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Media Buying

Media Buying
Produced by Peoples Income Tax Inc.


Buying media is a specialized skill, which requires knowledge of your target clients, consumer behavior, the media, and the criteria used to measure the value of TV and radio programming. Station sales reps can be very persuasive in proposing advertising packages and will offer to serve as your media advisors. A broadcast station sales rep's advice can be very helpful, but never let a media sales rep talk you into buying a package. Instead of relying on the sales rep, you may wish to hire a professional media buyer at no cost to you since the station pays the media buyer's commission. Even if you hire a media buyer, you must learn enough about the key buying criteria to be in control and make the purchase decisions based on the proposals. Since you are buying media only for your company, it is feasible for you to learn enough about the key factors applicable to the tax industry to buy your own media. The following is a summary of the most important considerations:

1. Go for the numbers: National mass-market firms buy TV and radio on a "tonnage" basis. Determine you market and then attempt to reach as many people in that market as is possible. Your efficiency goal is to get the lowest cost-per-thousand ("CPM") for your target market while also satisfying your other media buying requirements. If you can determine the demographics of your most lucrative customers, you may wish to advertise to them first.

TIP: Small ad agencies and freelance media buyers often agree to kick-back part of the 15% commission to you, or to provide free services if they receive the full commission.

2. Adequate Reach and Frequency: You want to reach the majority of viewers with adequate frequency to make an impression. Remember the AIDA model of consumer behavior: Awareness, Interest, Decision, and Action. A prospect may need to see your ad several times just to become aware of your company and the services you offer. Another couple of impressions may be necessary to create interest. Your commercial should, ideally, reach 100% of the audience with an average frequency of at least five times. This goal will not likely be accomplished by advertising only on one broadcast station. At least two of the four major TV stations (ABC, CBS, NBC and FOX) should be included. (Cable TV is discussed in Chapter 4 of this handbook, "Targeted Marketing".) If all network stations are competitive, you should buy time on all four. Your reach and frequency can be amplified through radio and other media, as well as your office sign exposure.

3. TV Program Schedules: You can buy time in specific programs (higher price), and you can buy "Run of Station" (ROS) spots within pre-determined time periods (lower cost). Prime time (7:00 p.m. to 11:00 p.m.) is very costly because of high demand. You should allocate no more than ten percent of your spots to prime time. At least 1/2 of your spots should be run during "Fringe Time", the hour immediately before (6:00 - 7:00 p.m.) and after (11:00 - 12:00 p.m.) prime time. About 20 percent of your spots might be run during morning news programs. Other departs with high adult audiences and good cost efficiencies could be added such as daytime soaps and talk shows, and weekend movies and sports programs. Given your goal of reaching your audience at the lowest possible cost per thousand and knowing that he or she is competing for your business against the other stations, your sales rep should be able to identify the most efficient programs. You may want to reserve part of your budget to take advantage of specials caused by late cancellations of prime spots.

4. Rating Services: TV programs are rated by rating services (e.g.: Nielson) subscribed to by all stations. New ratings are published in February, May, and November. You should require that all stations quote from the most recent book, adjusted for February. If the TV coverage area extends beyond the metro area where your offices are located, you should ask all stations to provide figures on a metro area basis.

5. Negotiating the Best Price: An effective strategy is to ask for proposals from each of the four major TV stations for a schedule that would use about 1/2 of your total TV budget over a five-week period. Instruct each station of your acceptable programming parameters and the maximum allowable ratio of 10 to 30 second spots (e.g. no more than 20% 10s). Ask that the proposed schedule be quoted on a weekly basis. For example, if your total budget is $20,000, request a proposal that uses $10,000 in five weeks, or $2,000 per week.

Compare all four proposals and ask the stations with the less competitive proposals to sharpen their pencils and resubmit. Unless you know the station with the best proposal has given you its best price, also ask it to resubmit. It's not unusual for a station to be asked to resubmit 3-4 times before it tells you that's the bottom line. Don't be shy; tough negotiating is part of the game! After you believe all proposals are final, you must decide how to allocate your budget.

The station with the best rates gets the largest piece of the pie. The station with the worst rates usually gets nothing. (Next year they may be more competitive.) Usually you should buy three stations, but if one station is high-priced compared to the other two, you should buy only two more affordable stations. If you buy three stations, the allocation might be something like this: station #1 - $10,000, station #2 - $6,000 and station #3 - $4,000. Reductions can be achieved by reducing the #2 and $3 stations to 3 or 4 weeks and/or by cutting out less desirable spots.

The cost of TV varies from market-to-market. Some cities are very inexpensive and some are high-priced TV markets. You may need to do some research to find out how your market compares. During the January/February flight (when inventory is the highest) we are usually able to buy adults 18+ at a CPM between $1.50 and $1.85 (always under $2.00). These buys can be as low as 50% of the standard rate card price. Again, rates in your market may be higher or lower, but the basic buying principles outlined here should still apply.

Radio is higher priced, up to twice as much as TV. However, radio is more targeted and it can compliment and reinforce TV. Besides increasing reach and frequency, twice as much information can be provided by radio commercials. Since mass-market radio is passive, the best day parts are drive times when listeners in their cars are a captive audience. Sponsoring the local metro traffic report can get your name and a brief message aired on several radio stations during drive time with great frequency at a modest cost.

TIP: Establish your own "in-house advertising agency" to buy your media advertising. This will result in the standard agency commission being credited to your house agency, thereby reducing the cost of all commissionable advertising you buy by 15%. You simply need to form a new "division" of your company operating under a different name (the Peoples Income Tax house agency is called "PeopleCommunications"). You should obtain a local business license and fictitious name certificate. To meet certain advertisers' requirements you may need to come up with a few clients (in addition to your firm) for which you provide advertising services.

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