Budgeting & Media Buying
JMC 222 Media PlanningDepartment of Media & CommunicationHanyang University
CPM & CPP
� Which is more efficient?
� Comparing multiple vehicles requires a standardized criterion(e.g., price/unit)
A’s CPM = (23,500/2.0mil.) x 1000 = $11.75
B’s CPM = (13,500/1.2mil.) x 1000 = $11.25
Magazine Circulation Ad Rate
A 2.0 million $23,500
B 1.2 million $13,500
CPM & CPP
� CPM (Cost-per-thousand)
� The cost to deliver 1,000 people or homes
CPM = -------------------------------------- x 1000
� CPRP or CPP (Cost-per-rating-point)
� The cost to deliver 1% of the target audience
CPP = Ad unit cost / Rating points
Ad unit cost
# of prospects reached
CPM & CPP
� Print mediaFemale Homemakers: 69,405,000
Rating #Target $1p/4c
Reader’s Digest 26.6 18,461,730 124,730
TV Guide 25.4 17,628,870 112,900
Vogue 20.8 14,436,240 103,190
CPM($) CPP($)
Reader’s Digest 6.76 4,689.10
TV Guide 6.40 4,444.88
Vogue 7.15 4,961.06
CPM & CPP
� Broadcast media
Adults 35-44: 30,132,000
Rating $/Ad Unit
Days of Our Lives 3.7 20,000
CBS News 6.2 49,000
Drew Carey Show 11.9 135,000
CPM($) CPP($)
Days of Our Lives 17.94 5,405.41
CBS News 26.23 7,903.23
Drew Carey Show 37.65 11,344.54
CPM & CPP
� CPM based on Gross Impressions (GIs)
CPM
$8.33
$37.50
$25.00
Schedule TargetReached
Insertion GIs Total Cost
Spot TV 600,000 3 1,800,000 15,000
Magazine 400,000 5 2,000,000 75,000
Net TV 800,000 2 1,600,000 40,000
CPM & CPP
� CPP based on Gross Rating Points (GRPs)
CPP
$142.86
$500.00
$444.44
Schedule Rating Insertion GRPs Total Cost
Spot TV 35 3 105 15,000
Magazine 30 5 150 75,000
Net TV 45 2 90 40,000
CPM Comparison by Media
Medium 2004(Won) 2005 2006 2007
KBS-2TV 4,171 4,273 4,896 5,451
MBC 3,658 4,595 5,298 4,956
3,985 4,105 4,806 5,514
Top 3
dailies
17,976 18,236 19,633 19,713
Top 7
dailies
72,488 78,287 87,555 83,294
61,009 61,464 63,776 67,450
SBS
Top 4
economic
dailies
CPM & CPP
� CPM is used to compare the efficiency of individual vehicles
E.G., “Running Man” vs. “SBS 8 News”
� CPP is the tool most often used to calculate the cost of an entire media plan
E.G., Broadcast plan A vs. B
� CPM and CPP must be used on a “relative” basis
E.G., 5,000 (won) CPM becomes meaningful only in comparison to other CPMs like 4,000 and 7,000
CPM & CPP
� It is important to express CPM and CPP in dollars and cents
E.G., 150 CPM (x); $150.00 CPM (o)
� Be cautious about accepting/rejecting media vehicles only on the basis of CPM/CPP
� CPM/CPP reflects only cost efficiency of media; media/vehicles are not equivalent in terms of the quality of impact
CPR
� CPR (Cost-per-reach)� The cost to deliver 1% reach during a period
CPR = --------------------------------------
Ex) Total ad cost spent for 2 weeks = 24 million wonTotal reach for 2 weeks = 50%
CPR = 24,000,000 / 50 = 480,000 won
Total ad cost spent for 6 weeks = 72 million wonTotal reach for 6 weeks = 75%
CPR = 72,000,000 / 75 = 960,000 won
Total ad cost/period
Total reach/period
CPR
� CPR is often used to evaluate the efficiency/inefficiency of an entire media schedule
� CPR tends to increase as the total ad cost increases� CPR is equivalent to the slope of a tangent line to a cumulative reach function
Reach
time
F(x)
F’(x)
Budgeting
� Media budget allocation� By media types� By time periods� By national vs. local coverage
� Budget allocation by media types
Toyota (%) Industry (%)
Network TV 31.70 28.44
Spot TV 28.04 32.05
Syndicated TV 0.58 1.16
Cable TV 7.87 8.03
Total (TV) 68.19 69.68
Budgeting
� Budget allocation by media types
� Toyota’s ad budget is allocated primarily to TV and magazines. The remaining portion (5.89%) can be allocated to other media types like the Internet and brochures
Toyota (%) Industry (%)
Magazines 25.52 18.56
Sunday Mag. 0.40 0.34
Total (Mag.) 25.92 18.90
TV + Mag. 94.11 88.58
Budgeting
� Budget allocation by time periods
0
5
10
15
20
25
30
35
40%
of
Bu
dg
et
Q1 Q2 Q3 Q4
If your product is a seasonal product with large sales fluctuation
Budgeting
� Budget allocation (media x time)
Q1 Q2 Q3 Q4
(30%) (15%) (45%) (15%)
Network TV (30%) $2.52 mil.
Spot TV (30%)
Cable TV (8%)
Synd. TV (0%)
Magazines (20%)
Internet (8%) $.672 mil.
Outdoor (4%)
If your budget is $28 million, $28 million x .30 x .30 = $2.52 million
If your budget is $28 million, $28 million x .30 x .08 = $.672 million
Budgeting
� Budget allocation by time periods
� Network TV budget in Quarter 1
� Quarter budget: $2,520,000
� Monthly budget: $2,520,000/3 = $840,000
� What to expect from $840,000?
� Prime $840,000/$20,000 CPP =
� Daytime $840,000/$6,500 CPP =
� Late fringe $840,000/$17,000 CPP =
42 GRPs
129 GRPs
50 GRPs
Budgeting
� Media flowchart: An example
March April May June July Aug. Sept. Oct. Nov. $ (000)
Net TV 4,000
Cable TV 4,000
Spot TV 1,500
Spot Radio 1,000
Magagine 2,500
Newspaper 1,500
Outdoor 600
Internet * 2,000
Promotions
% Budget 15 8 8 8 8 8 15 15 15
$ (000) 2,565 1,368 1,368 1,368 1,368 1,368 2,565 2,565 2,565 17,100
Any question?