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Chapter11
Using Magazines
Chapter Objectives
After reading this chapter you will understand:
1. The history and development of the American magazine
2. How magazine space is sold to advertisers
3. Characteristics of consumer and trade publications
4. The role of magazines as a targeted advertising medium
5. The usefulness of magazines in national media plans
6. The effect of new communications technology on magazines
Chapter Overview
Most magazines today appeal to niche readers, particularly those in categories with special value to advertisers. Virtually, all magazines are targeted to the special interests, businesses, demographics, or lifestyles of their readers. Magazines have adopted Internet technology to provide Web versions of their publications as a way to reach new readers, increase loyalty among readers, and to generate advertising revenue.
Lecture Outline
1. Introduction
A. The pros of using magazine include:
1) The number and range of specialized magazines provide advertisers with an opportunity to reach narrowly targeted audiences.
2) Magazines provide strong visuals to enhance brand awareness and they have the ability to deliver a memorable message to their niche audiences.
3) Most magazines offer some form of regional and/or demographic editions to provide even greater targeting and opportunities for less-than-national advertisers.
4) Magazines are portable, they have a long life, and are often passed along to several readers.
a. Business publications are especially useful as reference tools and leading publications within various industries offer advertisers an important forum for their messages.
B. The cons of using magazines include:
1) In recent years, magazine audience growth has not kept up with increases in advertising rates. Magazines are among the most expensive media on a per project basis. The growth in advertising rates has exceeded growth in audience size.
2) Advertising clutter has become a concern of many magazine advertisers.
a. Many magazines approach 50 percent advertising content and consequently time spent with any single advertisement is often minimal.
1. Most magazines have relatively long advertising deadlines, reducing flexibility and the ability of advertisers to reach fast-changing market conditions.
0. In the age of the Internet during which consumers are used to getting up-to-date information on demand, this poses a problem for some advertisers.
4) Despite the obvious advantages of magazine specialization, the downside is that it means a single magazine rarely reaches the majority of a market segment.
a. Therefore, several magazines must be used or alternative media must supplement magazine buys.
b. With thousands of consumer magazines, advertisers have difficulty in choosing the correct vehicle.
2. Advertising and Consumer Magazines
A. In 2005, 4.7 percent of U.S. advertising dollars was spent in magazines.
*****NOTES: Use Exhibit 11.1 Here*****
B. After television was introduced in the 1950s, magazines began to market themselves as a specialized medium to reach targeted prospects within the more general population.
1) Magazines focused on the quality rather than the quantity of the audience.
a. The modern niche magazine evolved, similar to the evolution of narrowly formatted radio stations.
2) Magazines must continue to adapt and change to be successful with today’s competitive and economic pressures.
1. Magazines share the problems of other media.
a. As with radio and newspapers, the segmented and fragmented nature of magazine publishing means that publications are constantly seeking to define audiences in more narrow ways.
b. Like radio, marketers invest the majority of advertising dollars in the leaders in the media category, leaving a small share of ad dollars to others.
c. Magazines have turned to editorial differentiation to attract special interest readers.
d. As with newspapers, magazines share concerns about the cost of paper,
delivery, and marketing to readers and advertisers.
4) The National Directory of Magazines reports over 6,300 consumer magazines.
a. Gaining and maintaining readership is difficult, however, as evidenced by the proliferation of discounts now offered to attract readers.
5) On average, five new magazines are introduced each week on very diverse topics.
a. Women’s magazines, although popular and profitable are experiencing numerous changes. Their designs are being revamped to fend off competition from lifestyle magazines.
6) Two primary factors affect the consumer magazine industry:
a. Selectivity.
b. Cost versus revenue considerations.
C. Selectivity
1) Successful magazines are characterized as having found narrow editorial interests and audience segments, or niches.
a. Niches include both readers and advertisers.
1. In a world of fragmentation, the right editorial formula is often hard to find.
(
*****NOTES: Use Exhibit 11.2 Here*****
)
3) There are few large homogeneous groups instead there are homogeneous segments within more general groups.
a. Publishers have long tried to reach the valuable teen market. However, they find that no market as such exists.
1. Boys and girls differ markedly now only in what they read but also in the amount of reading they do.
4) The Evolution of the Modern Magazine.
a. Audience and editorial selectivity is rooted in the historical development of magazines.
b. Even mid-nineteenth century magazines were targeted to special interest audiences and carried little advertising. Primary formats were:
1. Literary.
2. Political.
3. Religious.
c. In the latter years of the nineteenth century with a rising middle class, mass production and national transportation, national branded goods came about.
1. During the 1890s a number of publishers provided the foundation for today’s ad-supported, mass-circulation magazine.
a) In 1900 the Ladies Home Journal had a circulation of 1 million.
d. Until the advent of radio in the 1920s, magazines remained the only national advertising medium.
1. Magazines eventually had to share national advertising revenues with radio.
2. Magazines were the only visual medium available to national manufacturers.
e. In the 1950s, magazines became a class rather than mass medium. This change continues today with publications appealing to a fairly narrowly defined market segment.
D. Costs and Revenues.
1) Most magazines are largely dependent on advertising and have 47 percent of their content devoted to it.
1. Many advertising cancellations followed the 9/11 tragedy.
1. Subsequently, tobacco advertisers substantially curtailed advertising in the wake of the anti-smoking movement.
2) Publishers are concerned about profitability.
a. Marketing costs.
1. It is becoming more expensive to gain and maintain readers.
2. 70 percent of all consumer magazines are sold through subscriptions as opposed to via newsstands.
3. It takes huge sums of money to gain new readers and keep current ones.
4. Printing and postage costs have been escalating.
5. Competition prevents price increases for subscribers creating a cost squeeze.
6. 55 percent of magazine revenue comes from advertising.
b. Postage and distribution costs.
1. Since 1995, the U.S. Postal Service has imposed several postal rate increases at a rate exceeding the rate of inflation.
2. Cost of newsstand distribution has also gone up.
a) Consolidation has created streamlined and limited distribution channels.
b) Magazines are losing distribution levels due to wholesalers limiting the number of titles they will sell.
c) It is harder for publishers to get new titles on newsstand shelves.
3. Publishers are placing greater reliance on subscription sales to help offset upward spiraling costs.
c. Concentration of advertisers.
1. Publishers receive a disproportionate amount of advertising revenue from a very few product categories.
1. 12 categories account for 87 percent of all magazine revenue.
1. Ten companies provide one-third of these revenues.
1. In 2005, Procter & Gamble paid 6 percent of all consumer magazine revenue.
1. A cutback in spending by these few could have significant impact.
2. Magazines have been attempting to shift their costs to readers.
*****NOTES: Use Exhibit 11.3 Here*****
d. Increases in discounting.
1. Magazine ad rates have been slow to grow due to slowing of the economy.
2. Many magazines offer large discounts off the regular rate card to regular advertisers.
3. As advertisers push for more efficiencies in their media plans, magazines have been pushed to provide a wider array of discounts and value-added opportunities.
E. Cross-Media Buys.
1) Most magazine, television, or newspaper companies have been replaced by multimedia conglomerates.
1. These conglomerates have interests in all traditional media.
1. They also have interests with the Internet, interactive media, and various forms of direct response advertising.
2) If magazines can be sold as part of a multi-media package (cross-media buy), it can be of great benefit.
a. Because magazines reach niche audiences, they can often reach prime prospects who are light users of other media.
b. Companies such as Time Warner and Disney can offer advertisers hundreds of option for their advertising messages, often at a significant discount compared to buying on an individual basis.
c. In the sports arena, Disney can offer package deals with ABC, EXPN, ESPN The Magazine, and ESPN radio programming.
1. There is a complementary nature of magazines and television in reaching different segments of the population.
1. This combination not only extends reach, but also provides diversity of advertising themes and creative execution.
1. Despite the advantages of cross-media buys, advertisers are cautioned to be careful in selecting the right choice and fit, tailored for their target audience.
*****NOTES: Use Exhibit 11.4 Here*****
3. Magazines as a National Advertising Medium
A. Advantages of Magazine Advertising (as a primary or secondary medium).
1) Primary considerations in determining inclusion in a media plan are:
a. Does it work? (contribute to sale and profit).
1. Research indicates that it does (especially in the package-goods field).
*****NOTES: Use Exhibit 11.5 Here*****
b. Audience selectivity.
1. Magazines excel at reaching selected audiences.
2. Magazines are read by virtually everyone each month.
3. There are magazines for almost every demographic and interest group.
1. Readership is a secondary consideration to insuring reach to target audiences.
(
*****NOTES: Use Exhibit 11.6 Here*****
)
c. Long life and creative options.
1. Magazines are not perishable. They may be read many times by many people (i.e., doctor’s reception room, friend’s homes, or at work).
2. Magazines are portable.
3. Magazines are used as reference sources; article read, clipped, and saved.
4. Magazines are often re-read.
5. Magazines, as a visual medium, have creative options.
1. Suited to long copy.
(
*****NOTES: Use Exhibit 11.7 Here*****
)
d. Availability of demographic and geographic editions.
1. It is rare that a national magazine does not offer demographic or geographic breakouts of its total circulation
2. These special editions are called partial runs
.
e. Qualitative factors and engagement.
1. Advertisers are interested in how readers think of themselves when they read a particular publication — the Playboy man or Cosmopolitan woman.
2. Offer high-audience involvement or engagement (what does a reader think?).
3. Understated creative approaches are often used instead of hard sell techniques.
*****NOTES: Use Exhibit 11.8
Here*****
1. See the PRIZM technique in Chapter 7 to see how lifestyle can be used with magazine readers.
(
*****NOTES: Use Exhibit 7.2a Here*****
)
5. Editorial content also makes a connection and creates synergism as magazines are considered an information and idea source by readers
6. A 2003 survey by Knowledge Networks gave evidence that reader involvement is linked to advertising recall.
7. The ultimate measure of success is whether the right audience can be delivered at a competitive cost.
B. Disadvantages of Magazine Advertising:
1) High cost.
a. Magazines are generally the most expensive medium on a CPM basis.
b. In niche marketing, however, CPM is not as important as the quality of the audience being reached.
c. To achieve reach goals, several magazines might have to be used. This increases cost and risks duplicated audience levels and overlaps in readership.
2) Long
closing dates.
a. Because of the printing process, most magazine advertisements must be in far in advance of the actual printing.
b. This could be as long as 8–10 weeks in advance, which makes responding to current market conditions or events difficult.
1. Inflexibility in scheduling and developing competitive copy.
2. Consequently, magazine must keep copy very general.
c. Magazines have space reservation dates and material submission dates.
d. To overcome the competitive disadvantage of long closing dates, fast-close advertising
is available.
1. This allows advertisers to submit ads closer to publication dates.
2. In past years, advertisers paid a premium for this privilege, but competitive pressure and improved print technology has allowed very little or no extra charge.
4. Features of Magazine Advertising
A. Partial-Run Magazine Editions.
1) Partial-run editions refer to any magazine space buy that involves purchasing less than the entire circulation of a publication.
2) The oldest, and still most available, form of partial-run is the geographic edition.
3) The next most available forms are the demographic and vocational/special interest editions.
a. Partial-runs allow a general magazine to compete with smaller niche publications for specialized advertisers.
b. A good example of this is Time, Newsweek, and People.
1. Time offers hundreds of ways to buy advertising in partial-runs, including both demographic and regional editions.
4) Computer technology and advances in high-speed printing allow magazines to meet these advertisers’ requirements.
B. Split-Run Editions.
1) Split-run editions occur when, as a version of the partial-run, the advertiser uses the edition for testing of various ad concepts.
a. Many times different ads are run in every other issue within a regional edition.
b. Each advertisement is the same size and runs in the same position in the publication. The only difference is the element being tested.
c. By inserting a coupon, the advertiser can tell, which version of the ad had the highest response.
d. This split-run technique is called an A/B split, with half the audience getting version A and half version B.
2) Magazines themselves will run different covers for the same issue for testing purposes or to take advantage of a story in that issue of regional interest.
3) The benefits of the partial-run and split-run editions are:
1. Geographic editions allow advertisers to offer products only in areas where they are sold.
(
*****NOTES: Use Exhibit 11.9 Here*****
)
b. Partial-runs can localize advertising and support dealers or special offers from one region to another.
c Split-run advertising allows advertisers to test various elements of a campaign in a realistic environment before embarking on a national rollout.
d. Regional editions allow national advertisers to develop closer ties with their retailers by listing regional outlets.
4) The disadvantages include:
a. CPM levels are usually much higher than full-run advertising in the same publication, and close dates can be as much as a month earlier than other advertising.
b. In the case of demographic editions, the lack of newsstand distribution for these advertisements can be a major disadvantage if single-copy sales are significant for the publication.
c. Some publications bank their partial-run advertising in a special section set aside for such material. There may also be special restrictions placed on partial-run advertising.
C. Selective Binding.
1) Selective binding is binding different editorial or advertising materials directed to various reader segments in a single issue of a magazine.
a. Using computer technology and sophisticated printing techniques, advertisers and publishers can develop advertising and editorial material specifically for one group or even individual readers.
b. This technique began in farm publications in the 1980s.
c. It is most useful when there are significant subcategories of larger target markets, such as segments by age, income, etc.
d. Many advertisers believe selective binding is more suited for business and farm magazines than consumer magazines.
e. This technique has major implications for direct mail, combining the targeting nature of direct mail with the high-prestige environment of the magazine.
f. The major drawback is that it can only be used for subscribers.
1. There is also concern for invasion of privacy.
D. City Magazines.
1) City magazines as publications are not a new idea.
a. Town Topics was published in New York City in the late nineteenth century and San Diego was published in 1940s.
b. Today, city magazines are virtually in every major city.
2) Some publishers are combining traditional strengths of city magazines with specialized publication content.
a. Examples include, Chicago Bride and Atlanta Business Chronicle.
3) They have in common a homogeneous, upscale readership, and an editorial mission directed to the local community.
a. Attracting some national advertisers wanting to target individual markets.
4) When the advertising market goes soft financially, this is among the first media dropped.
1. Magazine network. Approximately 90 city and regional magazines have come together to sell space less expensively to advertisers.
(
*****NOTES: Use Exhibit 11.10 Here*****
)
E. Custom Publishing.
1) It is one of the fastest growing sectors of the magazine business and consists of advertiser-produced publications intended to reach prospects or current customers in a communication environment totally controlled by the marketer.
2) This idea is also not a new concept.
a. In 1949, GM published Friends, a magazine sent to Chevrolet car and truck owners.
b. Custom publishing is seen as a cross between direct mail and traditional magazines.
3) Most mainline magazine publishers have customized publishing divisions and offer custom publishing services to their advertisers.
4) The objective of this form of publishing varies from company to company.
5) Custom publishing is usually part of an integrated marketing campaign, made possible by market research.
6) These publications are beginning to look like traditional publications.
1. Some publications have even accepted and included outside advertising.
5. Magazine Elements (finding optimum best design, placement, and format)
A. Size.
1) The page size of a magazine is the type area, not the size of the actual page.
2) Traditional sizes include:
a. Standard size—8 by 10 inches (like Time).
1. Small—4 3/8 by 6 1/2 inches (like Readers Digest).
1. Oversized publications (like Rolling Stone).
B. Position, Color, and Size of Magazine Advertising.
1. Space in magazines is generally sold in terms of full pages and fractions thereof.
(
*****NOTES: Use Exhibit 11.11 Here*****
)
2) The small ads in the classified pages of many magazines are generally sold by the line.
3) The positions that demonstrate the highest readership, and are the most expensive, are the covers.
a. The front cover of a magazine is called the first cover.
1. Rarely sold in American consumer magazines.
b. The inside of the front cover is called the second cover.
c. Inside the back cover is called the third cover.
d. The back cover is called the fourth cover.
1. Four-color is usually worth the extra expense, whereas two-color is not.
(
*****NOTES: Use Exhibit 11.12 Here*****
)
5) Most advertisers request right-hand placement at the front of the magazine; preferably near related editorial material.
a. Known as FFRHPOE , “far forward, right-hand page opposite editorial.”
1. Size does matter, however, as size of an advertisement increases, the audience does not grow proportionately (nor does the cost).
(
*****NOTES: Use Exhibit 11.11 Here*****
)
a. Larger space does allow more creative flexibility; and have greater impact and recall over time.
1. The quality of the message is most important in ad readership and recall.
b. Specific objectives and creative approaches must be considered in designing magazine advertising.
C. Bleed Pages.
1) Bleed advertisements are printed matter that runs over the edges of a page, leaving no border or margin.
2) Does not have appearance of being confined to a particular space.
3) They are generally seen by 10 to 15 percent more of the readers than non-bleed pages.
1. There is no standardization for bleed charges.
1. Some magazines do not charge a fee, but offer the bleed option as a value-added or extra incentive.
(
*****NOTES: Use Exhibit 11.13 Here*****
)
D. Inserts and Multiple-Page Units.
1) Inserts and multiple-page units cover a variety of different formats.
2) The most common form of multi-page units is the facing, two-page spread.
a. Used most frequently by automotive manufacturers.
b. This form increases impact to the message and eliminates any competition for the consumer’s attention.
c. Gatefolds go from the front cover and are normally two or three pages.
3) Cost is a big factor when considering these formats.
1. One problem with the above formats is it has lost its novelty to consumers.
1. The most effective multiple-page units are for advertisers with an interesting product, a new story to tell, and an interested and involved group of prospects.
6. How Space is Sold
A. Advertising Rates, Negotiation, and Merchandising.
1) Advertising rates, negotiation, and merchandising are all receiving special attention in the competitive marketplace; and providing added value to magazine advertising.
a. Publishers are seeking to differentiate themselves with merchandising and value-added plans.
1. During the 1980s, magazine advertising experienced a downturn and magazines began to negotiate with individual advertisers for special rates. This practice of one-to-one negotiation is called going off the card.
1. One of the most common means of magazine merchandising is through brand extensions. The Good Housekeeping Seal is the oldest and most recognized tool; after lab testing it is applied to products and services, which meet quality standards.
(
*****NOTES: Use Exhibit 11. 14 Here*****
)
3. These services also take many other forms such as real estate services, greeting cards, and clothing offerings under the magazine brand name.
1. The key to successful merchandising programs is to coordinate the magazine’s reputation and expertise with marketing techniques that help advertisers sell their products.
(
*****NOTES: Use Exhibit 11. 15 Here*****
)
B. Magazines and the Internet.
1) Magazines were among the earliest media to use the Internet and hundreds remain heavily involved.
a. The most common usage is the online version of the print publication often designed to help build brand loyalty.
b. These online editions can be advertiser supported and are value-added for advertisers.
1. These online vehicles are intended to extend audience reach to online users.
1. Both magazines and advertisers can benefit from this multiplatform tie-in (print and online).
2) Joint ventures with other businesses have now become popular.
a. Some magazines have entered into joint ventures with cross-media programs such as CNN and Sports Illustrated.
b. Some magazines have co-ventured with established Web sites to create a synergy between the expertise of the company and the visibility of the magazine.
1. Magazines have also used the Internet as a traditional e-commerce business.
a. Targeted audiences of magazines offer an ideal marriage for the one-to-one
marketing over the Internet.
C. Magazine Rate Structure.
1) Magazine rate structures are typically broken down by size of the space purchased (full-page, or partial-size page) and a graduated scale of rates, depending upon the number of times an ad is run.
a. In Vogue, a 4-color full-page ad would sell for a one-time rate of $115,200; or $105,984 per advertisement for a twelve-time rate.
2) The cost efficiency of a publication can be computed and compared to others under consideration.
a. The CPM can be derived by dividing the cost per page by the magazine’s circulation; for Vogue, that would be $115,200/1,293,185 x 1,000 = $89.08.
*****See Illustration of a rate card on page 361 of text*****
D. Discounts.
1) Frequency and Volume Discounts.
a. The one-time, full-page rate of a publication is referred to as its basic, or open rate.
b. Frequency
discounts are volume discounts based on the number of pages run.
c. The volume discount gives a larger percentage discount based on the total dollar volume spent for advertising during a year.
*****See Illustration of Frequency and Volume Discounts on page 361 of text*****
2) Other Discounts.
a. The most common discount is that given to advertisers who combine buys with other publications or media owned by the same magazine group.
E. The Magazine Short Rate.
1) The magazine short rate, based on a space contract, is the rate charged if the advertiser uses less space than anticipated in their formal year contract.
*****See Illustration of a short rate calculation on page 362 of text*****
F. Magazine Dates.
1) Magazine dates are those used in planning and buying magazine space. The sets of dates are:
a. Cover date: the date appearing on the cover.
b. On-sale date: the date on which the magazine is issued.
c. Closing date: the date when the print or plates needed to print the ad must be in the publisher’s hands in order to make a particular issue.
G. Magazine Networks.
1) Magazine networks are groups of publications that can be purchased together simultaneously using one insertion order and paying a single invoice.
2) Currently, there are dozens of magazine networks, representing dozens of titles.
3) As with other media networks, advertisers benefit from a choice of several magazines at lower CPMs and gaining a larger audience than with a single magazine.
4) They generally fall into two categories:
a. Single publisher networks—a single publisher owns several magazines and allows an advertiser to buy all or any number of these as a group.
1. For example, Hearst Magazine Group publishes and offers over 20 magazines.
2. To a degree, the single publisher network is being replaced by cross-media buying.
b. Independent network—made up of different publishers that market magazines with similar audience appeals. A rep firm contracts individually with each publisher and then sells advertising for magazines within the group.
*****NOTES: Use Exhibit 11.16 Here*****
7. Magazine Circulation
A. The most common and reliable method of audience measurement is paid circulation.
1) Most consumer magazines have their circulation audited by an outside company.
2) Magazine rates are based on the circulation that the publisher promises to deliver to advertisers (called guaranteed circulation).
3) Because the guaranteed circulation is the number of readers advertisers purchase, it is also known as the rate base
, upon which advertising rates are based.
4) Problems faced.
1. It is increasingly expensive to maintain high readership levels.
1. It is expensive to keep fringe, marginally interested readers.
1. Major auditing firms only count readers who pay at least 50 percent of the full subscription price for auditing purposes; thus, limiting marketing promotions.
5) Some major magazines have recently lowered their rate bases.
6) Controversy exists over publishers’ view that auditors should use an “average” monthly circulation figure.
7) Advertisers would rather buy space in magazines with a quality readership and the largest number of readers in their target audience.
8) A number of audited publications do not offer guaranteed circulations, but provide accurate circulation figures for past issues.
B. Readership.
1) Readership, in magazine terminology, usually means combined paid circulation (subscribers and newsstand purchasers) with pass-along readers.
a. The more general the publication’s editorial, the more likely it is to have significant pass-along readership.
2) There is concern that readership is being used as a substitute for paid circulation.
3) It would seem that total readership, accurately measured, would be a reasonable approach to measure audiences.
a. Emphasis has shifted from numbers of circulation to selling the quality of
readership.
b. The problem arises that media buyers regard pass-along readers of consumer magazines as inherently inferior to paid circulation.
c. The real issue is assessing the specific objectives of the publication and those of its readers.
8. Measuring Magazine Audiences
A. Readership has two distinct meanings:
1) The time spent with the publication.
2) Includes all readers of a magazine as contrasted with only those who buy a publication.
B. The Audit Bureau of Circulations.
1) The Audit Bureau of Circulations (ABC) is the largest of several auditing organizations that verify magazine circulation.
a. ABC reports are very matter-of-fact documents that deal only with primary readers.
1. ABC does not offer information about product usage, demographic reader characteristics, or pass-along readership.
(
*****NOTES: Use Exhibit 11.17 Here*****
)
C. Syndicated Magazine Readership Research.
1) There are two principal sources of syndicated magazine readership research: Simmons Market Research Bureau (SMRB) and Mediamark Research, Inc. (MRI).
a. MRI explores the readers who read magazines. MRI uses a combination of personal interviews and self-administered questionnaires, respondent reports of magazine readership and product usage; using a sample of 26,000 people.
b. SMRB samples over 25,000 adults and collects data from questionnaires and measures media usage, including data on several hundred magazines, with an emphasis on audience and product usage.
9. The Business Press and Business-to-Business Advertising
A. Business-to-Business advertising is advertising that promotes goods through trade and industrial journals that are used in the manufacturing, distributing, or marketing of goods to the public.
1) The level of communication and marketing differs significantly between this form and consumer magazines.
2) Prospects for business advertising are fewer and more concentrated and tend to be experts concerning the products they purchase.
a. Audience selectivity is more important than CPM or reach used in
consumer media.
1. Business publications efficiently reach major decision makers.
(
*****NOTES: Use Exhibit 11.18 Here*****
)
c. The tone and advertising of business publications differ significantly from consumer magazines.
d. The business press is a medium of reference and commerce.
B. Communicating the Business-to-Business Message.
1) The message must be directed at the profitability of the customer. This is a different communication format than that used in consumer promotions.
2) Business-to-Business Advertising. Business community communication considerations:
a. Appeal to prospects in terms of specific job interests and demands.
b. Sell the benefits to the buyer and not the features of the product.
c. The job of business advertising, particularly of high-end products, is to support and facilitate the sales function.
d. Avoid product puffery.
1. Business advertising needs to have clear objectives and these objectives need to be measurable in terms of the specific publics that the message is directed toward.
1. A significant number of business publication readers receive their magazines on a pass-along basis and are viewed as valuable by the advertisers.
C. Corporate Branding.
1) Business-to business selling is about buying the reputation of the companies with which other companies do business.
a. The future of a business can be at stake when a major purchase is made.
2) More emphasis is now being placed on corporate branding.
a. Corporate branding attempts to integrate a company’s total image through a coordinated marketing communications process.
b. Brands should help a company to establish its reputation and set it apart
from competitors.
D. Audiences of the Business Press.
1) Characteristics:
1. Reading publications for business people is part of their job.
1. Business magazines must develop a depth of understanding of their readers that is not required in the consumer press.
c. In terms of age, income, job categories, and education, business publications skew far higher than consumer magazines.
*****NOTES: Use Exhibit 11.19 Here*****
E. Competition for Business-to-Business Advertising.
1) TV, newspapers, radio, and consumer magazines are competing for consumer related advertising dollars.
2) B2B marketing devotes its dollars to personal sales, trade and business publications, direct mail, and telemarketing.
3) Business executives will not make appointments with salespersons unless they have a thorough knowledge of the companies and product they represent.
4) The Internet has become a major force in this field of advertising.
*****NOTES: Use Exhibit 11.20 Here*****
F. The Internet and Business-to-Business Marketing.
1) The Internet gained acceptance faster on the B2B side than on the consumer side.
a. Businesses were computer savvy long before the Internet came along.
2) The Internet quickly became part of the integrated-marketing communication plans of most companies.
3) Despite the greater utility of Internet B2B marketing, it has been used in rather traditional ways to reach consumers.
4) The use of the Internet in B2B marketing and potentially the practices of business selling changed dramatically in the late 1990s with the introduction of the Internet auction.
G. The Internet Auction and Business-to-Business Marketing.
1) The coming of the Internet auction promises to change many methods of
marketing and selling goods in the B2B world.
a. The traditional method of doing business had involved a long, drawn out process of mailing specifications, questions and answers, bidding, and negotiation.
2) It allows buyers and sellers to make a connection, bid on parts and supplies, and make the final deal through direct-marketing channels between buyers and sellers.
3) Emphasis is on price rather than brand/company reputation and advertising.
a. It is assumed that companies have established an enhanced company reputation and product identity before the Internet connection enters the picture.
b. It is price that sells.
1. The Internet adds a true global dimension to the process.
1. The Internet is altering rules on how companies manage sales, service, and distribution operations.
H. Business Publication Expansion of Services.
1) As competition for B2B advertising grows, business publications have
increasingly expanded their merchandising and ancillary services.
2) New ventures include:
a. Subscriber list rentals.
b. Event-related publications.
c. Custom publications.
d. Trade shows.
3) Ancillary services add to magazines’ overall profitability and decrease dependence on advertising from their publications:
4) Advantages of ancillary services:
a. Utilizes a publisher’s knowledge of a particular industry to help client’s develop a coordinated program and advertising campaign.
b. They gain revenue from companies not using advertising as a primary B2B marketing tool.
c. They increase the magazine’s credibility.
I. Types of Business-to-Business Publications.
1) Trade Papers (distributive trades).
a. Trade papers are directed at those who buy products for resale, such as wholesalers, jobbers, and retailers.
b. Almost every goods distribution company has a trade paper dealing with its issues.
2) Industrial Publications (manufacturers and builders).
a. Aimed at industries, which sell materials, machinery, tools, and parts to other companies for producing other products or services.
b. Designed to reach purchasing agents, plant managers, engineers, controllers, and others who have a say in spending the firm’s money.
3) Management Publications (top officers of other corporations).
a. This is a difficult group to reach because there are just a few decision makers and they tend to read business-related consumer magazines such as Fortune and Nation’s Business.
4) Professional Publications (physicians, dentists, architects, and other professional people).
a. Journals upon which professionals depend to keep abreast of their respective professions.
5) Controlled Circulation.
a. Free circulation is known as controlled circulation
, directed only to carefully selected people who are influential in making purchasing decisions for their industry.
b. The number of controlled publications in the business field plays a major role in their share of advertising-to-circulation revenues compared to consumer magazines.
c. This form creates a significant dependence on advertising support.
6) Vertical and Horizontal Publications.
a. A vertical publication is one that covers an entire industry (i.e., the baking industry).
b. Horizontal publications are aimed at people who are engaged in a single function that cuts across many industries (i.e., a purchasing agent).
J. Circulation Audits.
1) B2B advertisers are very interested in the circulation of the publications in which they advertise.
2) The readership numbers are very important because of the directed nature of B2B advertising.
a. Total audience is smaller, CPM for most is significantly higher, and competition makes it imperative that B2B marketers reach their target market in a timely fashion.
3) The leading auditor is Business Publications Audit of Circulation International
(BPA).
4) Verified Audit Circulation (VAC) provides audits of other media as well as business publications.
*****NOTES: Use Exhibit 11.22Here*****
10. Agribusiness Advertising.
A. A special form of business publications is to the agribusiness industry that was once addressed to small farmers.
B. Dramatic changes have caused advertisers in this industry to tailor their advertising messages to a concentrated industry of huge farm cooperatives and farm managers with income and educational levels that rival those of the CEOs of any major business.
C. The farm press is seeing increased competition from other media for the advertising dollar, such as syndicated television programs.
D. Web sites have been established by farm media and agribusiness advertisers.
E. Agribusiness promotional techniques are more specialized than those of traditional B2Bselling.
F. The business of farming has hit hard in recent years making it difficult for farm magazines and agribusiness advertising in general.
G. To compete, farm publications have added many techniques to reach their audience, much like the business press, using sophisticated databases, direct mail, and special catalogs.
*****NOTES: Use Exhibit 11.23 Here*****
H. The Organization of the Farm Press
1) General Farm Magazines.
a. The farm press, though hard hit economically, is still viable and competitive.
b. The three major publications in this category are Farm Journal, Successful Farming, and Progressive Farmer.
2) Regional Farm Magazines.
a. These tend to be general in nature and address issues of crops, livestock, and government farm policy.
b. Examples are Prairie Farmer, Oregon Farmer-Stockman, and Nebraska Farmer.
3) Vocational Farm Magazines.
1. Devoted to certain types of farming or livestock raising.
1. Examples include The Corn and Soybean Digest, The Dairyman, American Fruit Grower, and Missouri Pork Producer.
4) Many farmers receive several publications.
Chapter 10
Using Newspapers
Chapter Objectives
After reading this chapter you will understand:
1. The changing character and role of newspapers in the marketing mix
2. Challenges to newspaper advertising from other media
3. The marketing of newspapers to readers and advertisers.
4. The many categories of newspaper advertising
5. The newspaper advertising planning and buying process
6. The role of weeklies and ethnic-oriented newspapers
Chapter Overview
Newspapers are the leaders in terms of local advertising revenue and trail only television in terms of total advertising revenues. Each day approximately 53.5 million newspapers are distributed, providing a large segment of the population with news, entertainment, and advertising. Newspapers also enjoy a reputation for credibility that creates a positive advertising environment.
Lecture Outline
1. Introduction
A. The pros of using newspapers include:
1) Newspapers appeal primarily to an upscale audience, especially those adults 35 years of age and older.
2) Newspaper advertising is extremely flexible with opportunities for color, large and small space ads, timely insertion schedules, coupons, and some selectivity through special sections and targeted editions.
3) With coupons and sophisticated tracking methodology, it is much easier to measure newspaper response rates than response rates of many other media.
4) Newspapers have high credibility with their readers, which creates a positive environment for advertisers.
B. The cons of using newspapers include:
1) Many newspapers have about 60 percent advertising content. This high ratio of advertising, combined with an average reading time of less than 30 minutes, means few ads are read.
2) Overall newspaper circulation has fallen far behind population and household growth.
a. In addition, readership among a number of key demographics such as teens and young adults has not kept pace with population growth.
3) Advertising costs have risen much more sharply than circulation in recent years.
C. Newspapers are read by over 50 percent of the population.
1) Newspaper readers have a higher than average income and education level.
2) Advertising revenues are about $50 billion annually.
3) 84 percent of the revenue comes from local advertising.
4) National advertisers are increasingly looking to local and regional advertising strategies to communicate with target consumers in the most effective way.
D. Advantages to small businesses and large corporations (important features) of newspaper advertising include:
1) Flexibility of advertising formats and audience coverage.
2) Newspapers are especially useful in reaching upscale households and opinion leaders.
3) Newspapers offer advertisers a number of creative options including preprinted inserts, advertising in their Internet edition, and the ability to deliver product samples.
4) Newspapers provide an environment of credibility and immediacy unmatched by most media.
a. Viewed as a reliable source of both information and advertising.
E. Trends that cause concern for newspapers include:
1) Circulation.
a. Newspaper circulation was 77 million in 1976 and dropped to 53.5 million by 2005.
b. Throughout the ’90s, circulation dropped about 1 percent per year.
c. Reasons for the decline include changing demographics, lack of youth readership, and the encroachment by other media such as television and the Internet.
d. Some newspapers have had aggressive subscription drives, set up programs to give young readers experience with the medium, and attempted to appeal to an upscale readership.
(
*****NOTES: Use Exhibit 10.1 Here*****
)
2) Advertising revenues.
a. Revenue percentage of the total media pie was 28 percent in the 1980s; however, currently this figure is at 18 percent.
b. Problems can be summarized as:
1. Retail chains have turned to other media forms such as direct mail and inserts through newspaper distribution.
2. Lack of support from national advertisers.
3. Even local advertising support is being challenged by other targeted media forms: local television and cable TV cut-ins, free niche advertising books, city and regional magazine editions, and radio.
3) Changing technology.
a. Newspapers face challenges from new media technology.
b. Significant improvements in instantaneous delivery, clarity, and reliability of content and portability of technology over the next 20 years are expected and will change dramatically the methods of reaching customers.
c. Many newspapers have their own Web sites for their readers and their advertisers.
d. The immediacy of newspapers is being replaced by electronic formats.
e. Traditional newspaper strongholds such as newspaper-classified advertising are being challenged by dozens of online websites.
F. The newspaper industry faces both problems and opportunities as they enter the next century; however this industry will face growing competition from other media and information sources as it attempts to maintain its media leadership position.
1. Despite declines in readership, however, newspapers remain one of the most effective means of reaching a broad, heterogeneous audience.
2. The National Newspaper
A. Historically, the United States, unlike other countries, has not had a national newspaper; however, now there are a number with national circulation, or national stature, or both.
1) To be a national newspaper, the newspaper would need:
a. To be published at least five days per week.
b. To print copies that are sold, distributed and available nationwide.
2) Using the above criteria, national newspapers in the United States would be:
a. The Wall Street Journal.
1. With 1.7 million in circulation, it is the second highest circulation newspaper in the country.
2. Emphasis is on financial news.
3. It is among the most respected newspapers in the world, appealing to the most elite demographics.
b. USA Today (Gannett Company publication).
1. A general-readership national newspaper.
2. Popular because of its bright colors and graphics, short articles and extensive business and sport coverage.
3. The paper has a circulation of over 2.2 million.
4. The problem facing all nationally circulated newspapers is finding a profitable market niche.
5. USA Today, along with other national papers depend upon much of their revenue coming from automobile, computer, communication, and financial services companies, that want to appeal to a national audience.
1. The New York Times.
1. Like the Washington Post and the Chicago Tribune, until recently, the Times was considered a regional newspaper.
3) The success of national newspapers is how readers and advertisers define them. Widespread distribution and upscale audiences are needed to be considered anything but a local vehicle with occasional national advertising opportunities.
4) The Internet now offers newspaper publishers an opportunity to reach a national and even an international audience.
*****NOTES: Use Exhibits 10.2 Here*****
3. Marketing the Newspaper
A. Newspapers are a product in need of extensive marketing to both readers and advertisers.
1) Newspapers are being challenged by many new and traditional competitors while at the same time finding it more difficult to maintain the broad base of readership that has made them such a powerful medium for over 200 years.
2) The quality (versus the quantity) of newspaper readership is very good.
3) Newspapers are very strong among college graduates and households with incomes in excess of $100,000.
a. Unfortunately, this tends to skew toward the older population.
4) Extensive marketing research studies have been undertaken by newspapers to find out about current facts and interests of readers. The general conclusions are:
a. Readers obtain their information from a number of sources (including television, the Internet, etc.).
b. Advertisers, especially at the local level, are adopting strategies that replace newspaper advertising with direct mail and other forms of promotion.
c. Newspapers have a high degree of integrity and prestige as sources of both advertising and editorial information, according to studies.
d. Newspapers need to adopt a marketing mentality. Seeking to protect their franchise by attracting readers and advertisers.
B. Marketing to readers.
1. Falling readership trends must be reversed; the quality of the audience must be improved if advertisers are to be attracted.
1. Most newspapers depend on a broadly based audience and high household penetration for financial success.
1. Steps that newspapers should take to reverse the decline of this trend include:
a. Maintaining good circulation numbers should be a high priority.
1. Get newspapers into the hands of young readers.
b. Editors and reporters should be free of control by marketing departments.
1. Understand, however, that the newspaper is a business enterprise that requires market research.
c. Go after the opportunities in national advertising.
1. Move aggressively to get these dollars.
d. Newspapers should consider their Web sites as a distinctive product rather than a mere spin-off from the printed paper.
e. Give readers a choice and market to new audience segments.
1. Some papers have added youth sections.
f. Invest in research and explore ways to make their Internet site complement the information provided in the newspaper.
4) Most newspaper readers see value in a newspaper with local news and information with relevance to their lives.
a. Appealing to diverse interests, however, is extremely difficult.
b. To maintain their position, newspapers will have to find ways to address the heterogeneous population.
C. Marketing to advertisers.
1) Advertising constitutes more than 70 percent of all newspaper revenues and more than 50 percent of total newspaper space is devoted to advertising.
a. In a fragmented market, newspapers are finding it difficult to get their share of the advertising.
(
*****NOTES: Use Exhibit 10.3 Here*****
)
2) One of the problems facing newspapers is the dramatic increase in advertising rates and CPM caused by rising fixed costs that are generally higher than that faced by other media.
3) Newspapers must continue to convince advertisers that newspapers are an efficient means of meeting a variety of marketing and advertising objectives.
4) The marketing task for newspapers is a twofold undertaking:
a. To deliver the audience.
b. To compete for advertisers.
5)
Newspaper advertising is considered high on believability and trustworthiness relative to other major media types.
(
*****NOTES: Use Exhibit 10.4 Here*****
)
6) It is essential that newspapers retain local retailers that traditionally comprise the bulk of newspaper revenues and must gain more support from national advertisers.
7) To better position themselves favorably with advertisers’ desires, newspapers have taken a number of positive steps:
a. Provide readership as well as paid circulation data, because total readership includes pass-along readers that can nearly double the newspaper audience.
b. Develop a client-oriented perspective.
1. Train the salespeople in relationship marketing
.
2. Develop a team approach between newspapers and advertisers to solve problems.
c. Approach agency media buyers on a personal basis to demonstrate the utility of newspaper advertising.
1. Develop information centers to make it easier for national or regional advertisers to know about services and products.
2. The Newspaper Association of America (NAA), in cooperation with Editor & Publisher magazine, provides advertisers with a database of which newspapers provide special editions, targeted inserts, and other advertising options to make it easier to plan multi-newspaper media buys.
4. Newspaper Inserts, Zoning, and Total Market
Coverage
A. Newspaper advertising executives must provide service to a number of advertisers, many with distinctly different marketing and advertising problems.
1) Four approaches include:
a. Full coverage of a newspaper’s circulation.
1. Some waste circulation was accepted by smaller advertisers.
2. Large department stores, grocery stores, and some national businesses benefited from the paper’s entire circulation.
b. Zoned preprints.
1. Newspapers countered the threat from targeted direct mail with advertising circulars and preprinted inserts delivered with the paper.
2. These preprints have become a major mechanism for delivering coupons.
3. Zoned distribution preprints followed.
a) Preprints could be delivered to specific ZIP Codes.
b) Today, any ZIP Code within a newspaper’s primary circulation area is possible; even to sub-ZIP Code circulation clusters called microzones.
c) Preprints are now the primary source of revenue for many papers, replacing traditional advertising as a revenue leader.
(
*****NOTES: Use Exhibit 10.5 Here*****
)
d) Preprints have surpassed run-of-paper (ROP) as a source of revenue.
(
*****NOTES: Use Exhibit 10.6 Here*****
)
e) Problems that occur with zoned preprints include:
i. Inserts are less profitable than ROP advertising.
ii. The newspaper insert has just become a form of direct mail considering that one of its primary functions is to deliver preprints.
iii. As ROP decreases, so does the space for traditional news and editorial matter (called news hole).
f) Zoning has offered newspapers a compelling weapon against direct mail and other forms of targeted media and holds the potential for bringing an increased number of national advertisers to newspapers.
i. The zoned newspaper. This service answers the demand for information about particular suburbs of a city. Zoned editions have rewarded newspapers with higher readership and advertising increases. The zoned newspaper overcomes the problem of clutter because inserts can be targeted to more specific groups.
ii. Total market coverage. Some advertisers are seeking total market penetration of specific markets. Total market coverage (TMC
) may be accomplished in the following ways:(a) Weekly delivery of a non-subscriber supplement carrying mostly advertisements, (b) Using newspaper-supported direct mail to non-subscribers, (c) Delivering the newspapers free to all households once a week.
5. Categories of Newspaper Advertising
A. Newspaper advertising is divided into two categories:
1) Display—all the non-classified advertising in a newspaper.
a. Local (retail), (44.9 percent of total).
b. National (16 percent of total).
2) Classified advertising—carried in a special section; comprises of a variety of advertisements from small yard sale notices to those for the largest automobile dealers and real estate firms (35 percent of total).
B. Classified advertising.
1) Commonly called the “want ads,” also known as classified display ads when accompanied by illustrations.
2) Has its own rate card and operates as a separate department within the newspaper.
3) Revenues approach $16 billion annually; the most profitable of the newspaper departments.
4) Competition for classified ads one of the most serious financial threats to the newspaper industry.
1. Classified ads are concentrated in three major areas (80 percent of all such ads):
a. Employment.
b. Real estate.
c. Automotive.
6) Online services have begun to compete in these areas.
7) Online services introduced two new concepts of aggregation (compiled classifieds from across the country) and vertical (single category) sites.
8) Newspapers have met these challenges with their own Web sites and aggregate Web sites of their own.
9) In order for newspapers to preserve their dominance in classified advertising, they must embrace online technology and become an innovative leader in this area.
a. In the future, newspapers could become a directory of Web sites.
10) Most newspapers have positioned themselves to take advantages of future changes.
C. Display advertising (divided into two categories, local and national).
1) Local advertising.
a. Newspapers have an overwhelming local focus.
b. The financial structure is built on local retailer support and is the most popular medium for both advertisers and consumers.
(
*****NOTES: Use Exhibit 10.7 Here*****
)
c. Major trends affecting local advertising are:
1. General consolidation of merchandising and discount retailers, the number of retailers and amount spent on advertising is expected to drop.
2. Services will also be concentrated, including such businesses as auto repairs, banking, and services that are part of large mega-stores.
3. As store names, brands, and images become the core retail strategy (rather than price), we may see a diversion of advertising dollars to television or upscale magazines.
4. Retailers will add their shopping options to cater to changing consumer preferences which may shirt advertising dollars to other media.
5. Retail private and store brand emphasis might cause a decline in advertising.
d. The concept of relationship marketing is critical between newspapers and their retail advertising customers.
2) National advertising.
a. National advertising is increasing in newspapers.
1. In 2005, national newspaper advertising represented nearly 16 percent of all newspaper advertising revenue.
2. National advertising is still a very small percentage of overall newspaper advertising.
b. National advertising has increased because:
1. Newer categories of national advertisers need newspapers to successfully target high potential markets.
2. The success of the Newspaper National Network (NNN).
a) The NAA made it possible (starting in 1994) for national advertisers to have easy access to a national network of newspapers for buys.
b) The NAA provides advertisers with Standard Advertising Units (SAUs) from one newspaper to another, allowing national advertisers to buy space in virtually every major U.S. newspaper and prepare one advertisement that will be accepted by all of them.
(
*****NOTES: Use Exhibit 10.8 Here*****
)
c) A serious point of disagreement, however, still exists over the continuing local/national rate differential debate; ranging from 40-60 percent.
c. Newspapers must continue to find ways to make it easier for national advertisers to buy the medium and some accommodation must be made in the rate differential.
D. Cooperative advertising.
1) Cooperative advertising (co-op) is a joint promotion of a national advertiser (manufacturer) and local retailer on behalf of the manufacturer’s product on sale in the store.
a. It is an outgrowth of the newspaper local/national rate differential.
2) Co-op advertising is placed by a local advertiser but paid for, all or in part, by a national advertiser.
3) The national manufacturer usually provides the ad, allowing space for the retailer’s logo.
4) The original reason for developing this form was that it allowed the national advertiser to place the ad at the local rate.
5) There are huge funds spent in this area and for national advertisers co-op advertising can additionally be a source of building goodwill with distributors and retailers and exercising some creative control over local advertising.
6) National advertisers pay anywhere from 50 to 100 percent of the cost of the co-op ad placed locally.
1. It stretches the local retailer’s ad budget and saves money for national firms.
1. Newspapers receive over half of all co-op dollars placed.
E. The rate structure.
1. The rate structure for newspaper advertisements represent a dichotomy.
a. Local advertisers find the rate structure and discounts to be straight forward and easy to use when buying space.
b. National advertisers have a more difficult time buying space because of the complexity of buying options, price, and discount structures.
2) Discounts – Newspapers are divided into two categories of discounts:
a. Flat rate is a uniform charge for space in a medium offering no discounts.
1. When flat rates do not prevail, time discounts or quantity discounts are offered.
b. Open rate is the highest advertising rate at which all discounts are placed.
c. The most common discounts are based on frequency or bulk purchases of space.
1. Bulk discount means there is a sliding scale so the advertiser is charged proportionally less as more advertising is purchased.
2. Frequency discount requires some unit or pattern of purchase in addition to total amount of space.
3) ROP and preferred-position rates are the most basic rates in the newspaper.
a. ROP (run-of-paper) positions the ad anywhere in the paper that the publisher chooses to place it; although the paper will be mindful of giving the advertiser the best position possible.
b. Preferred position means you get to pick where the ad will appear.
4) Combination rate usually means that the advertising dollar is split between different editions of the paper (such as morning and evening).
a. This type of combination may involve as few as a single city market or as many papers as bought on a national basis.
b. The advertisers deals with only one group and pays a single bill.
F. The Rate Card.
1) The rate card is simply a starting place for negotiation.
2) Today, newspapers are among the few media, which maintain rate integrity by offering all advertisers the same rates and discounts.
a. Newspapers can adjust quickly to whatever advertising space is needed.
3) Rate card flexibility can occur in the following ways:
a. Multiple rate cards—cards for different categories of advertisers.
b. Newspaper merchandising programs—these are also known as value-added programs, which offer other types of merchandising concessions in lieu of negotiating rates.
c. Offer pickup rates—re-run ads at lower rates.
G. Comparing Newspaper Advertising Costs.
1) National advertisers compare newspaper advertising costs when faced with considering hundreds of newspapers in a single media plan.
2) Advertisers use CPM for purposes of making comparisons between advertising cost and audience delivery.
3) The CPM for newspaper rate comparisons has two advantages:
a. It reflects the move to page and fractional-page space buys.
b. Comparisons among media are more easily calculated using this standard benchmark.
*****NOTES: For calculations of CPM, see page 329 of text*****
H. The Space Contract, the Short Rate.
1) Space contracts in open-rate papers must have flexibility to allow advertisers to use more or less space than originally contracted.
a. Such a space contract is not a guarantee of the amount of space an advertiser will run, but rather an agreement on the rate the advertiser will finally pay for any space run during the year in question.
2) The space contract involves two steps:
a. Advertisers estimate the amount of space they think they will run and confer with the newspaper on how to handle any rate adjustments needed at the end of the year. They are then billed during the year at the selected rate.
b. At the end of the year, the total lineage is added, and if advertisers ran the amount of space they had estimated, no adjustment is necessary; but if they failed to run enough space to earn that rate, they have to pay at the higher rate charged for the number of lines they actually ran. That amount is called the short rate
.
Example: A national advertiser plans to run advertising in a newspaper with the following rates:
Open rate, $5.00/column inch
1,000 column inches, $4.50/column inch
5,000 column inches, $4.00/column inch
10,000 column inches, $3.50/column inch
Situation: The advertiser expects to run at least 5,000 column inches and signs the contract at the $4.00 rate (subject to end-of-year adjustment). At the end of 12 months, however, only 4,100 column inches have been run, therefore, the bill at the end of the contract period is as follows:
Earned rate: 4,100 column inches @ $4.50/column inch = $18,450
Paid rate: 4,100 column inches @ $4.00/column inch = $16,400
Short rate due =$ 2,050
OR
Column inches run x difference in earned and billed rates
54,000 column inches x .50 = $2,050
3) A rebate
is the amount owed to an advertiser by a medium when the advertiser qualifies for a higher space discount. Newspapers usually credit a rebate against future advertising.
Example: In our previous example, if the space was purchased for the 10,000 inch rate ($3.50), the advertiser would have received a rebate of $5,000. The calculation would be:
Paid rate: 10,000 column inches @ $4.00/column inch = $40,000
Earned rate: 10,000 column inches @ $3.50/column inch = $35,000
Rebate due = $ 5,000
*****NOTES: for calculations explaining the CPM, short rate, and rebate, see page 329 & 330 in the text*****
6. Circulation Analysis
A. The Audit Bureau of Circulations (ABC) is the organization sponsored by publishers, agencies, and advertisers for securing accurate circulation statements. The organization serves advertisers, agencies, and publishers.
1) The organization aids in preventing gross overstatement of circulation.
2) It is self-regulating and self-supporting.
3) The Audit Bureau’s report contains:
a. Total paid circulation.
b. Amount of circulation in the city zone, retail trading zone, and all other areas.
1. The number of papers sold at newsstands.
*****NOTES: Use Exhibit 10.9 Here*****
4) The reports have nothing to do with a newspaper’s rates; they deal only with circulation statistics.
5) Verification still causes concern. Two areas of controversy standout:
a. Discounted circulation and bulk sales; guarding against too liberal an interpretation of circulation by publishers.
b. Readership versus paid circulation. Measuring reading audiences is a problem and most major papers commission market research to determine readership to supplement circulation figures.
B. Technology and the future of newspapers.
1) The Internet has the potential to significantly change the way in which readers’ search and respond to classified advertising.
2) New technology must be a factor in any media company marketing plan.
3) Newspapers may need to switch to being information providers instead of editors and publishers.
4) People need to think beyond the newspaper as a print-on-paper product and consider alternative delivery systems as well as the type of information that is provided.
1. Hundreds of daily newspapers have websites.
(
*****NOTES: Use Exhibit 10.10 Here*****
)
6) In spite of the potential threat, the daily printed paper has advantages to the Internet including convenience and portability.
a. Cell phones and other mobile devices that provide access to the Web will likely become a decided threat to traditional newspapers.
b. Aggressive moves by newspapers are being made to combat the new media threat.
7. Newspaper-Distributed Magazine Supplements
A. Few of the Sunday magazine supplements survive today, except in major newspaper markets like New York, Los Angeles, and Chicago.
1) National supplements appeal to advertisers that gain network buying efficiency, broad-based circulation, and quality magazine format at a lower CPM than either magazines or newspapers.
2) The two leading syndicated national publications are USA Today (23.4 million circulation in 612 newspapers) and Parade (32.7 million circulation in 340 papers).
3) Other supplements, such as Vista (Hispanic publication), reach ethnic markets.
B. Comics.
1) The comics supplement began in 1889 in the New York World.
2) The comics were used as a way to draw readers, as far back as Joseph Pulitzer and William Randolph Hearst’s time.
3) In 1897, The Katzenjammer Kids was introduced as the first modern comic strip with separate panels and speech balloons.
4) From the 1920s on with the introduction of Blondie, The Phantom, Beetle Bailey, and Peanuts comics became a major source of readership.
5) Although not a major advertising vehicle, comics are used by a number of advertisers to reach millions of readers
6) For those advertisers that want to use the comic sections, there are networks that sell the comic sections in a variety of combinations so that advertisers can place an advertisement simultaneously in a number of papers.
8. The Ethnic and Foreign Language Press
A. The U.S. population is changing and becoming dramatically more diverse.
1) Newspapers are reaching these audiences with information, entertainment, and advertising, and the role newspapers play varies among the major ethnic markets.
2) The fastest growing group of ethnic newspapers is the Spanish-language press.
B. The Hispanic press facts:
1) Hundreds of Hispanic newspapers are available in the United States.
2) Many major newspaper companies have Hispanic sections or sister publications in Spanish.
3) Problems faced by the Hispanic press:
a. Many fragmented cultural backgrounds because of Hispanic diversity.
b. Disparity in language preference.
*****NOTES: Use Exhibit 10.11 Here*****
C. The African American press facts:
1) This press has not shown the economic vitality of the Hispanic press.
2) The peak occurred between the 1930s and 1960s, with almost 300 papers with a 4 million circulation.
3) Ironically, as opportunities for African Americans have risen, it became less and less important to have separate newspapers to cover news of African American readers.
4) Mergers and consolidations have also influenced the African American press.
5) There is a continuing problem with the preference among the African American population for television and a few selected magazines.
a. Some national companies have shifted significant advertising dollars from newspapers to the broadcast media and magazines.
D. The Asian press facts:
1) This press faces many of the same problems of both the Hispanic and African American press (perhaps even more so).
2) The Asian culture is also very diverse, coming from many countries in Southeast Asia.
3) This group, though growing, is not as large as the Hispanic population, to support a national Asian press system.
4) Still, a number of newspapers serve the Asian population.
E. The increasing multicultural nature of the United States is reflected in a growing number of newspapers available in more than 40 languages.
F. Ultimately, the success of the ethnic press is determined by the same formula used by mainstream media—advertising support.
9. Weekly Newspapers
A. Weekly newspapers fall into the categories of:
1) Suburban papers covering events within some portion of a larger metropolitan area.
2) Traditional rural weeklies providing local coverage.
3) Specialty weeklies covering politics or the arts.
1. Free shoppers with little editorial material.
B. According to the NAA, there are almost 6,700 weekly newspapers in the United States with a total circulation of over 50 million.
C. Weeklies now tend to be located in growing suburbs and focus upon coverage of zoning disputes, overcrowded schools, crime and how to control future growth while increasing the county’s tax base, rather than covering weddings and family reunions.
D. More and more weeklies are part of networks, which also include major local daily papers.
1) Retailers, in particular, depend on this media to reach targeted markets in their trade areas.
2) From an advertising standpoint, the strength of suburban weekly newspaper networks is that they can serve equally well small, local advertisers and national advertisers or major retailers.
E. Growth will be primarily in suburban and urban areas, where niches can be identified.
Chapter7
Media Strategy
Chapter Objectives
After reading this chapter you will understand:
1. The basic functions of the media planner
2. The role of the media in the total advertising function
3. Characteristics of the major media categories
4. Relationships between media planning and target marketing
Chapter Overview
The media function, whether executed by an advertising agency, an independent media-buying/planning firm, an unbundled media shop, or a company’s in-house media department, is increasingly complex. The demand for efficiency, effectiveness, and creativity in the media-planning process has never been greater. Two factors have created uncertainty for both advertisers and media executives: 1) the steady increase in the number of media and promotional options, and 2) the unprecedented audience fragmentation. This chapter initially addresses the primary characteristics of the media function.
Lecture Outline
1. Organization of the Media Function
A. Media Planner. The role of the media planner is to supervise all areas of the
advertising campaign as it relates to the media function.
1) They are also marketing specialists who play a pivotal role in the advertising
process.
2) They must anticipate future trends in a rapidly changing environment and must
keep agency management and clients abreast of major changes.
B. Media Research. The media research department coordinates both primary and
secondary research data and functions as a support group for media planners.
1) It must gauge future media trends.
2) In some instances, this department estimates likely audiences for new magazines or television programs.
C. Media Buying. The media-buying department executes the overall media plan.
1) Media buyers select and negotiate specific media placements and they are responsible for monitoring postplacement executions.
2) There may be separate groups or departments for each of the mass media depending on the size of a media unit.
3) Recently, some media departments established units to research and buy Internet advertising and/or construct client websites.
D. Few areas of marketing and advertising have experienced the change demonstrated by media planning in the last decade.
1) The media function has been driven by changes in the number of media options, increasing media expenditures, and the great financial risk associated with media buying mistakes.
2) In 2005, total advertising expenditures were over $271 billion.
a. By 2006, this figure will increase to over $286 billion.
b. The media planner of 2015 will be dealing with media outlets that don’t exist today.
2. The New Media Function
A. As the media adapt to new technology and methods of planning, there are a number of trends that will set the tone for change and assess the future of media planning and buying.
B. Convergence. Simply put, media convergence is the blending of distribution, content, and/or hardware from a number of media companies to create a new or significantly expanded communication system.
1) An example would be cell phone companies offering Internet connections, newspaper companies creating websites, or NBC and Microsoft combining to create MSNBC.
2) Consumers will continue to see numerous examples of convergence.
3) Marketing, media content, and technological convergences are in their embryonic stage. It is a trend of the present and even more so of the future.
C. Interactivity. Technology will allow consumers to deal directly with marketers for their entertainment, purchases, and services; bypassing traditional media and marketing channels.
1) Because of this ability, buyers and sellers will be able to deal on a one-to-one basis with communication and products tailored to the interests of specific households and individuals.
2) In many instances, technological capabilities will outpace customer utilization.
3) Interactive media are dramatically changing the marketing landscape.
D. Creativity. Interactivity will also change the creative process.
1) We have entered a new era of “permission marketing” in which the consumer has already determined his or her product demand and actively seeks an advertiser.
2) The former mass advertising, which uses attention-getting techniques is giving way to the dynamics of relationship marketing.
3) Media planners are being asked to think of and evaluate new and different media options to build additional, effective exposure to consumers.
1. Attention has turned to developing and evaluating entertainment and experience marketing opportunities.
(
*****NOTES: See
Kleppner’s
Viewpoint 7.1 For Example*****
)
E. Engagement.
1) With the shrinking of television audiences and the proliferation of new media, advertisers and media planners are becoming more interested in the concept of engagement..
2) Engagement takes into account the ability of an advertising vehicle to deliver a receptive audience to the advertising in it. It is turning on a prospect to a brand idea enhanced by the surrounding context.
3) Advertisers are interested in knowing which media make the advertising for their brand more effective.
4) Commonality in these trends is that they demonstrate that media executives must be analytical, creative, and strategic in their approach to the media process.
3. Media Unbundling and Independent Media Buying Firms
A. In a media environment characterized by convergence and creativity, one of the common approaches to the media function is known as unbundling.
1) The concept refers to the establishment of agency media departments as independent units apart from their traditional role as departments in full-service agencies.
2) This idea began in the 1960s when media experts believed that they could obtain better commercial rates (television) than full-service agencies, which often concentrated on creative services.
3) Major advertising agencies took issue with the above premise. Two major areas of disagreement are noted:
a. Where media planning (as contrasted with media buying) should take place.
b. Degree of coordination between creative and media strategy.
1. Unbundling is a core issue subject to debate.
4) The concept of a totally unbundled media department is a core issue for many agencies.
a. Historically, advertising agencies promoted themselves on the basis of their being able to offer a complete menu of advertising services – creative strategy and execution, account management, and media research, planning, and placement.
B. Factors that led to an era of unbundling were:
1) Integrated marketing.
a. Several complex elements were at work in marketing.
b. Advertising agencies were not the only source for communication expertise.
c. Specialists were hired in addition to the agencies.
d. Clients became comfortable dealing with several communication agencies and began to look to specialization within the advertising function.
2) Cost factors.
a. Media buying became more important as costs escalated.
1. Clients demanded more efficiencies, better identification of target markets, and accountability.
c. The desire for low costs ran contrary to the use of specialized media.
d. Fragmented media are being used more to reach homogeneous audiences and this has increased the cost per person reached.
3) Globalization.
1. Expansion into global markets increased demands exponentially on media departments.
b. Strategic media planning became essential to gain worldwide recognition.
4) Complexity of the media function.
a. The media function is now diversified in many more areas than just the
mass circulation media.
1. Companies are demanding that advertising be monitored and coordinated with event marketing, sales promotion, and public relations.
c. Media planning plays a significant role in the execution of these programs.
5) Profitability.
a. Media planning has now become a profit center.
b. Some agencies get the media planning business while others get the
creative business.
(
*****NOTES: Use Exhibit 7.1 Here*****
)
C. Unbundling has given media executives a greater role in the overall planning of advertising strategy.
4. Basic Media Strategy
A. Traditionally, media planners have used a building block strategy to develop a media schedule.
1) Start with the medium that reaches the largest audience and work down to the one that reaches the smallest.
2) Determining the first two or three “blocks” is easy. From there on down it is not.
3) Media options are growing each year.
a. The Internet.
b. Videogames.
c. Interactive television.
4) Media planners have to go beyond costs in developing plans and examine qualitative factors of the media such as communication interactions between the audience and the media.
B. Historically, the advertising process began with the development of broad marketing and advertising strategies, moved to creative execution, and finally to media placement. Changes in this notion include:
1) Qualitative factors of media. The qualitative core attributes of each medium interact with advertising messages to enhance or diminish the advertising.
2) Fading distinctions among media.
a. Technology is changing the fundamental relationships among media, audiences, and advertisers, creating an environment of unclear distinctions.
b. Media planners must be more creative in utilizing media vehicles today and look less at the distribution system and more at the audiences and communication effectiveness.
3) Media accountability.
a. There is pressure on media planners to become more knowledgeable in areas not formerly part of their responsibility.
b. Research shows that networks have distinctive brand identities that appeal to certain demographic and buyer categories.
c. Advertising accountability means that businesses want to link their advertising to specific sales of their brands; made even more important by the influence of technology on the media.
4) Value-added opportunities are incentives offered by the media to advertisers to entice them to purchase more advertising space in their media vehicles.
1. Can be anything from product placements, event sponsorships, or mixed-media promotions to tickets to sporting events or remote broadcasts.
C. Need to find ways to better link advertising and product sales even more important as technology continues to change the nature of both mass media and advertising.
0. In the near future we will not be dealing with distinct media vehicles, but there will be a convergence of media.
0. Consumers will have greater control over communication outlets, selecting only those entertainment, information, and advertising messages they want.
0. Organizations we view as media today will be information sources, and the carriers of this information will be limited.
D. Media Characteristics.
1) It is necessary to have a basic working knowledge of the major media characteristics and functions, both editorial and advertising.
2) Media planners must keep an open mind, finding the best fit for the marketing and promotional goals of clients.
3) There will be hard budget choices due to the growing number of media choices.
4) Strengths and weaknesses of media vehicles will be discussed in future chapters.
5. Putting It All Together: The Media Plan
A. Media planners must be able to use the distinctive attributes of each medium as part of a sophisticated analysis that leads to a complete media plan for an advertising campaign.
B. Elements of a typical media plan:
(Note: See the five-part media plan in this section for specific details and lists of the plan; specific units of the plan are addressed in the following sections of this outline.)
Standard Media Plan components include (see p. 242 of text):
1) Marketing analysis: including market strategy, product benefits, pricing strategy, and competitive environment assessment.
2) Advertising analysis: including fundamental advertising strategy and budget.
3) Media strategy: matching media vehicles and considering creative and communication factors.
4) Media scheduling: including CPM estimates.
5) Justification and summary: including ad goals, research plans, and
contingencies.
C. Target Audience.
1) No area in a media plan is more critical to the success of the advertising campaign than the proper identification of the prime target market(s) for a brand.
2) Rather than demographically-oriented, this identification is more likely focused on identifying consumer needs, and the product benefits that meet these needs.
3) Buyers and planners must keep their focus on the consumer, product, and benefit rather than just reaching the greatest target audience at the lowest cost.
4) Until recently, media planners tended to concentrate on overall audience delivery by various media and the most common way of measuring efficiency was cost per thousand (CPM):
a. The formula is:
CPM = ad cost x 1,000
circulation
b. Example: People Weekly magazine has a circulation of 3,823,600 and a four-color page rate of $198,500.Then, CPM is calculated:
People Weekly CPM = $198,500 x 1,000 = $51.91
3,823,600
c. In order to measure People Weekly’s efficiency in reaching any particular
audience, we can use some variation of the weighted or demographic CPM.
d. Of the total number of readers in the above example, 1.5 million have children underage 3. For this target audience:
Weighted CPM = $198,500 x 1,000 = $132.33
1,500,000
1. Any demographic lifestyle, product user or psychographic data could be used.
1. CPM figures are important only as comparisons with those of other media.
g. Now some measure of communication impact and audience awareness can be added to the CPM mix.
h. Other considerations that need to be taken into account include:
1. Creative predispositions of the audience (i.e., teens may prefer radio to print).
2. Qualitative environment for the message—car magazines for car buyers.
3. The synergistic effect—media combinations that are greater than the sum of each one.
4. The creative approach.
D. CPM adjustments that might be necessary to take into account communication
factors:
1) Probability of exposure to a medium. Should equal weights be given to all forms of the mass media?
2) Advertising exposure weights to equalize the probability of an ad being seen.
3) Communication weights to equalize the probability of an advertising message communicating.
4) Frequency of exposure weights in the same medium. Does the first exposure have the same or greater value than subsequent exposures?
E. Research has shown that high levels of audience involvement with a medium are positively related to advertising response.
F. Claritas’ Potential Rating Index by Zip Market (PRIZM).
1) A shortcoming of many audience analysis methods is that they consider only a single variable.
2) An innovation for segmenting markets on a multiple-variable basis is the Potential Rating Index by Zip Market (PRIZM) developed by Claritas Corp.
a. PRIZM NE divides the population into 14 social groups and further subdivides these large segments into 66 subcategories. The primary variables for determining these social groups are lifestyle and income.
b. The value of these PRIZM groups is that these general categories can then be matched with those products and media that members of that particular group are most likely to use.
*****NOTES: Use Exhibit 7.2a and 7.2b Here*****
6. Communication Requirements and Creative Elements
A. Media planners are interested increasingly in the differential value of various media and the value they add or subtract to specific advertising messages, that is, the engagement these media provide.
1) Account supervisors and clients recognize the importance of early involvement of the art directors, copywriters, and media planners to provide creative input in positioning and/or advertising a brand.
2) Particularly now that value-added opportunities are an important part of the media buying and planning process, it is necessary for both the creative and media teams to know what opportunities are most desirable for a brand to pursue.
B. There is a wide gap between advertising exposure and advertising communication.
1) The greater the input from the account team to both media and creative, the better the communication and coordination.
2) Early decisions with proper input improves price negotiation and time or space
selection.
C. A major criticism has been that advertising execution has not fully utilized the communication strengths of the various media.
D. The convergence of media outlets, new media technology, and availability of
interactive approaches for audiences has necessitated the cooperation to create the
greatest impact on an audience that is in control of the communication process.
7. Geography—Where Is the Product Distributed?
A. Geographical considerations are among the oldest factors in buying media.
1) Today, media-planning boundaries are often much smaller than in previous years.
2) Geographical considerations are more important as advertisers find that consumers in different parts of the country demonstrate different attitudes and opinions concerning various product categories.
3) Media distribution demonstrates unpredictable patterns, like products.
4) Media planners not only need to know where prospects are located, but also how consumers in different areas rate in terms of current and future sales potential.
5) A common method is the brand development index (BDI)
. This is a method of allocating advertising budgets to those geographic areas that have the greatest sales potential.
6) Research data allow marketers to more narrowly define segments, leading to
greater use of localized media.
7) Localization can supplement a national campaign effectively.
*****NOTES: Use Exhibit 7.3 and 7.4 Here *****
8. Media Tactics: Reach, Frequency, Continuity, and Budget
A. The media planner deals with four primary elements in developing the final media
schedule:
1) Reach (also called coverage) is the number of different people exposed to a
single medium or, in the case of a multimedia campaign, the entire media
schedule.
1. It may be expressed as the number of prospects or as a percentage of your target audience.
1. It represents a nonduplicated audience.
2) Frequency is the number of times each person in the audience is exposed to your media schedule.
3) Continuity is the length of time over which a campaign will run or the length of time that reach and frequency will be measured.
4) Budget is the major constraint of any advertising plan. The core consideration in all media planning.
B. The value of each media vehicle should be measured according to three criteria:
1) The cost of the vehicle.
2) The number of target market members or the weighted target market quality of the audience reached by the vehicle.
3) The effectiveness of the advertising exposures the vehicles deliver.
C. From a practical standpoint, the media planner has control over reach and frequency.
1).The budget is a strategic decision largely determined by the client.
2) Reach, frequency, and continuity must be balanced against the demands of a fixed budget.
*****NOTES: Use Exhibit 7.5 Here*****
D. Reach tactics:
1) Prime time television, reaches mass audiences, but is expensive.
2) Daily newspapers cover 30 to 50 percent of most markets.
3) Large circulation magazines have a similar function as television; but reach smaller overall audiences.
E. Frequency tactics:
1) Cable television, particularly specialized outlets.
2) Special interest magazines, reach same audiences over several issues.
3) Radio, reaches loyal target markets.
F. The overriding motive of media planners is to achieve cost efficiency with media dollars, although communicating effectively to the target audiences.
G. Planners must take care to precisely measure the value ofa particular prospect, medium, or message to the overall measure of advertising effectiveness.
9. The Media Schedule
A. One of the final steps in the media planning process is the development of a detailed media schedule.
1) The media schedule is a detailed blueprint or calendar for the media portion of the campaign. It is also a guide for media buyers to execute the media strategy developed by the planner.
2) This schedule details what media will be bought, when it will be purchased, and how much time or space will be used for each advertisement or commercial.
3) The advertising schedule for a national brand may entail dozens or even hundreds of similar decisions; time availability is also a concern.
4) The process of broadcast buying has improved in recent years with the addition of electronic data interchange (EDI). This is a means of connecting the agencies, clients, and media involved in the buying process.
a. System is more efficient and significantly reduces errors by decreasing the number of people involved in the buying and billing process.
b. Another electronic media-buying process and brokering service clearinghouses are becoming more important as the process of linking stations with agencies and clients becomes more complex.
B. Flighting is one of the most used advertising scheduling techniques.
1) It consists of relatively short bursts of advertising followed by periods of total or relative inactivity.
2) It appeals to those who perceive that they do not have enough money to reach all their prospects with a consistent advertising program.
3) Advertisers must guard against significant erosion of brand awareness between flights.
4) In a steady schedule, awareness peaks fairly quickly (after about 20 weeks) and afterward shows little if any increase.
a. Flighting saves budget dollars, reaches more prospects, and builds higher levels of brand awareness in the long term.
*****NOTES: Use Exhibit 7.6 Here*****
5) Regardless of the flighting schedule used, the following factors should be considered before using the strategy.
a. Competitive spending.
b. Timing of flights.
c. Advertising decay.
d. Secondary media.
6) Pulsing is a less extreme form of flighting, using advertising more or less continuously but with peaks during certain periods.
C. The pressure of competition.
1) Advertisers must constantly be aware of what the competition is doing in advertising strategy, product development, pricing tactics, and other marketing and promotional maneuvers.
1. The media planner must develop a campaign that distinguishes his or her product/brand from the competition.
1. Rather than operating from a defensive mentality, advertisers should take practical stance in determining what their marketing and advertising plans can reasonably accomplish and how they meet the inroads of competing brands.
4) Advertising agencies bring an objective voice to the table—a key to success.
5) Advertisers must undertake a thorough and candid appraisal of all aspects of the competitive situation.
D. The budget.
1) If there is any advertising axiom, it is that no budget is ever large enough to accomplish the task.
2) The art of media planning is solving the problem of large media constantly demanding higher and higher rates with advertising clients demanding more cost efficiency to their advertising dollars.
3) Advertisers and their agencies have reacted to the cost squeeze by instituting more stringent cost controls on media costs and accountability for their advertising dollars.
4) As media continues to fragment, advertisers will continue to look for alternative, nontraditional methods of promotion to hold costs down.
5) In response to increases in advertising costs, advertisers are more precisely defining their prospect to cut down on waste circulation and are negotiating more aggressively with media for time and space.
6) The media schedule is normally summarized in a flowchart that presents the
overall media schedule as well as their audience estimates and costs.
Chapter8
Using Television
Chapter Objectives
After reading this chapter you will understand:
1.
The diversified nature of the television industry
2.
The multiple roles of television as an advertising medium
3. The changing position of network television
4. Syndicated rating services and television research methodologies
5. The various segments of television viewing
Chapter Overview
Television is truly a multidimensional medium with the consolidation of ownerships, blending of technology, and the co-producing of programming. As the future penetration of digital television makes interactivity a reality, both advertisers and programmers will have to adapt to significant changes in the role of audiences with the medium. From a marketing standpoint, the television medium now exhibits wide diversity of advertising and programming opportunities made possible by a number of related broadcast and cable entities. From local cable programming to nationally broadcast events such as the Super Bowl, each segment of the television industry has special characteristics which are the subject of this chapter.
Lecture Outline
1. Introduction
A. An overview of the television industry sets forth advantages and caveats for marketers:
1) Pros:
a. Television reaches 99 percent of all U.S. households and is particularly popular with market segments that are primary markets for advertisers.
b. Television’s combination of color, sound, and motion offers creative flexibility for virtually any product message.
c. Despite recent audience declines, television remains extremely efficient for large advertisers wishing to reach a mass audience. Cable outlets and local broadcast stations add a local or regional component to national television schedules.
d. Government-mandated moves to digital television will open opportunities for advertising and programming by early 2009.
2) Cons:
a. The television message is perishable and easily forgotten without expensive repetition.
b. The television audience is fragmented and skewed toward lower-income consumers. Daily viewing time declines significantly as income increases.
c. Shorter spots, some as short as 15 seconds, have contributed to confusing commercial clutter.
d. With remote control use, channel surfing by viewers, and the VCR and DVR (digital video recorder), the amount of time spent viewing commercials by the average television user has greatly reduced.
B. Television had humble beginnings.
1) First thought of by Philo Farnsworth in the 1920s in Idaho, the idea was for an all-electronic system.
2) In 2008, the medium will mark its 60th anniversary.
a. The medium continues to exhibit dramatic change and innovation.
b. By February 2009, the government has mandated that the medium must introduce digital technology, bringing even more innovations in both advertising and programming.
c. Television has long been the most influential medium, even with those who do not watch it.
3) Quantitative dimension: approximately 99 percent of households have at least one television set.
a. Americans spend twice as much time with TV than with radio and 10 times more time than with newspapers; the average household viewing is more than 8 hours daily.
4) Qualitative dimension: television is definitely the medium for news, entertainment, and advertising.
a. According to a TVB (Television Bureau of Advertising) survey, television is the primary source of news by over 70 percent of watchers, with newspapers second at 12 percent.
b. Television’s positive credibility carries over to television advertising, rating highly in as an authoritative, exciting, influential, and persuasive medium.
5) The complexion of television has changed over the years, moving from a mass medium to a niche medium.
a. The trend began with the VCR and moved toward more interactivity with the Internet becoming a major catalyst for two-way television communication.
6) Television must continue to move toward more interactivity to combat the appeal of the Internet and to be successful in the future.
2. Television As An Advertising Medium
A. Introductory comments.
1. The purpose of television as an advertising medium is to function as an audience delivery system.
a. The real product of television is not programming and personalities, but in the manufacture, collection, and distribution of viewers to advertisers.
1. The first television commercial was aired in the summer of 1941 following a Federal Communications Commission (FCC) approval of 10 commercial television licenses.
3) Program options are growing at a high rate through not only network affiliate stations, but also independent stations and cable television outlets.
4) Cable networks growth.
a. By the 1980s, cable television had greatly expanded the number of stations, which viewers could receive.
b. By the 1990s, cable networks had evolved and began to compete with broadcast networks for advertising by the development of original programming, making available 50-plus channels.
c. Cable network programming began producing highly-acclaimed programs, which competed for prime-time audiences.
d. The result was television fragmentation, with both advertisers and audiences being drawn to this new programming.
5) Today’s television audience is fragmented over dozens of channels and thousands of other new media choices, including video games, CD-ROMs, and the Internet.
B. With digital capabilities, networks can deliver a number of services to a household over the same conduit.
1) Programming options will be greater in number and advertising can be tailored to individual buying preferences of individuals on an interactive basis.
2) The traditional relationships between the television industry and its advertisers will change.
3) Even with technological changes ahead, television remains a primary medium for advertisers.
4) Creative flexibility is offered.
5) Television encompasses all of the senses, using sight, sound, and motion, 24-hours a day.
1. It can reach all lifestyles.
7) A large number of advertising formats available.
C. Limitations of television include:
1) Cost—television is a very expensive medium. Cost is high in network television advertising, local and cable advertising, and production costs.
a. On a CPM basis, however, television is less costly than print media, although fragmentation and increased options for audiences will increase the CPM.
b. It is critical to not only consider the cost of television production but also the cost associated with more creative commercials.
2) Clutter—refers to any nonprogram material carried during or between shows.
a. Commercials represent 80 percent of the clutter; the balance being public service and program announcements.
b. The commercials time has grown (15 minutes per hour) and the length is shorter, going from primarily 30-second spots in 1980 to 15 second or less by 2005; thereby increasing the audience perception of advertising clutter.
c. To combat this problem and break through the commercial clutter, some television networks have experimented with reducing the number of commercials and advertisers, allowing some advertisers to buy all the commercial time within a particular program.
3. The Rating-Point System
A. The basic measure of television is the rating point
.
1) The rating point (TV) is the percentage of a population (either TV households or a specific group such as women 18–49 years of age) in a market a television station reaches with a program.
2) Basic calculation:
a. Rating = program audience/total TV households.
b. The rating, expressed as a percentage of some population (usually TV households), gives the advertiser a measure of coverage based on the potential of the market.
1. When ratings are expressed as percentages of individuals, the same formula is used, but the population is some target segment rather than households.
1. A household rating of 12 for a program means that 12 percent of all households in a particular area tuned their sets in to that station.
1. Prime-time network programs usually achieve a rating of between 6 and 16, with the average being less than 9.
B. Gross rating points (GRP), calculated by multiplying the insertions by the ratings, are where the weight of a schedule is measured in terms of the total ratings for all commercial spots bought.
(
*****NOTES: Use Exhibit 8.2 Here*****
)
1) Advertisers also use GRPs as the basis for examining the relationship between reach and frequency. Formulas are:
R x F = GRP or
GRP = F and GRP = R where R = reach and F = frequency
R
F
2) To use these relationships, you must know (or estimate) the unduplicated audience. When GRP is divided by reach (R) or frequency (F); we can estimate the percentage of the target market reached and the number of times each audience member was reached, respectively.
*****NOTES: Use Exhibit 8.2 Here; See page 263 for calculations *****
C. One of the principal merits of the GRP system is that it provides a common base that proportionately accommodates markets of all sizes. However, GRPs cannot be compared from one market to another unless the markets are of identical size.
1) The advertiser has to decide how much weight (how many GRPs) to place in their markets and for how long a period.
2) The answer to this may be whether the goal is reach or frequency.
3) To estimate the cost of television advertising on several shows, advertisers use the cost per rating point (CPP)
calculation.
The formula is:
CPP = cost of schedule or commercial
GRPs
*****NOTES: Use Exhibit 8.2 and 8.3 Here; See p. 264 for calculations on CPP*****
D. Limitations:
1. Should not be used to compare markets of different size (intermarket size comparison).
1. It does not tell us the number of prospects being reached by a program.
1. GRP, by itself, cannot tell us how effectively a broadcast schedule is performing.
1.
4. Share of Audience
1. Share of audience (or simply, share) is the percentage of households using TV that are watching a particular program.
1) Share of audience is often used to determine the success of a show. It is used by advertisers to determine how a show is doing against its direct competition.
2) The rating calculates the percentage of total TV households that are tuned to the program.
Formula: Rating = show viewers x 100 = rating
total TV households
3) The share calculates the percentage of households using television (HUT) that are tuned to the program.
Adjusted formula: Share =
show viewers x 100 = share
HUT
(NOTE: HUT indicates the actual number of viewers.)
5. The Many Faces of Television
A. Each form of television (i.e., network television, cable, syndicated programs, etc.) has its own advertising pricing structure, programming, target audience, and rating expectations.
1) The use of television as a personal medium is further demonstrated by the number of multi-set households.
2) More diverse advertising opportunities will occur through technological advances and as the wireless world advances.
3) The process of television media planning and buying is extremely complex.
*****NOTES: Use Exhibit 8.4 Here*****
1. Network Television
A. Erosion of audiences for top-rated network shows continues.
1) This probably occurs because of the proliferation of television options.
2) The Big Four (ABC, CBS, FOX, and NBC) have surprisingly sustained share levels in spite of the proliferation of television options.
*****NOTES: Use Exhibit 8.5 Here*****
B. Clearance and affiliate compensation.
1) Networks are comprised of local stations that contract to carry network programming.
2) The four major networks have affiliates in most television markets.
a. The newest networks are WB and UPN. They have affiliation agreements with smaller stations in most markets.
3) Networks sell national advertising on the basis of station clearance
.
a. Network clearance is expressed as the percentage of the network’s station lineup that has agreed to clear their schedules for network programming.
4) Another primary factor in the relationship between networks and affiliates is station compensation
.
a. Compensation is a system whereby networks share advertising revenues with their affiliates in return for using local station time for their programs.
b. As the cost of network programming has increased and the audience levels have fallen, the relationship between networks and stations over compensation has become contentious.
1. Networks are demanding that local affiliates share in the cost of this programming because the value of a station’s local advertising spots is a result of the audience gained through popular network programming.
2. Many local stations are now reviewing the value of the cost to continue affiliation with national networks.
C. Network ownership.
1) Most networks are relatively small parts of larger conglomerates.
2) They are usually not among the most profitable units of the conglomerates.
3) Mergers and acquisitions raise troubling questions regarding the free flow of news, restriction of competition, the impact on rates, and internal conflict of interest among units.
4) Congress is examining ownership questions that might lead to control that is excessive.
D. Network commercial pricing and declining audience shares.
1) Television is in the business of delivering prospects to advertisers.
2) High costs are affecting the commercial pricing structure.
3) The average cost of a 30-second spot is currently $150,000 on the four major networks.
a. Some spots cost over $550,000.
4) Network advertising revenues are growing significantly, but media buyers complain that these increases are more a result of more commercials (clutter) and unjustified rated increases that have resulted in higher CPMs.
E. Block programming.
1) The television audience is fickle.
2) Research has consistently shown that shows do not stand on their own, but are greatly influenced by:
a. Preceding shows called the lead-in.
b. The total daypart schedule, called a block.
c. Strong lead-ins are very important and are closely watched by local stations.
d. Strong lead-ins responsible for escalating prices paid for by off-network syndicated programs.
e. Network programmers are very aware of the ebb and flow of audiences.
f. Pricing of new network shows is dependent on their placement in the network schedule.
g. A new show sandwiched between older but successful shows is in a hammock position.
h. Once a new show is on the air, it is judged by how it keeps the audience from its lead-in and sustains the strength of the block.
F. Network television advertising criteria. Three factors considered to determine buying decisions:
1. Demos—demographics of television audiences becoming more important than just the size of the audience.
2) CPMs—CPM levels; other advertisers driven by cost considerations, evaluating cost efficiencies and CPM levels on an equal basis with audience demographics.
3) Demand—demand for certain programs. Not only a function of demographics and CPM, but also of qualitative factors created by a special event, personalities, or publicized final episodes.
4) Other factors:
a. Avails (available times)—broadcast media do not have the advantage of flexible advertising inventory.
1. Networks must ration prime commercial spots among major advertisers, combining top-rated avails with less popular ones.
2. Advertisers buy package plans, placing commercials across the entire schedule.
b. Up-front buys. Each May, major advertisers begin the negotiation process to buy commercials on the network prime-time lineup for the coming fall season. Most prime-time spots bought during this period. Has become complex with a number of trends:
1. Greater demand for time. A very competitive marketplace.
*****NOTES: Use Exhibit 8.6 Here*****
2. Globalization. Positioning in the context of global media plans of multinational clients.
3. Special events. Time demands brought by events like political elections and the Olympics.
c. Scatter buys
. The up-front season is followed by scatter plan buys throughout the year, usually quarterly.
1. Designed for larger advertisers that want to take advantage of changing marketing conditions or for smaller advertisers shut out of up-front buys.
2. Sell at a higher CPM because there is less inventory and smaller advertisers don’t have the leverage to negotiate better CPM levels.
G. Negotiation.
1) This is the key to network buying.
2) Declines in network rating and share levels have created a more contentious atmosphere.
3) Negotiators look for time across a number of television options to reach a particular target market.
4) Small differences can make big differences in profits and revenues with respect to rating points.
H. Make-goods.
1) Make-goods are concessions to advertisers for a failure to achieve some guaranteed rating level.
a. Usually offered on the basis of total GRPs for an advertiser’s television advertising schedule.
b. Usually take the form of future commercials making up for rating shortfalls.
2) Make-goods are now a major contention between agencies and the networks.
3) The make-goods put pressure on networks to deliver what they have promised—the audience.
7. Spot Television
A. When national advertisers buy from local stations, the practice is known as spot television or spot buys.
1) The idea is to spot coverage in certain markets rather than blanket coverage.
2) The disadvantage is that it requires a great deal of planning and paperwork because everything is bought on a one-to-one basis.
a. It is more costly on a CPM basis than network buys.
3) Spot advertising is very competitive; more than 1,000 local stations, plus several thousand cable outlets competing for spots.
4) Spot market expenditures will be relatively flat as advertisers move dollars toward other forms of local television (as in cable).
5) Most spot advertising is placed through station representatives or
reps.
a. The rep is paid a commission by the station based on the time sold; and may have 100 or more station clients.
b. Commission ranges from 5–10 percent depending upon station size.
c. Unlike a real network, stations are linked only through being clients of a particular rep; they are called nonwired networks.
d. Nonwired concept is simply a means of providing buying efficiency and convenience for spot advertisers.
6) The rep’s role in the spot market will probably change significantly as consolidation in the television industry accelerates. Some station groups are large enough to support their own national sales force.
7) The primary purposes of the spot buy are:
a. To allow network advertisers to provide additional GRPs in those markets
with the greatest sales potential.
b. To provide businesses with less than national or uneven distribution a means of avoiding waste circulation incurred by network television.
c. To allow network advertisers control for uneven network ratings on a market-by-market basis.
d. National advertisers can use spot advertising to support retailers and provide localization for special marketing circumstances.
*****NOTES: Use Exhibit 8.7 and 8.8 Here*****
B. Defining the television coverage area.
1) Television research uses three levels of signal coverage to designate station coverage of a market area.
a. Total survey area is the largest area over which a station’s coverage extends.
b. Designated market area (DMA) is a term used by A.C Nielsen Company to identify those counties in which home market stations receive a preponderance of viewers.
c. Metro rating area corresponds to the standard metropolitan area served by a station.
C. Local television advertising.
1) Television advertising is increasingly purchased by local advertisers.
2) Buying and scheduling spot and local TV time. Media buyers must be familiar with the specifics of both of these aspects.
3) The TV day. Typical daypart designations are:
a. Morning: 7:00–9:00 a.m., Monday through Friday.
b. Daytime: 9:00 a.m. – 4:30 p.m., Monday through Friday.
c. Early fringe: 4:30–7:30 p.m., Monday through Friday.
d. Prime-time access: 7:30–8:00 p.m., Monday through Saturday.
e. Prime time: 8:00–11:00 p.m., Monday through Saturday and 7:00–11:00 p.m. Sunday.
f. Late News: 11:00–11:30 p.m., Monday through Friday.
g. Late fringe: 11:30–1:00 a.m., Monday through Friday.
4) Preemption rate. A considerable portion of spot TV advertising time is sold on a preemptible (lower-rate) basis, whereby the advertiser gives the station the right to sell a time slot to another advertiser that may pay a better rate for it or that has a package deal for which that particular spot is needed. Forms include:
a. Nonpreemptible.
b. Immediately preemptible (IP).
c. Preemptible with two weeks notice.
5) Other forms:
a. Special features. News telecasts, weather reports, stock market reports, etc., are often sold at a premium price.
b. Run of schedule (ROS). Advertisers can earn a lower rate by permitting a station to run commercials at its convenience, whenever time is available, rather than in a specified position.
c. Package rates. Different periods of the day are sold as a package.
d. Product protection. Every advertiser wants competitive products as far away as possible from their time slots. Most stations will attempt at least a 5-10 minute break in between competitive commercials. The only guarantee is that they will not run them back-to-back.
e. Scheduling spot and local time.
1. Rotation of schedule refers to the placement of commercials within a schedule to get the greatest possible showing.
2. Horizontal rotation spreads spots throughout the week.
3. Vertical rotation spreads spots throughout the day or during a program.
8. Television Syndication
A. Television syndication is the sale of television programming on a station-by-station, market-by-market basis.
1) Major syndicated shows are sold on an advertiser supported or barter basis.
2) Barter syndication refers to the practice of offering shows to stations in return for a portion of the commercial time in the show, rather than selling the show for cash.
3) A majority of the commercial time on syndicated shows is packaged into national units and sold to advertisers.
4) Some spots are pre-sold on a national basis and the remaining time sold to local and spot advertisers.
5) Syndication began when producers sold their canceled network shows to stations for inexpensive “fillers” during late afternoon or other time period’s not programmed by the networks. During this time it was a minor portion of television advertising.
6) Syndication accounts for close to $4 billion in advertising revenues and major syndicated shows provide coverage comparable to the broadcast networks.
7) The key to syndication’s success is quality programming. The types include:
a. First-run—made for syndication programs.
1. Off-network syndication—reruns of former network shows.
1. Off-network shows reach more predictable demographic segments than first-run products.
8) The three-tier pricing structure includes:
a. The top-10 blockbusters (most expensive, but proven).
b. Fall short of the top 10 but have sizable, loyal audiences (medium pricing).
c. Lower tier of talk shows and less-popular reruns (low pricing).
9) The demand for syndicated shows is driven by television’s insatiable demand for all types of programming.
a. It is expected that broadcast syndication will surpass cable networks in achieving significant levels of audience reach.
b. Some stations have moved to sign long-term contracts with program producers to guarantee access to certain shows.
B. The audience for syndicated television.
1) Syndication has some of the same characteristics as cable.
2) Audiences are delivered; however, these audiences are spread over several shows.
3) Syndicators sell programs on the basis of multiple airings known as gross average audience ratings.
4) The future of syndication is very bright because local stations find it very lucrative.
a. More commercials can be sold in syndicated shows; network shows allow the station to sell 1 minute of commercial time and syndicated shows allow 6–12 minutes of commercial time.
5) Top ten syndicated television advertisers include large package-goods companies and pharmaceuticals.
(
*****NOTES: Use Exhibit 8.10 Here*****
)
6) Syndications will be a major advertising vehicle for the foreseeable future.
C. Stripping.
1) Popular shows are “stripped” across a time period for an entire week (i.e., Wheel of Fortune appears at the same time Monday through Friday).
a. This practice is cost effective and builds a consistent audience for selling commercials to potential advertisers.
9. Cable Television.
A. Cable systems began in Pennsylvania in the 1940s. The systems (then known as CATV) brought TV into rural areas.
1) By the 1970s, cable systems had spread throughout the country, moving from rural to major cities.
2) Cable systems are now a major medium with a household penetration of more than 72 percent.
3) Cable advertising has shown double-digit increases in recent years.
B. The contemporary cable television industry.
1) Audiences now have a wide choice of options from cable operators.
2) The success of cable can be traced to two related elements:
a. Brand identification based on unique, selective networks and programs that appeal to targeted demographic audience segments.
b. The investment by cable networks in first-run programming.
3) Unlike networks that reach huge audiences, cable provides advertisers with much smaller niche audiences who exhibit both common demographic characteristics and interests.
4) Favorable brand recognition attracts large national advertisers to this medium.
5) Cable networks have begun to add original programming in order to attract both viewers and advertisers; billions of dollars are being invested in original programming.
*****NOTES: Use Exhibit 8.11 Here*****
C. The future of cable advertising. Factors that make cable television an attractive medium for advertisers:
1) Ability to target audiences.
2) Low cost.
3) A strong summer season.
4) Opportunity for local and spot cable advertising.
D. New advertising options in the future for cable will be:
1) Cable network magazines that offer advertisers the opportunity to negotiate cross-media deals to potentially have more impact on their target audiences.
2) Traditional advertising spots carried on regular analog cable.
3) Targeted advertising using digital technology.
4) Interactive advertising offered through software added to cable boxes.
1. Shopping directly from the TV screen.
1. A new innovation is cut-ins on network programs for local advertisers.
c. Interconnects occur where cable systems interconnect and link themselves to distribute commercial advertising schedule simultaneously.
E. New research methods have been developed to help measure cable’s impact; Nielsen Media Research and Mediamark Research Inc. offer a number of such services.
10. Videocassette Recorders and Digital Video Recorders
A. The videocassette recorder (VCR) has become as commonplace as TVs.
1) 89 percent of American homes have a VCR and many have more than one.
2). The VCR is almost a medium in itself.
3) Time-shift viewing allows one to see a show after it has already been broadcast.
B. Recording shows has its dark side for television advertisers.
1) Half the recorded shows are never watched.
2) Commercials can be skipped.
3) Time-shifting viewers tend to be demographically different than original audience.
C. Some industry observers predict that the VCR will be replaced by digital video recordings (DVR), which offers more flexibility.
1. This technology does not require a tape and recording is quicker and easier and stores many more hours of programming than a VCR.
1. It also allows advertisers to customize commercials for individual viewers.
1. Advertisers worry, however, this that technology also makes skipping commercials very easy
1. There is also a concern that pay-per-view movies will decrease commercial viewing.
5) DVRs did not take off as quickly as predicted, due to the high cost of a unit. However, some satellite and cable television companies began offering DVRs to lure subscribers.
a. In 2006, DVR penetration of US television households was about 11 percent.
b. DVR households tend to be more upscale and more likely to be heavy users of magazines, newspapers and the Internet.
6) DVRs provide technical convergence of computers, interactive communications and multiple options for standard television. Advertisers will have to better target their commercials to audiences.
11. Brand Integration or Product Placement
0. Product placement is when a real brand or product is included in a media vehicle in exchange for goods, services, and/or money. The brand is integrated into the programming so it appears realistic to the viewer and may lead to a positive impression of the brand.
0. Advertisers have been more aggressive in seeking ways to integrate their brands into television programs.
1. Brand integration can range from having the product appear in one episode to sponsorships of entire shows.
1. New technology is making virtual product placements possible.
1. Advertisers debate the value of integration and it is not seen as something that will replace commercials.
12. Syndicated Rating Services
A. Introduction.
1) It is crucial for advertisers to have reliable data on which to make buying decisions and to determine if they are paying a fair price.
2) As television has become more fragmented, the measurement of customer delivery has become more difficult and complicated.
a. As audiences for each television outlet decrease, the magnitude of error increases as a percentage of the total viewing audience.
b. Because most advertising rates are determined by ratings, concern is increasing.
B. The Nielsen ratings.
1) The primary supplier of syndicated television ratings is Nielsen Media Research.
a. The company was founded in 1923 by A. C. Nielsen to collect radio audience information.
b. The company began television rating services in 1950 with the Nielsen Television Index (NTI).
c. Data is collected nationally from 9,000 households.
d. A People Meter is attached to the selected household’s television set to monitor what is being watched, with buttons assigned to each person living in the home.
(
*****NOTES: Use Exhibit 8.13 Here*****
)
2) A Nielsen Station Index (NSI) monitors local television watching.
a. In the 56 largest markets, set meters measure household television set usage on a continuous basis.
b. In 210 television markets, Nielsen provides diaries in which individuals record their viewing habits. These are administered during four sweep periods (sweeps) used to set the price of local commercials for the coming quarter.
3) In recent years, the rating system has come under increasing scrutiny. Areas of concern include:
a. Sweep weeks. In theory, an efficient, inexpensive means of estimating quarterly local market ratings. In fact, local market stations have sometimes used the period to artificially distort their ratings by manipulating programming.
b. Diaries. Due to 50-plus-channel reception, the diary is an antiquated tool. However, people meters are very expensive. Use of people meters would largely eliminate the current sweeps problem by providing ongoing measurements.
c. Exposure value. Estimating exposure levels for television commercials versus set usage.
1. Who is watching?
2. Who is paying attention?
3. What level of attention being given to any particular show?
4) Nielsen and Arbitron announced a joint research effort to solve audience measurement problems, using portable people meters (PPM)
a. It eliminates the nuisance of diaries and does well at measuring out-of-home audience measurements of radio.
b. Cost, however, is a major barrier.
5) It is clear that methods of measurement used in the past will not work in the fragmented landscape of the twenty-first century.
a. But how much stations, networks, and advertisers are willing to pay will be a primary issue.
C. Qualitative Ratings.
1) Another type of qualitative audience measurement seeks to offer insight into audience involvement or degree of preference for particular television shows or personalities.
2) The best known qualitative service is Marketing Evaluation, which compiles a number of popularity surveys called “Q” reports.
1. The most familiar of these are TVQ and Performer Q.
1. Example: If a TV show reveals 50 percent of the population familiar (FAM) and 30 percent rank it as their favorite (FAV), then Q = 60.
Q = FAV or 30 = 60
FAM 50
c. Because of fragmentation TVQ scores have gone down.
Chapter
9
Using Radio
Chapter Objectives
After reading this chapter you will understand:
1. The role of radio as a selective medium
1. Radio’s strength as a secondary medium
1. Radio’s ability to reach audiences at a low cost
1. Attempts to overcome radio’s lack of a visual dimension
1. Different roles of AM and FM radio
1. The rating systems used in radio
Chapter Overview
With a host of formats and numerous stations, even in the smallest towns, radio provides advertisers with options to reach very narrowly defined niche prospects. Radio is also among the most popular media with high levels of listenership throughout the day. Radio offers the opportunity for advertisers to reach some audiences, such as teenagers, working women, and light television viewers that are sometimes hard to reach with other media.
Lecture Outline
1. Introduction
A. The pros of using radio include:
1) Radio is a primary medium for targeting narrow audience segments, many of whom are not heavy users of other media.
2) Radio is a mobile medium going with listeners into the marketplace and giving advertisers proximity to the sale.
3) Radio, with its relatively low production costs and immediacy, can react quickly to changing market conditions.
4) Radio has a personal relationship with its audience unmatched by other media. This affinity with listeners carries over to the credibility it offers many of the products advertised on radio.
5) Radio, with its low cost and targeted formats, is an excellent supplemental medium for secondary building blocks to increase reach and frequency to specific target markets.
B. The cons of using radio include:
1) Without a visual component, radio often lacks the impact of other media. Also, many listeners use radio as “background” rather than paying full attention.
2) The small audiences of most radio stations require numerous buys to achieve acceptable reach and frequency.
3) Adequate audience research is not always available, especially among many small market stations.
C. From 1926 to the mid-1950s radio was the most prestigious of the national media. Several factors, however, led to a decline in popularity with advertisers.
1) After the advent of coast-to-coast television broadcasts and the advent of instant hits such as I Love Lucy and The $64,000 Question in the early 1950s, radio’s popularity as a national medium quickly declined.
D. Despite it minor position on the national scene, its appeal as a “local” medium grew, generating impressive reach and producing over $18 billion in revenues.
1) Radio demonstrates impressive reach.
2) 94 percent of adults and 93 percent of teenagers are reached by radio.
3) Radio’s targeted program formats create intimate, one-to-one relationships with prospects.
4) Radio offers creative effects at lower production costs than any other media.
*****NOTES: Use Exhibit 9.1 Here*****
2. The Contemporary Radio Industry
A. Radio is having to adapt to a new competitive environment and different economic structure.
1) Only a few years ago the FCC limited the ownership of FM and AM stations.
2) The rules changed in 1996 with the Telecommunications Act of 1996, allowing corporations or individuals to control as much as 35 percent of the national market.
3) The radio industry changed from one of numerous small groups to one of a few huge conglomerates.
1. Some conglomerates have as many as 1,200 stations.
1. Some radio stations are owned by large media companies, which also own television stations and newspapers.
4) Radio more efficiently reaches niche markets.
B. Radio and new technology.
1) Some observers think that the radio platform of the next decade will be as an Internet business, with computers and satellites rather than the radio dial.
1. Web sites have become the new business model for radio, and Internet radio listening is beginning to grow.
1. HD Radio and satellite radio also pose challenges for traditional broadcast radio.
4) Though predicting the future for radio will be difficult, trends include:
a. The size of the audience listening to radio stations over the Internet is growing rapidly; 40 percent in June 2005 said they had listened. More listeners to Internet radio are becoming habitual listeners.
1. Over 20 percent of Americans age 12 and older said they listened to radio stations online in the past month.
2. About 6 percent said they listened to radio stations over the Internet in the past week.
0. Young audiences are more likely to prefer to listen to the radio via the Internet.
*****NOTES: Use Exhibit 9.2 Here*****
3. Features and Advantages of Radio
A. Radio is an ideal medium for the segmented marketing of the twenty-first century.
1) In many respects, radio was the forerunner of localized marketing.
2) Radio can use words, voice, music, and effects to establish a one-to-one connection with prospects that uniquely grab their attention.
3) Radio uses the most powerful form of communication—the human voice.
4) Radio can generate an emotional response.
5) Production costs are a fraction of that of other broadcast media.
B. According to the Radio Marketing Bureau, radio has the following unique advantages:
1. Radio targets. Its great strength is its advertising ability to reach selective audiences.
(
*****NOTES: Use Exhibit 9.3 Here*****
)
2) Radio reaches a majority of the population several hours per day.
*****NOTES: Use Exhibits 9.4 Here*****
3) Radio advertising influences consumers closest to the time of purchase. No other medium is present like radio just prior to prospects making purchase decisions.
4) Radio reaches light users of other media. Radio fills in the gaps in newspaper and magazine coverage of prime audiences.
5) Radio works well with other media. Radio increases frequency and reach by reaching non-users or light users of other media.
1. Much of radio listening takes place on an out-of-home basis.
(
*****NOTES: Use Exhibit 9.5 Here*****
)
7) Radio delivers consistent listening patterns. Unlike other media, radio does not experience seasonal audience drop-off.
8) Radio delivers its messages at a very low CPM level.
9) Radio provides advertisers with both immediacy and flexibility. Radio can react quickly to changing market conditions.
C. The simplicity of radio can be a major advantage in making tactical marketing decisions.
1) Even the smallest marketers can afford radio’s cost.
(
*****NOTES: Use Chapter Objective #3 Here*****
)
4. Limitations and Challenges of Radio
A. Four of the major problems facing advertisers who use radio are:
1) The sheer number of stations creates a very fragmented environment, especially for those advertisers needing to reach a general audience.
2) Clutter.
1. The medium’s lack of a visual element.
4) Increased use of MP3 players and digital radio.
B. Audience fragmentation.
1) The great strength of reaching a narrowly defined audience can also be a weakness when considered as over-fragmentation.
a. It is often difficult to reach a brand’s core prospects.
b. For those products with broad appeal, audience fragmentation has made it difficult to gain effective reach and frequency without buying several radio stations or networks.
c. Radio remains about the most effective means for advertisers to target their market.
d. Reach is facilitated by the great number of radio stations, numbering 10,600 in 2005.
*****NOTES: Use Exhibit 9.6 Here*****
C. Clutter.
1) Clutter is a major concern of advertisers.
2) The great number of commercials makes it less likely that listeners will recall any particular advertising message.
3) The number of radio commercials is significantly greater than television commercials.
a. With deregulation, the amount of time devoted to commercials has steadily increased.
1. Some stations run over 30 percent advertising during prime periods.
1. Increased clutter seems to impact young audiences the most.
D. Lack of a visual element.
1) A fundamental problem for advertisers when considering radio is its lack of a visual component.
a. Lack of visualization works against brand recognition.
b. With self-service retailing and competitive brand promotions, package identification is crucial.
2) Radio uses creative techniques to substitute the ear for the eye.
a. Radio creates a mental picture for the listener with sound effects, jingles, short and choppy copy, and vivid descriptions.
b. In recent years, radio has transferred television commercials to its own medium, allowing listeners to form their own advertising images by recall of previously viewed TV commercials.
E. Increased use of MP3 players
1. 85 percent of 12- to 24-year-olds would choose their MP3 player over broadcast radio as their preferred music source.
5. Technical Aspects of Radio
A. The signal.
1) The signal in radio is comprised of the electrical impulses that are broadcast.
2) A “good” signal means that a certain station can be heard clearly within its given territory.
B. Frequency.
1) Frequency
(used as a technical term) means the number of radio waves that pass a given point in a given period of time.
2) The frequencies for AM are measured in kilohertz and FM frequencies are measured in megahertz.
C. Amplitude.
0. Describes the height of the electromagnetic waves, whose range resembles the difference between an ocean wave and a ripple in a pond.
0. Speed is measured by the frequency with which a succession of waves passes a given point per minute.
0. Two separate systems carry radio waves, based on amplitude and frequency.
1. Amplitude modulation (AM). Variations in sound waves by variation in its amplitude (constant frequency).
1. Frequency modulation (FM). Variations in sound wave by variations in its frequency, with amplitude constant.
1. The AM signal is generally inferior, but can carry farther than FM.
1. FM signal distances are limited, but tonal quality is very fine.
1. Reception quality is determined by atmospheric conditions and station power.
*****NOTES: Use Exhibit 9.7a & b Here*****
6. Selling Radio Commercial Time
A. Radio advertising dollars are concentrated at the local level.
1) Local dollars are still greater than network or spot advertising levels, in spite of the growth of the latter.
2) Buying radio time is difficult because of the number of station options and formats.
1. There are over 850 stations in Texas alone.
1. There are dozens of distinct formats, including over 700 Latin/Hispanic format stations.
3) Recent consolidations of ownership will probably change radio rate structure and the way time is bought.
a. The media buyer will have to deal with less stations and independent rep companies to make a buy.
4) Competition is still fierce for the local advertiser’s dollar.
0. Radio has to compete with other selective media such as newspapers, the Yellow Pages, and direct response.
0. Radio is competing with newer media such as the Internet and both broadcast and cable television, which see local advertising as major profit centers.
B. Network radio.
1) Network radio began its decline in 1948 with the introduction of television.
1. Average ratings for previously popular comedy shows, soap operas, and westerns dropped to less than 6 percent, with the last major dramas Suspense and Have Gun Will Travel ending in 1962.
3) The next decade saw programming change from an entertainment format to one of news and occasional short features.
4) Although network radio is still a minor source of advertising dollars, it has remained stable at $814 million of the $19.6 billion spent annually in radio.
5) Radio networks are basically program providers and a single radio station may belong to several networks at the same time. As a result, the networks depend on local ratings to garner national advertising support.
6) Radio networks, like ABC, provide a number of targeted networks and provide individual programs and news breaks that are broadcast throughout the day.
7) Radio networks do offer some of the same advantages as television networks.
1. As with television, an advertiser can arrange for one insertion (commercial) for multiple stations and pay just one invoice.
1. Radio networks provide economical reach.
1. Radio networks target special audience segments who often are light users of other media.
8) Radio has benefited from the use of satellite technology. Consider the following when matched with satellite links:
a. Stations are guaranteed quality programming based on the latest audience research for a particular format.
b. Radio networks bring celebrities to the medium that local stations could not afford.
c. Even the smallest stations can obtain national advertising dollars as part of a network.
d. The cost efficiencies of sharing programming with several hundred other affiliates keep both personnel and programming costs to a minimum.
C. Spot radio.
1) Like television, spot radio is local time bought by national advertisers, amounting to $3.5 billion per year.
1. Used to build added reach and frequency to selected target markets.
1. The opportunity exists for advertisers to act quickly in response to competitive challenges and hit narrowly segmented markets with little waste circulation
(
*****NOTES: Use Exhibit 9.8 Here*****
)
1. Spot radio serves several important functions.
1. Provides added weight in selected regions or individual markets.
1. Popular with national companies with extensive retail outlets.
1. Provides flexibility and low cost to national advertisers.
1. Purchases are made through reps just like TV.
1. The best reps serve as marketing consultants for client stations.
1. The effect of consolidation on selling relationships is yet undetermined; reorganization has become the rule.
D. AM versus FM as an advertising medium.
1. FM dominates the overall listening audience and is the clear leader in most formats.
1. AM stations tend to reach an older audience with talk, news, and specialty formats such as gospel and nostalgia.
1. Growth of FM radio audiences and advertising revenues during the last 30 years is one of the most important trends in the industry.
1. FM programming for 30 years was confined to non-commercial and classical stations with little advertising.
4) In 1975, FM independent stations lost almost $10 million combined. Just 3 years later, these same stations had profits of slightly less than $25 million. This economic turnaround in FM radio was due to the following elements:
a. In 1972, the FCC ruled that owner of both AM and FM stations in the same market had to program different formats. This ruling opened the way for FM as a separate medium.
b. There is better sound quality with FM.
1. As the medium became more popular, the cost of FM sets declined.
1. Radio audiences turned to FM for the most popular music formats.
5) The emergence of talk radio is the only thing that may have saved AM radio from economic disaster in the past 20 years.
1. HD Radio may make it possible for AM stations to see a resurgence in listenership with its promise of high-quality sound.
E. Types of programming.
1) Radio is a medium constantly searching for targeted audiences.
2) The dominant format is music.
a. Radio audiences are very loyal to a station because of the type of music, sports, or information broadcast.
3) The most popular is the “country” format with nearly 2,000 stations.
a. The popularity had its origin in rural and small market areas.
1. To advertisers, the quality of the audience is more important than size.
5) It is extremely difficult for more than one or two stations with the same format to be successful in the same market.
a. Second and third tier stations, therefore, are constantly searching for niche formats.
6) Radio is considered a quasi-mass medium because there are only a limited number of listeners at any given time; low ratings of 1 to 3 are common.
a. Although television would consider a 1 or 2 percent increase hardly worth noting, that percent for radio might make a major difference.
7. Radio Rating Services
A. For rating measurement purposes, the lack of specific programming on most radio stations makes respondent recall much more difficult than for television.
1) Further complicating rating measurement is the fact that listening diaries or telephone surveys are impractical for radio because radio audiences frequently listen out-of-home.
B. The major source of radio ratings is Arbitron Inc., which provides audience data through its Arbitron Radio division.
1) Arbitron measures radio audiences in over 280 local markets.
a. The listener diary method is used.
b. A chosen person must be over 12-years-old and be willing to report listening habits for a 7-day period. Ratings last for a 12-week period in a specific market.
c. Arbitron collects data from more than 2.6 million diaries each year.
2) In 1998, Arbitron also began to collect the Webcast audience, measuring broadcast station Web sites.
a. One in five U.S. consumers age 12 and above have tuned to an Internet broadcast of an AM/FM station they listen to.
C. Because of the local nature of radio, station ratings are much more critical to most advertisers than those for networks.
D. The primary source of radio national network ratings is done by Radio’s All- Dimension Audience Research (RADAR), also a service of Arbitron.
1) Collected through 7-day listening diaries kept by consumers.
2) Arbitron has developed a Portable People Meter (PPM).
a. The device is worn by survey participants throughout the day and listening data is automatically sent to Arbitron for analysis.
E. The overriding problem with researching ratings is the cost.
a. The overall advertising investment does not support a research expenditure comparable to television.
8. Buying Radio
A. Radio demonstrates a number of characteristics as an advertising medium.
1) Advertising inventory is perishable, and when a spot goes unsold, revenue is permanently lost.
2) Radio is normally used as a supplement to other media. Therefore, coordination with the total advertising plan is crucial for most radio sales.
3) Every radio buy is unique. Most radio is sold in packages tailored to the advertiser.
4) A fixed rate card rarely exists. Pricing is largely based on negotiation.
B. Elements to examine prior to an advertising execution include:
1) Review product characteristics and benefits and decide whether these benefits can be effectively communicated through radio.
2) Who is the target market and can they be reached effectively with radio and, if so, what formats, what dayparts?
3) Who is our competition? How are they using radio and other media? Will radio provide a unique differentiation for our product or will we be up against strong competing messages?
4) What is our basic advertising and marketing strategy and can it be effectively carried out with radio?
C. The starting point in all advertising is the clear identification of our audience, or target market.
1) This is followed closely by comparing cost alternatives for radio outlets (CPM), in terms of how well a specific station will meet our advertising objectives.
D. Because radio is often a secondary medium, we must consider how well it complements other more primary media on our advertising schedule.
1) And consider what proportion of the advertising budget should be devoted to radio.
1. Once radio’s role is determined, the task begins of selecting the best station(s) to reach our target market in an environment best matching our products image.
F. The final, difficult step is to schedule spots.
1) Deciding the length of the spots, the selection of specific dayparts, the combination of time periods, and the use of sponsorships or events.
G. Because the planning process is difficult, radio sales personnel are often used to guide efforts and to build credibility. Obviously, there are pluses and minuses to this approach.
1) The ultimate key to successful selling is identifying with the problems of the clients.
H. In 2003 an electronic invoicing (and commercial verification) system, called RadioExchange was introduced to improve the speed and accuracy of spot radio buys.
9. Using Radio Ratings
A. Radio calculates ratings and shares in the same manner as TV (see previous chapter). The audiences and programming of radio, however, are unique and mandate that ratings be used in a way much different from the way ratings are used in TV.
B. Primary differences in ratings usage in radio versus TV include:
1) Radio advertisers are interested in broad formats rather than programs or more narrowly defined TV scatter plans.
2) Radio ratings tend to measure audience accumulation over relatively long periods of time or several dayparts instead of individual programs.
3) The audiences for individual radio stations are much smaller than TV, making radio ratings less reliable.
4) Because most radio stations reach only a small segment of the market at a given time, there is a need for much higher levels of advertising frequency in order to increase reach compared to other media. Therefore, it is extremely difficult to track accurate ratings information for national radio plans that include a large number of stations.
C. Geographical patterns of radio ratings (two different geographic boundaries) to report audiences.
1) Metro survey area (MSA) includes a city or cities whose population is specified as that of the central city together with the county or counties in which it is located.
2) Total survey area (TSA) is a geographic area that encompasses the MSA and certain counties located outside the MSA, but meets certain listening criteria.
D. Definitions of the radio audience.
1) Advertisers must understand the differences in the way audience figures are considered between radio and television.
2) Radio audiences are measured in either Average Quarter Hour
AQH
audiences or the cumulative or unduplicated audience (Cume) listening to a station over several quarter hours or dayparts.
E. Average quarter-hour estimates (AQHE).
1) Average quarter-hour persons. The AQH persons are the estimated number of people listening to a station for at least 5 minutes during a 15-minute period.
2) Average quarter-hour rating. Here we calculate the AQH persons as a percentage of the population being measured.
(AQH persons/population) x 100 = AQH rating
3) Average quarter-hour share. Determines what portion of the average radio audience is listening to our station.
(AQH persons to a station/AQH persons to all stations) x 100 = AQH Share
F. Cume estimates
. Cume estimates are used to determine the number or percentages of different people who listen to a station during several quarter-hours or dayparts.
1) Cume persons. The number of different people who tuned to a radio station for at least 5 minutes.
2) Cume rating. The percentage of different people listening to a station during several quarter-hours or dayparts.
(Cume persons/population) x 100 = Cume rating
Example: a typical station’s audience.
Station XYYY – Friday 10 a.m.–3 p.m. Adults 12+
AQH persons = 20,000
Cume persons = 60,000
Metro survey area population = 500,000
Metro survey area AQH persons = 200,000
AQH rating = (20,000/500,000) x 100 = 4
Cume rating = (60,000/500,000) x 100 = 12
MSA AQH share = (20,000/200,000) x 100 = 10
Using the above example, the following can also be calculated:
1. Gross impressions (GI) = AQH persons x number of commercials
a. Six (6) commercials on XYYY would have purchased 120,000
impressions (20,000 AQH persons x 6 spots)
2. Gross rating points (GRP) = AQH rating x number of commercials
a. Six (6) commercials would deliver 24 GPRs (4 AQH rating x 6 spots)
NOTE: The media planner must be able to manipulate the various radio data to
develop a plan most suited to a particular client. The same budget and number of
spots used in different dayparts and across multiple stations can deliver vastly
different levels of cumes, reach, frequency, and demographics.
Questions for ch. 8 and 9
1. Discuss major changes in network television advertising during the last 20 years.
2. Define the following terms: rating, share of audience, people ratings, TVQ ratings, clutter
3. Compare and contrast syndication and spot television buying.
4. Discuss the relationship between networks and their affiliates.
5. Describe the up-front television buying for prime time.
6. What are the major advantages and disadvantages of radio for most advertisers?
7. Where do most advertisers obtain radio audience information?
Assignment questions for ch. 10 and 11
1. What are the trends in newspaper advertising over the last 10 years? Go to the Newspaper Association of America website and explore their data. Which target market continues to be strong readership for newspapers? Which categories of advertising continue to use newspapers for their ads? Why does it make sense for them to do so?
2. Two of the major concerns of the magazine industry are costs and selectivity. Explain what these are.
3. Why would an advertiser want to use both television and magazines?
4. What are some qualitative features of importance to magazine advertisers?
Part 1: Answer these questions:
How has the fragmentation of media audiences affected media planning?
In what significant ways has the responsibility of media planners changed during the last decade?
Briefly define reach, frequency, and continuity.
What is BDI? Discuss the applications of the brand development index. How is it used?
Part 2 assignment
Consider a product that you commonly purchase from one of the following categories: athletic shoes, sodas, ice cream, music, and restaurant food. For one of these products, evaluate:
a. Who is the target audience? Define the target audience with as much specificity as possible.
b. Based on their current advertising, what creative and communication considerations are reflected in their media plan? (For example, is there need for product demonstration? Are there daypart and/or seasonal requirements?)
c. What traditional media would you select, based on finding the target audience, leveraging the appropriate qualitative factors of the media, and considering the appropriate characteristics and functions of the media? Why?
d. What nontraditional media would you select and why?
e. How would you schedule the advertising, considering the purchase cycle of the product?
