How Brands Can Figure Out Their Real Cost for Media

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This is our baby sitters farm in Mad River Valley, Vermont

This has been simmering for awhile. I have noticed since transitioning from B2B direct sales to Advertising/Marketing that my new industry uses Jargon to sell books, to mystify ignorant people, and to fleece clients. When I found out Brands paid for impressions my reaction was ‘Are these Brands really that dumb?’ The answer has been yes and no.

Do you believe the Nielsen Ratings? Facebook Stats? Billboard Views? Print Ads Seen? The job of the media Channel is to maximize their profits just like it is for your business. Figure out the real value for your business of all these activities. To get decent statistics you just need to know basic math.

The two main variables are:

  1. Did they see my ad?
  2. How much is a sale conversion worth?

I preach finding the value of your sales and marketing channels. The price you are charged isn’t the real price you pay. If a Magazine tells me they have 1 million issues sold each month and claim 2.9 readers per issue (industry standard who came up with this?) So in effect 2.9 million MIGHT see my ad. and that the CPM rate is using easy numbers $100. And my cost per ‘Impression’ is $0.10 each. That is what my invoice will say after I run my ad.

Billions of dollars in deals are done this way. On paper. The agency will do all their accounting based on this. They sold me 2.9 million impressions at $0.10 each.

The smart Brand will not. The smart Brand will never hire someone to do marketing who places the ad and sends back the exact same accounting. In fact each Brand should do their own, and each time this should come out differently because different people will believe/assume different things.

This example is for determining how many people actually saw my ad. My next post will cover valuing conversions.

Brand places full page Ad is placed on page 5.

Questions:

  1. How many people do you think actually read the issue per unit?
  2. Is there value for the same person to see the ad more than once?
  3. How many unique readers saw the ad.
  4. What percentage of reads saw your ad.
    1.  Each page has a different likelihood of your ad being seen. For example you are on page 89 out of 102. How many get that far? Or your ad is across from a full age Bikini Photo in say Maxxim. That might get seen many times?

This Brand has their own rule of thumb for this Magazine: 1.9 readers per issue. 1.3 unique readers.

If the ad has added impact if seen twice or more they will use 1.9 as their base number. If not 1.3 (or something in between). So now your readership is between 1.3 million and 1.9 million and you discount the CPM by the % lower your estimated readership is.

2.9 million / 1.3 million = 2.23 x $100 = $223/CPM

2.9 million / 1.9 million = 1.52 x $100 = $152 CPM

This can be done with all media channels. You decide what you believe. When I discuss conversions there is similar variables. What kind of Ad/Content/Campaign? What are you selling? What is a sale worth to you?

So the Magazine might say the CPM is $100 but if you respond ‘No it is $152 for us’, you are right not them.

If you have a question about valuing the real cost of a media placement please contact me.

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About chiefalien

Howie Goldfarb with 20 years of Sales and Marketing experience founded Blue Star Strategic Marketing in central Vermont to serve as the objective and strategic adviser of brands to help them grow and thrive. His Degree in Finance and 14 years of B2B sales to Fortune 500 companies gives him a CFO’s view of marketing. Thus bringing a dose of reality to the confusing world of jargon, spin, and hype. Also playfully known as the Chief Alien of Blue Star Strategic, Howie relishes his role as an industry outsider. A native New Yorker and former Angelino, he currently lives in the Green Mountains of Vermont and is still seeking his first moose sighting. His passions are living life, art, music, the outdoors, he tries to cook and loves the Vermont Fresh Network – local sustainability initiatives like farm to table and buying local.
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One Response to How Brands Can Figure Out Their Real Cost for Media

  1. Pingback: How to Estimate your Cost per Sales Conversion | Space Agency Notes

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