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INTEGRATED MARKETING COMMUNICATIONS LECTURE 9: PUTTING IT INTO PRACTICE Objectives At the end of this input the participant will: • Understand the issues behind media strategy & scheduling in relation to spend • Appreciate key methods of arriving at budgets (bottom up & top down) • Appreciate theoretical approaches to spend • Understand the differences between advertising and other communication elements when dealing with appropriation and budgets The Media Planning Process for each Target Objectives 1. Reach } 2. Frequency } Week 8 3. Weight } 4. Allocation/continuity/ scheduling 5. Expense/cost 4. Allocation • How should the budget be spent? • The ‘timetabling’ of the media – Continuous i.e. spread resources equally over the time period of the campaign – Burst i.e. concentrated periods of activity, and others with no activity – Drip i.e. intermittent (on/off) activity – Flighting, short, then heavy intermittent periods of activity – Pulsing: some activity at all times, but periods where the intensity is increased Media scheduling • Schedules will often be constructed around the idea of pulsing. A key question therefore is ‘how many exposures do we need to achieve our objectives’, the answer to which will depend on the nature of the objectives. – Krugman’s ‘rule of thumb’ of 3 – Naples’ ‘optimal frequency of exposure of 3 5. Cost • Two main costs to consider: – Media costs i.e. buying airtime, space etc – Production costs – making the advert • Don’t compare actual costs of different media/promotools, use a CPT measure Media costs • Some key issues related to cost/media choice: – Creative content has an effect on choice/cost of media – Effectiveness would have to be weighted in some way to be entered into any calculation. – Audience Duplication – Loss of domination (if spread amongst too many different media) – Additional production costs (if many media used) – The importance of concentration & repetition Media strategy • The media strategy document should show how media will be selected to meet objectives. – For example: "Radio spots will be purchased every other week to extend support throughout the period up to and immediately after Xmas" Media strategy • Strategy statements should include rationale for the use of one medium rather than another. – For example: "Television will be used as a primary medium because it offers the optimum combination of mass coverage flexibility in time and place and meets the creative requirements" The media plan • This shows how media strategy is to be executed in terms of specific purchases. For example, six one half pages are recommended in Good Housekeeping magazine because: – It provides concentrated coverage of the target market – It has minimal duplication with other recommended media – The Good House Keeping seal of approval is an asset in this product field The media plan • When evaluating the media plan two areas for consideration are important as alluded to earlier: – the suitability of the various media categories and vehicles; – audience research - this should be an ongoing process, especially in view of new technology and fragmentation Spend Issues Appropriation • Setting budgets is an emotive topic • ‘Half the money spent on advertising is wasted … the problem is knowing which half’ attributed to Lord Leverhulme • Are advertising and other marcomms activities seen as an investment or a variable cost? • A key question is 'what should the money be used for?' Should the organisation spend money on building brand images or selling products, or both? Such objectives are likely to be achieved by particular elements of the communication's mix. This has a bearing on how much is spent on other elements Appropriation trends • What is happening to spend overall? E.g. Brandrepublic (20/4/05) report DM now has a 23% share of all marketing spend • UK adspend up 3.3% 2004 (brandrepublic 16/2/05) yet 43 of top 100 cut above the line spend • UK top advertiser is P and G (£159m in 2004) Spend Issues Budgets • Budgets are to do with timing of spread of • • financial resources The size in the end depends on objectives There is no simple answer to the question "How much do we spend?” Approaches to budget setting: issues • • • • • • • Custom and practice: what has worked before Power and politics: e.g. finance and marketing Persuasiveness of marketing managers Use of ‘expert’ opinion e.g. agencies Pressures on managers to set timely budgets and to prove performance and meet targets Budget approval mechanism and who is involved Allocation of spend to each promotool Spend Issues The key methods employed are: • Strategy-based approaches (bottom-up) • Predetermined approaches (top-down) • Theoretical approaches Strategy based approach • What do we have to spend to achieve our objectives? • This is also called Task/objective approach i.e. budget • • • is based on the objectives that have been set and the strategies that have been developed to achieve those objectives Seen as the ‘best’ approach by many, though difficult to implement/operationalise May not be achievable if unrealistic in terms of resources (objectives or strategies may have to be revised in the light of this) Often costs not fully known until end of campaign – accountants nightmare! Predetermined approaches • Top down i.e. set in advance of objectives/strategies as part of annual financial planning process – – – – – – – Inertia Affordable Arbitrary Percentage of sales Historical Advertising to sales ratio Comparative parity Predetermined: inertia • No/little change, keep budget the same • Fairly unusual as most marketing managers would at least ask for an ‘inflation’ raise (media inflation is often greater than economic inflation measures) Predetermined: affordable • A ‘cost’ (not investment) based approach • A product oriented, not marketing oriented • • • approach Usually not based on market analysis Can be viewed as a cautious approach Difficult to determine budget for new product launches where considerable investment may have already been made in product developemnt Predetermined: arbitrary • Based on judgement or ‘gut feel’ • Intuitive approach that can be flexible and responsive to market changes • Not usually based on analysis, other than that which is arrived at from experience Predetermined: percentage of sales • Links marketing expenditure to sales • Can use industry averages to set budget – useful with new market entries as a guide • Industry averages can range from 1% to 25% (Picton and Broderick) e.g. – Games and toys: 15% – Grocery: 3%-7% – Cars: 5% Predetermined: historical • What has been done in the past • The only increase may be where increases in • media costs have to be followed, or in line with inflation. This might be allied to the affordable approach, which has clear drawbacks, and is based on what is left after costs and profit are subtracted from revenue. Predetermined: advertising to sales ratio • Advertising to sales ratio is based on maintaining a set ration between the advertising weight and sales volume Predetermined: comparative parity • Competitive parity i.e. spend the same as the • competition. But trade/consumer mix has to be taken into consideration so that like with like is compared and similarly with the qualitative aspect of the message. If this is equal then share of voice may be considered the best option since the weight of adspend will be the important factor. Theoretical approaches • Theoretical approaches include marginal • • analysis and sales response curves. Overall these are of little use, principally because they are not real and in any event the information required is impossible and/or too expensive to acquire. The simple, concave sales response curve follows the law of diminishing returns where sales and expenditure relationship is expressed Theoretical approaches • The idea that it is possible to predict how many extra sales can be had from an extra unit of spend where the point will be reached where there is equilibrium i.e. marginal revenue = marginal costs, and p1 is the optimal level of promotional expenditure. Theoretical approaches • There are too many assumptions not least • of all that promotion is the only cost or influence on sales, that there is no influence from competitive action and reaction. Communications cannot be varied smoothly and continuously as assumed and not all messages are standardised Any Questions? Next week we start the final theme: Control