– POP, personal selling, PR, AdvertisingPOP, personal selling, PR, Advertising

Advertising ClassifiedAdvertising Classified

• By audienceBy audience– ConsumerConsumer– Business to BusinessBusiness to Business

• IndustrialIndustrial• TradeTrade• ProfessionalProfessional• FarmFarm

Advertising ClassifiedAdvertising Classified

• GeographicallyGeographically– NationalNational– RegionalRegional– LocalLocal– InternationalInternational

Advertising ClassifiedAdvertising Classified

• By mediumBy medium– ElectronicElectronic

• RadioRadio• TelevisionTelevision• CableCable• InternetInternet

Advertising ClassifiedAdvertising Classified

• PrintPrint– NewspaperNewspaper– MagazineMagazine

• OutdoorOutdoor– BillboardBillboard– TransitTransit

Advertising ClassifiedAdvertising Classified

• SpecialtySpecialty– NoveltiesNovelties– POPPOP– Product placementProduct placement– Etc.Etc.– Etc.Etc.– Etc.Etc.

Advertising ClassifiedAdvertising Classified

• By functionBy function– Product -vs- non-productProduct -vs- non-product– Commercial -vs- non-commercialCommercial -vs- non-commercial– Direct action -vs- non-direct actionDirect action -vs- non-direct action

The advertising industryThe advertising industry

• AgenciesAgencies

• The media The media

• The advertisersThe advertisers

• The support services and suppliersThe support services and suppliers

• The regulatorsThe regulators

• The consumersThe consumers

Advertising HistoryAdvertising History

• Functions of advertising:Functions of advertising:– Identify products and differentiate themIdentify products and differentiate them– Communicate information about productCommunicate information about product– Induce consumers to try the productInduce consumers to try the product– Increase product usageIncrease product usage– Build brand preference and loyaltyBuild brand preference and loyalty

Advertising HistoryAdvertising History

• Dates to 1600sDates to 1600s– British newspapers paid noticesBritish newspapers paid notices

Advertising HistoryAdvertising History

• Ben Franklin is credited with introducing Ben Franklin is credited with introducing white space and illustrationswhite space and illustrations

Advertising HistoryAdvertising History

• Magazines became first national Magazines became first national mediummedium

• Volney Palmer – first ad agency – 1841Volney Palmer – first ad agency – 1841– Bought newspaper and magazine space in Bought newspaper and magazine space in

large volumes at discount.large volumes at discount.– Marked up 15%Marked up 15%

• N. W. Ayer – first full service agencyN. W. Ayer – first full service agency

Broadcast Advertising HistoryBroadcast Advertising History

• Out of the debate on how to pay for Out of the debate on how to pay for broadcasting came…broadcasting came…

• ““Toll” broadcastingToll” broadcasting– WEAFWEAF– AT&T station AT&T station

• ““telephone philosophy of paying toll for long distance telephone philosophy of paying toll for long distance calls.calls.

• First commercial broadcast First commercial broadcast • http://www.old-time.com/commercials/1stcom

mercial.html

Broadcast Advertising HistoryBroadcast Advertising History

• Post WWIPost WWI– Radio grewRadio grew– Lifestyles improvedLifestyles improved– Spending increasedSpending increased– Radio networks emergedRadio networks emerged– Advertising stressed the “Unique Selling Advertising stressed the “Unique Selling

Proposition”Proposition”

Broadcast Advertising HistoryBroadcast Advertising History

• Television explodes post WWIITelevision explodes post WWII– Radio programs shift to televisionRadio programs shift to television– Radio adopts musical formatsRadio adopts musical formats

• Advertising costs increaseAdvertising costs increase• Sponsorships give way to participations Sponsorships give way to participations

or “spots”or “spots”• By the 1960s – advertising entered the By the 1960s – advertising entered the

“image era”“image era”

Broadcast Advertising HistoryBroadcast Advertising History

• Depicting a lifestyle – not product Depicting a lifestyle – not product informationinformation

• Emotional appeals – not logical appealsEmotional appeals – not logical appeals

• Remember the package – not the nameRemember the package – not the name

• Focus on benefits to consumerFocus on benefits to consumer

The contemporary advertising The contemporary advertising industryindustry

• Complicated by the proliferation of Complicated by the proliferation of mediamedia

• Audiences are splinteredAudiences are splintered– NarrowcastingNarrowcasting

• Clutter and competitionClutter and competition

• High costs of media drive demand for High costs of media drive demand for researchresearch

Effects of advertisingEffects of advertising

• On pricesOn prices

• On competitionOn competition

• On product imageOn product image

• On demandOn demand– ““Creating” demands?Creating” demands?– Bran, fiber, carbs, cosmetics, vitamins, etc.Bran, fiber, carbs, cosmetics, vitamins, etc.– Slow a declining market – “repositioning”Slow a declining market – “repositioning”

Media strategyMedia strategy

• Buying patternsBuying patterns– Weekly cyclesWeekly cycles– Monthly cyclesMonthly cycles– Annual cyclesAnnual cycles– Seasonal productsSeasonal products

• Products/service with fixed maximum Products/service with fixed maximum capacitiescapacities

Media strategyMedia strategy

Media strategyMedia strategy

Media strategyMedia strategy

Media strategyMedia strategy

Media strategyMedia strategy

• ReachReach– Unduplicated exposures – gross Unduplicated exposures – gross

impressionsimpressions– Number of different people exposed to the Number of different people exposed to the

messagemessage

• FrequencyFrequency– Average number of exposuresAverage number of exposures– How many times audience is exposed to How many times audience is exposed to

messagemessage

Media strategyMedia strategy

• Best frequencyBest frequency– Outdoor, newspapers, magazinesOutdoor, newspapers, magazines

• Best ReachBest Reach– Network advertising, magazinesNetwork advertising, magazines

• Best combinationBest combination– RadioRadio

Media strategyMedia strategy

• Calculating cost efficiencyCalculating cost efficiency

• Cost per thousand (CPM)Cost per thousand (CPM)– How much it costs to deliver 1000 gross How much it costs to deliver 1000 gross

impressionsimpressions– How much to reach 1000 listeners, How much to reach 1000 listeners,

viewers, readers, households, etc.viewers, readers, households, etc.

CPMCPM

2 spots @ $8.00 each2 spots @ $8.00 each1 reaches 4500 QHP1 reaches 4500 QHP1 reaches 3500 QHP1 reaches 3500 QHP

CPMCPM

• 4500 + 3500 = 8000 gross impressions4500 + 3500 = 8000 gross impressions• 2 spots @ $8 = $16 – cost of the schedule2 spots @ $8 = $16 – cost of the schedule

• $16$16 ÷ ÷ 8000 =8000 =

• .002 .002

• .002.002¢ ¢ per personper person

• X 1000 = 2.00 X 1000 = 2.00 • $2 per 1000 QHP$2 per 1000 QHP

CPMCPM

Number of spots Cost per spot Total cost QHP Total QHP1 80 34008 10 29134 10 5825

Totals

CPMCPM

Number of spots Cost per spot Total cost QHP Total QHP1 80 80 3400 34008 10 80 2913 233004 10 40 5825 23300

Totals $200 50000

200 200 ÷ 50000 = .004÷ 50000 = .004

CPMCPM

Number of spots Cost per spot Total cost QHP Total QHP4 11 265008 15 3000

10 19 4700Totals

CPMCPM

Number of spots Cost per spot Total cost QHP Total QHP4 11 44 26500 1060008 15 120 3000 24000

10 19 190 4700 47000Totals $354 177000

354 354 ÷ 177000 = .002÷ 177000 = .002

Waste circulationWaste circulation

• Reaching people who are not the Reaching people who are not the desired audiencedesired audience

• Demographics = age, gender, incomeDemographics = age, gender, income

• Psychographics = “lifestyle”Psychographics = “lifestyle”

Audience researchAudience research

• How we know the size of the audience How we know the size of the audience reachedreached

• Rating = percentage of all possible Rating = percentage of all possible viewers or listenersviewers or listeners

• Share = percentage of people using Share = percentage of people using mediamedia

• Share is always a larger numberShare is always a larger number

Audience researchAudience research

All possible viewers or listenersAll possible viewers or listeners

100%100%

Audience researchAudience research

TVHHTVHH

100%100%

Audience researchAudience research

HUTHUT Not Not viewingviewing

HUT level = 50HUT level = 50

50%50%

Audience researchAudience research

Tuned Tuned to our to our spotspot

Not Not viewingviewing

Audience researchAudience research

25% of TVHH – 50% of HUT25% of TVHH – 50% of HUT

Audience researchAudience research

Rating = 25 Rating = 25 Share = 50Share = 50

Audience research termsAudience research terms

• Gross ratings points Gross ratings points

• Average quarter hour people (QHP)Average quarter hour people (QHP)

Audience researchAudience research

• Began in the 1920s with radio Began in the 1920s with radio listenershiplistenership

• Archibald Crossley personal interviewsArchibald Crossley personal interviews

• C. E. Hooper – C. E. Hooper – Hooperatings Hooperatings – personal– personal

• A. C. NielsenA. C. Nielsen– DiariesDiaries– AudimeterAudimeter

AudimeterAudimeter

A.C. NielsenA.C. Nielsen

• Now only television ratingsNow only television ratings

• Use diaries, audimeters and “people Use diaries, audimeters and “people meters”meters”

• Meters used for “overnights”Meters used for “overnights”

A.C. Nielsen terminologyA.C. Nielsen terminology

• Total survey area (TSA)Total survey area (TSA)

• Designated market area (DMA)Designated market area (DMA)– Every county in the U.S. assigned to a Every county in the U.S. assigned to a

DMADMA

• Metro survey area (MSA)Metro survey area (MSA)

Market areasMarket areasTSATSA

TSATSA

DMADMA

DMADMA

TSATSA

ArbitronArbitron

• Radio researchRadio research

• DairiesDairies

• Developing the “personal people meter” Developing the “personal people meter” (PPM)(PPM)

Arbitron terminologyArbitron terminology

• Total survey area (TSA)Total survey area (TSA)

• Area of Dominant Influence (ADI)Area of Dominant Influence (ADI)– Every county assigned to an ADIEvery county assigned to an ADI

• Metro survey area (MSA)Metro survey area (MSA)

Problems in audience Problems in audience researchresearch

• Poor return rates of diariesPoor return rates of diaries

• Absenteeism – controlled by PMsAbsenteeism – controlled by PMs

• HypingHyping

• What does “listening” or “viewing” really What does “listening” or “viewing” really mean as it relates to advertising?mean as it relates to advertising?