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FEATURE STORY

The Ins and Outs of Media Buying

Juggling small business departments is just part of the job when you’re running your own company. The tasks of marketing and advertising usually fall onto your desk almost as an afterthought once you’ve rolled out your product line, but take heed. Don’t spend the largest portion of your marketing budget without fully understanding how media buying works and more importantly what you should expect in return for your hard-earned dollars.

I recently had the opportunity to chat with media guru Bruce Carlisle, founder of SF Interactive and CEO of Digital Axle, a marketing services company specializing in interactive media. Bruce has been an expert in media for more than 30 years working in both traditional and new media. He offers some of his expertise in media buying for small business owners.

Before we dig into the heart of media buying, there are several terms that you should first familiarize yourself with when working in the advertising arena.

Reach – How many people does the advertising reach? Reach is the total number of people or households exposed to your message within a specific period of time. Think top viewing periods like the Super Bowl or the Academy Awards when a good portion of the free world is watching television.

Frequency – How many times is the ad running? Frequency is the number of times a person or household is exposed to a media in a specific period of time.

Cost – What is the cost per person to run the ad? (generally stated in thousands as CPM). Pay particular attention to the cost per customer of your advertising dollars.

Impressions – The number of exposures among the people who see the ad. This is different from audience or circulation. For example, a newspaper has 10,000 readers per day. Of those, 8,000 read the lifestyle section on a regular basis. If you run your ad in that section every day for 30 days (30 days x 8,000 readers) that equals 240,000 impressions.

Ratings points – measures that TV and radio stations use to equate one program to another in terms of audience. Broadcast advertising pricing is based on these numbers.

Know your budget.
It’s important to have a firm understanding of your marketing budgets before you commit to a media buy. It’s advisable to sit down in the early fall to plan for the next year’s marketing and advertising efforts. This advance planning will give you an opportunity to review what has worked and what hasn’t in the current year as well as make any adjustments or new additions. If you’re not the business owner, you can always ask for more budget dollars too! With a working budget in hand, you can then give pricing guidelines to sales reps, saving yourself a ton of time wading through off-target proposals later.

Don’t be afraid to try something new. It’s easy to just keep doing what you’ve always done, but sometimes expanding into a new media can open your product or service line to a completely new market. Just beware that a new target market may mean taking a new twist on your current creative in order to effectively speak to that audience.

Know your market.
I know that this seems repetitive (I think I say it in every marketing article I write), but if you don’t know your market, what they eat for breakfast, where they work, and their favorite hobbies, you won’t be able to effectively market to them. Take this one step further and identify goals for the number of times you wish to reach this audience. For example, one goal might be that your ads should reach 75% of your market 20 times a week and 50% of your secondary market 10 times a week. Make sure you also have a plan for how you will measure the advertising’s effectiveness. One strategy is to place a code in the print ad (perhaps in the coupon) so you’ll know where the customer saw the offer.

What will you pay the media buyer?
Generally media buyers get paid by adding a 15-20% to your advertisement placement purchase. “That commission may more than make-up for itself because of advanced planning and the buying power the agency can provide for your business,” says Carlisle. For example, if placing an advertisement in the newspaper costs $1,000, you’ll pay $1,200. The newspaper keeps $1,000 and your media buyer gets $200. While this is the norm, you may be able to negotiate a flat rate or a different mark-up percentage.

Most advertising agencies usually provide both creative development and media buying. The argument is that they will have better control over the success of the creative if they are allowed to also control the placements. If you decide to use a separate firm to buy media, make sure that they are both on the same page with your expectations of goals and outcomes.

“Recognize that professional ad people understand that media are good for specific purposes,” says Carlisle. “Advertising in radio and print media allows the buyer an immediacy factor. You can have a new spot on the radio within a day and a new print ad running in the next production cycle.” For a product or service that relies on branding to tell their story, look at television advertising.

If you’re evaluating Internet advertising, it’s important to know that you can bid on key words in search engines like Google based on geography – as small as 25 or 50 miles from your location. This localization is great if you’re trying to drive traffic to a retail store on a very regional level. When working in the online arena, get the stats upfront. Ask the sales rep for web statistics (that include visitors, page hits and frequency) so you know the CPM and can make strategic decisions. This will save you from spending precious marketing dollars only to discover later that only 200 people visited the site in the last year.

It’s a numbers game.
“Small business owners need to remember that the number of advertisements they buy is less important than understanding the number of people that they are reaching,” says Carlisle. “I could sell you ten spots on cable at twenty dollars per spot equaling two hundred dollars. The real question you should be asking is how many people are going to be seeing that spot?”

Know that most media is negotiated. “If a media sales man is coming to your office and gives you the open retail rate, don’t be afraid to negotiate those costs,” says Carlisle. “Leverage can be gained by agreeing to lock in for longer periods of time. If you understand what at CPM is and use that as an argument that will help with your success. Don’t be afraid to compare the cost of one medium to another.” Look at radio versus TV for example. A radio spot may cost ten dollars and you may be able to get the same time on cable for only eight dollars per spot. “Be upfront and tell the radio rep that TV is cheaper and see what you can negotiate.”

See what else you can get thrown in.
While print advertising is declining, it’s not dead yet. Publications are putting together tremendous stimulus packages for advertisers that can be very attractive. Items such as online banner ads (more SEO for the money!), a block of consecutive placements may have additional free placements thrown in, the opportunity to pitch stories to editorial, and even slashed rates on full page ads that can sometimes rival the smaller ad rates are all negotiable items.

“Now is also a great time to buy cable advertising,” says Carlisle. “Much of the buying can be localized and businesses can buy time on channels like CNN through local cable systems. It’s also worth noting that there are emerging companies that allow you to create your own ad and then buy cable or radio on a self service basis. Companies like Spot Runner, Inc. (www.Spotrunner.com) are becoming a bigger threat to agencies.” Spot Runner essentially allows a business to create its own ad from canned video footage called B-Roll, upload the company logo and voice over copy and within days, they have their own television spot. Media buyers at Spot Runner will then make custom recommendations for your local market and even make the media buy for you – all at a fraction of the cost of using a traditional advertising agency. What used to cost anywhere from $20,000 to $2 million, will only cost around $500 making Spot Runner and others like them a perfect solution for small business. The upside of self-service advertising is that for the first time small business can get in on accessing cable television for an affordable rate. The downside is that there is a loss of quality production and agency expertise. It’s a gamble, but if the small business is thoughtful and has some good local talent, it can work well,” says Carlisle.

Don’t forget about the cost of production which changes by medium. Creating a radio spot is far cheaper than creating a television spot. Don’t be afraid to ask the radio or television station to create the spot for you. For small business this is often cost effective, however, there’s a trade off. By allowing the station to produce the ad, you’ll be giving up quality, brand control and most importantly portability of the ad to another station.

Out of Home Media
Outdoor, highway, and transit advertising, digital signage, or even television-type environments in the mall fall into the category of Out of Home Media. “While Out of Home can be effective mediums,” says Carlisle. “They are relatively hard to measure in terms of numbers that you get and it’s hard to measure the impact on your business.

Sometimes you just have to use certain media because it is just more effective in your market. For example, outdoor advertising (i.e. highway billboards) is really good in Los Angeles, but not so good in New York City because no one has a car. Alternatively, buying network news time on the east coast is good, but no one gets home in time to watch the news on the west coast. You have to really understand your markets and how they live in order to buy the right kind of media.”

What are good buying options for small business owners with annual revenues of $5M?
For businesses in a competitive environment like auto dealerships, think about running ads on Saturday and using billboards in town,” advises Carlisle. “Different types of businesses tend to have different marketing to sales ratios. It’s worth finding out what those standards are in your specific industry in order to make better decisions.” For more information, check with your industry trade associations or even the American Association of Advertising Agencies to find standards and better understand your market.

Media buying can make or break the success of your marketing efforts. For the small business owner, it’s even more critical to fully understand what you’re buying and why. Remember the key to good media buying is to use the best possible media for the least possible cost. If you don’t have the time to learn the nuances of media buying, then an agency may be the right choice for you.