Media 101

Oct 3, 2018

I’d like you to imagine, for the next few minutes as you read this, that you are not a retailer or manufacturer or wholesaler. Instead, imagine your job is to buy media. You’re not buying and selling items or services, but rather, acquiring “eyeballs” to look at your ad message.

Ok, sounds, icky, but what I mean by "eyeballs" is views—attention to your store’s message. Today, buying eyeballs is a lot more complicated than it used to be because there are so many new choices for advertising. In addition to the big three traditional media (newspaper, broadcast TV, broadcast radio) there are still lots of traditional choices like direct mail, outdoor, in-store, and event advertising; and there are all these new media like Facebook, Instagram, Twitter, Google search, online display advertising, email, and so many more. So how would you start building a modern media plan to have as many of the right eyeballs seeing your ad as you want?

Although there are more choices, most of the principles are unchanged—we want to put our ads where our potential and existing shoppers are most likely to see them; we want to make sure that we don’t waste a lot of money putting ads in places where we reach people who don’t buy our product. And of course, we need to make sure they see our ad enough to remember it and then act on it.

Plotting Your Media Plan
Most retailers advertise in the newspaper, so let’s start there and then compare it to a more modern digital buy. We are going to want to know the size of their total audience for your trade area. We will want to know the average number of views per ad and we will want to know the cost to put our message into their newspaper. 

The first part is easy—call your newspaper and they will tell you their total audience. Let’s look at the Dothan Alabama Eagle. They say their total audience ("circulation" in newspaper lingo) is 27,000 in your trade area. That seems simple enough, right?

Well, maybe not. Let’s look closer. They have three ways they send out newspapers—paid and unpaid distribution, plus rack sales. Paid means a person actually pays for a subscription—they WANT to get the newspaper. Same with rack sales, where a consumer goes up to a newspaper kiosk, convenience store, or grocery store, and buys a paper.

But the third type of distribution is tricky—unpaid is where publishers throw newspapers onto people’s lawns who didn’t subscribe, or put them in hotels, coffee shops, restaurants, etc., to achieve what they call “total market coverage.” It would be logical to assume that people who buy a newspaper are more likely to read it than people getting one free, right? The newspaper claims a total reach of 27,000 homes, but only 19,000 are paid. That’s a big difference between paid and unpaid numbers.

The Science of Audience Measurement
This spread between total potential audience and actual viewer/readers is where media buying turns into a true science. Just because someone receives a newspaper doesn’t mean they read it; and if they read the newspaper, it doesn’t necessarily mean they see or read your ad.

I typically estimate that 10 percent of total newspaper subscribers actually read print ads each week, and only two percent of the people who received a free newspaper saw my ad. Those estimates were based on research I did for the home improvement category so many years ago they may not be accurate today, but using that math, and the Dothan Eagle as an example, we have:


One way to know if these calculations are hitting the mark is to just ask your own shoppers. Print up a simple notecard and ask your cashiers to hand it out for a few weeks, perhaps with a reward for a free coffee or donut or something in your store if the shopper fills it out: 


This is crude research but it is enough to start getting an idea of the spread between potential and actual audiences.

And if the number of actual readers/views is hitting 10 percent (or even two percent), you’re doing pretty good. Compare the newspaper numbers to some other forms of advertising:


Click-through rate and clip rate are different versions of the spread between potential audience and actual viewers/readers. And yes, these numbers really are this low.

We can look at other media, too. In TV advertising, for example, your potential audience (eyeballs) is the total number of adults watching TV at any particular time; your actual is the number of viewers who saw your commercial.

Now I am sure you have had an opportunity to watch late night TV infomercials. You know the ones, with a 1-800 number flashing on the bottom of the screen and they're asking you to call to buy cosmetics, or a kitchen apparatus, or a book on how to get rich in real estate. This kind of media is bought differently—the advertiser only pays for the number of calls they get to their 1-800 number or visits to their website. They choose to buy actual responders and not pay for potential audiences.

Different media is sold using one of three techniques:

  1. You can pay a fee for the entire potential audience (CPM, or cost per thousand, the way most newspaper and TV advertising is sold today).
  2. You can pay for only those people who interacted with your ad (CPC, or cost per click, which is how most of digital advertising is sold).
  3. You can only pay for the people who act in the way you wanted them to (CPR, which is called ‘cost per response’). CPR is great because the advertiser has no waste – you only pay for the results you want, just like those late-night infomercial advertisers.

Okay, so the spread between actual and potential is large, but that doesn’t always mean it is bad if the cost to reach the potential consumers is extremely low. On Facebook, for example, the cost per thousand (CPM) to reach a large potential audience is really low, usually $0.35 to $0.50 per thousand.

Compare that to the cost for your weekly print ad, probably in the range of $75 per thousand for printing and inserting, and you can see why new media options are so attractive to so many advertisers.

I had a boss once who would say that even bad media is better than no media. I could amend that to say expensive media is better than no media, too. But of course, we want both good and inexpensive and that’s where the science and art of media buying comes into play.

This means for any media you buy, you will need to know the total potential audience, the cost to reach that audience, and have an estimate for the actual audience.

The way to think about this equation is to create a simple chart for your store or chain that would look like this:


Using the Dothan, Alabama newspaper as an example, we determined that the total potential audience was 27,000. But using my estimates that 10 percent of paid subscribers read the ad and two percent of those who receive it for free read the ad, we get to an effective media reach of 2,060 shoppers. Let’s say it cost you $1,500 to print and insert your ad. That would make your effective cost per shopper $0.72.

You can now use that as a benchmark for all your other advertising. Now create your worksheet, listing all the media you buy today. You may need to guess at actual audience rates, but when in doubt use 10 percent of potential. might look like this:


(In this example I used only paid distribution for print; had I used paid-plus-free distribution for the newspaper ad, it would have been $.72 per shopper.)

Now, once you get the hang of this chart, you can start doing it for all the forms of advertising you do. Go ahead and list out other programs, things you might not even think of as advertising. Put in the cost to provide food for a charity event in your town, to hire someone to offer samples in your store, to put in new signage in a department of your store.

What makes this kind of thinking addictive is that you start to ask yourself, what do I need to spend to reach one more effective shopper?

Reaching More with Less: IGA’s National Digital Ad
Now, let’s compare this chart to the new IGA National Digital Ad, starting next Sunday. It has a total potential reach of about 33 million per week. But it is new, so we don’t yet know how many shoppers who could see the ad will actually view it. I will be super conservative and guess one half of one percent.

The good news is that because our National Ad is digital, it will allow us, over time, to know the true spread between potential and actual. And like most sustained media programs, it will grow from low numbers at launch to maturity in the next year, so we can expect it to be highly predictable and increasingly effective. But let’s do an estimate.


Note that the cost listed above is a plug for what IGA corporate might pay on any given week, not the retailer (it is free to IGA retailers!). Actual pricing will go up or down by season and by event, as we spend more over key holiday weekends and for events like the Super Bowl. 

But the math is good, and for the first time ever, we can see what happens when IGA independents act like a national chain. Imagine how cool it will be once the ad is mature and shoppers have begun to expect their weekly national IGA digital ad!

This is part one of a multi-part series on media. Next time we will look at the combination of media reach and frequency, and how audiences build over time. And we will go in deeper on owned media (like your store or own website) versus paid media (like print) versus earned media (social).

Let me know what you think of this article—too much? Too basic? And let me know if you would enjoy us hosting a periodic lunch-and-learn webcast to talk with media professionals about the changes in the media world.

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