BUDGET CONSIDERATION

ANSHUL RENOLD

DEEKSHA.G

HARISH . B

PREM KUMAR

UDIT. G

INTRODUCTION

1) Budget Consideration?

• Cost Estimating

2) How can a value of an media strategy be determined?

• By how well it delivers the message to the audience with the lowest cost and the least waste. The factors that affect the decision are reach,frequency and availability.

ABSOLUTE COSTAdvertising and promotional costs can be categorized in two ways.

ABSOLUTE COST

of the medium or vehicle is the actual total cost required to place the message. Example: a full page 4 color ad in Newsweek magazine costs about $2,10,000

COSTS

RELATIVE COSTIs the relationship between the price paid for advertising time or space and the size of the audience delivered.

RELATIVE COST

Why Relative Costs are important?

Because managers must try to optimize audience delivery within budget constraints.

Alternatives are available for delivering message therefore the advertiser must evaluate the cost associated with these choices

DETERMINING RELATIVE COSTS OF MEDIA

1) Cost Per Thousand (CPM).

2) Cost Per Ratings Point (CPRP).

3) Daily Inch Rate.

CPM is used by Internet marketers to price ad banners. Sites that sell advertising will guarantee an advertiser a certain number

of impressions (number of times an ad banner is downloaded and presumably

seen by visitors.), then set a rate based on that guarantee times the CPM rate.

What is Cost Per Thousand (CPM).

CPM =Cost of ad space (absolute cost)× 1,000/circulation.

2) Cost Per Ratings Point (CPRP).

The cost of reaching one percent of the target population. The cost per rating point is used to estimate the cost for TV advertising on several shows.

CPRP =Cost of commercial time/Program rating

3. What is Daily inch rate.

For newspapers, cost effectiveness is based on the daily inch rate, which is the cost per column inch of the paper.

Television: Cost of 1 unit of time × 1,000/ Program rating Newspapers: Cost of ad space × 1,000/Circulation

EVALUATION AND FOLLOW UP

Marketers must consider two factors to measure the effectiveness of media plan

(1) How well did these strategies achieve the media objectives?

(2) How well did this media plan contribute to attaining the overall marketing and communications objectives?

BUDGETING FOR YOUR ADVERTISING CAMPAIGN

 If there is a golden rule for running an advertising campaign, it is that

you have to stick to it.

Sustained Advertising = Recognition = Trust = Sales.

Advertising campaign is a long-term investment that takes time to show a return and budget must reflect this reality.

METHODS COMPANIES USE TO SET THEIR ADVERTISING CAMPAIGN BUDGETS

1. The Percent of Sales Method: The advertising campaign budget is a constant percentage of desired sales

2. The Task Objective Method: How much money do you need to spend to reach the specific goals you have outlined for the advertising campaign?

3. The Historical Method: How much did you spend to reach your sales goals in previous years or periods?

4. Competitive Parity: With competitive parity you spend in equal amounts to your competitors as a percentage of market share

5. The Combination Method: The best advertising campaign budget you can set will be based on some combination of all of the previous models.