Fundamentals
Before we dive too far into this article, I want to toss out a quick crash course in media buying. Since most people are familiar with terms like demographics and ratings, I’ll use broadcast media (TV and radio) for the bulk of the examples. It’s important to note that every media, from billboards to Facebook, can and should be measured.
The first thing a media buyer does is find the right target market, that is the group of people most likely to respond to the marketing message. Once the media buyer knows who to deliver the message to, he or she finds the type of media that group uses most. For simplicity’s sake, let’s say that audience watches a lot of TV. By looking at the ratings of each program, the media buyer will know how many total people watch a particular program and how many people in the target audience watch that particular program.
The price of an ad depends on how many total people watch that program. The key is to find the program most watched by people in your target audience. Once you’ve selected a few top-performing programs (again, just using one media for starters), it’s time to look at your budget.
You have a choice. You can run a lot of ads or you can try and capture as many people in your target market as you can. The amount of ads run during a certain length of time is called frequency. Reach is the number of different people you showed your message to. Ultimately, a media buyer wants to get a healthy balance of reach and frequency.
Those are the basics. Let’s kick it up a notch.
5ives: Media Metrics to Know
Nearly every medium has a different way of measuring its effectiveness. Broadcast uses gross rating points, newspapers use circulation, billboards use traffic counts and websites use impressions or clicks. So how does a non-media person make the right media purchase?
1. Cost Per Thousand (CPM)
The easiest way to buy media is to only look at cost. Cost Per Thousand (CPM) is a standard measurement. Simply put, CPM means the amount of money it will cost to show a thousand people the ad one time. This allows people to compare one medium to another. It’s important because every media is measured differently.
The downside of buying media solely on CPM is that the metric doesn’t measure the quality of the purchase. Price and quality need to be considered just like any other purchase you’d make. A radio ad targeting teens might be inexpensive, but if it runs at 4 a.m. on a Monday morning, is it effective?
2. Gross Rating Point (GRP)
A Gross Rating Point (GRP) measures the balance of frequency and reach for broadcast with a simple equation. Here’s how it works. Say 25 percent of everyone listening to radio in the morning listen to one radio show. That would have a “reach score” of 25. Multiply the “reach score” (not the technical term) by the number of times you run the ad to determine how many GRPs you’re paying for. If that spot has a “reach score” of 25 and I ran the ad 10 times, I would have 250 GRPs.
GRPs are, in our opinion, the best way to compare broadcast media. But they are limited to broadcast for the most part. Even so, considering the number of stations and programming available on each station, the GRPs are a powerful measuring tool that should be understood.
3 & 4. Pay Per Click (PPC) and Price Per Thousand (PPM)
Ah, the Internet. What a beautiful, analytical and (often) inexpensive media. The major sites like Google and Facebook have found a way to charge for ad space which is pretty revolutionary. Pay Per Click (PPC) and Pay Per Thousand (PPM) are two ways to purchase Facebook Ads or Google AdWords. Here’s how they work, how they’re different and why we feel one is better than the other.
An AdWord ad is the small block of text to the right of your Google search result. These ads link to a page, often to a site that sells something directly related to what you searched for. You can purchase these ads two ways. The first is Pay Per Thousand (PPM). This means you are charged a fee every time that text block is shown a thousand times. Back in the day, you could buy a Facebook ad for $0.25 PPM. The second way to purchase an ad is by Pay Per Click (PPC). PPC means that Google, Facebook or any other company, will run the ad for free. Every time someone clicks on the ad, you’re charged a flat rate. That same Facebook Ad would have cost about $0.60 PPC.
PPC is truly revolutionary. Sure it costs more in theory, but in practice it’s the way to go. Imagine running a newspaper ad and being charged only if someone came into your shop. You might disagree and that’s fine, but hopefully you’ll understand the difference between PPC and PPM.
5. Impressions
This is the most basic of all media terms and can be very difficult to track. I’m talking about impressions. In short, an impression is every time someone sees your message. You can count impressions using website analytics and estimate impressions through GRPs, circulation or traffic. Some people try to put a number of impressions on pens. (We all know my feelings about pen ads.) A lot of times the number of impressions is used to show how much a company received for the money spent. For example, “Last year we spend $12,000 and received over nine million impressions.”
It sounds good and when you think about it, it is impressive that a message was witnessed 25,000 times a day. Use this metric as an ice breaker only. When it comes to seeing the value, make sure there are other metrics to back up each media in order to show the investment.
And we’re just getting started.
Media, like any industry, is full of terminology, tricks and trade secrets. Unless you dive in and nerd out about it, media will seem daunting. Take into consideration that new media opportunities pop up every day, so the need to know how media works is important. Absolute loves media, we’re biz junkies, and while we could write a small novel on the benefits of using an agency to place media, one thing is for certain: have the knowledge to make an informed decision. Make sure you know the pros and cons of your purchases. The more you can infer, the better your strategies will be.
If you need any help understanding the metrics and numbers behind media buying give us a call at 701-478-1111 and ask to speak to a Marketing Advisor or visit absolutemg.com/contact. Our Media Director has a deep understanding of how to get you the most for your money.