Despite tools and systems being available for linking advertising media performance to marketing results, in most emerging markets the main measurement for evaluating TV campaign performance is the unit cost of airtime.
Using cost per rating point (CPP) as a metric for measuring TV campaign performance is a bit like using the price of concrete as a metric when employing an architectural firm to construct a new hotel.
It may be the main basic material, but it has little bearing on the success of the final product, or even its final cost.
It has absolutely no bearing on whether the project is successful or profitable long term.
What does determines the final cost is the utilisation of the basic materials; how they are used; what is created, and is it fit for purpose.
The same is true of using Cost Per Point as TV metric.
The Results of Using CPP
Using only CPP creates a false commodity and marketplace which doesn’t exist in reality. Grouping all ratings together, and even subdividing them into sectors (channel, day part, position in break) is to treat them as if they were the same. They are not; each spot is completely different in composition.
But further; when adding spots together and constructing a campaign, the reach they generate is unique, and cannot be replicated or commoditised.
Aggregating campaign spots is meaningless, because when the spots are constructed into a campaign there is diminishing return in effect (the number of contacts possible). Therefore the spot utility value changes depending on how and when each spot is used.
Advertisers and auditors are not measuring the agency contribution when analysing campaigns using CPP on TV; they are auditing the fulfilment of the TV channel contracts, as most contracts are CPP based.
CPP negotiations can be manipulated by the channel and by the agency in their favour. As research information and analysis is centred with the agency and channel, the advertiser becomes the weak player in the game.
CPP is simply a TV price negotiation metric: It should be used as such.
A TV Metric that measures Contact
We should measure the cost of reaching the right number of people the right number of times. The correct metric to use when measuring media campaigns is the cost per reach point.
That is; the total TV campaign budget divided by the percentage reach, (in marketing; ‘penetration’). The total reach is the total percentage of the population who saw the ad one or more times, (known as 1+ Reach).
To develop the concept further; the effective reach number should correctly be used. Effective reach is the percentage who saw the ad at the frequency determined to produce a consumer response (change of awareness, change of attitude to the brand, a call to action etc), known as 3+, 5+ Reach etc.
The Cost per Effective Reach Point (CPERP) is the total budget divided by the Effective reach percentage of the campaign.
Using CPERP
CPERP is a metric that has meaning and real utility for the marketer.
· It takes account of the diminishing return on the ratings
· It measures the actual campaign results
· It starts to include campaign effect and consumer response into the measurement
· It measures the agency’s contribution and it’s scheduling ability
· It is difficult to manipulate results
· Individual channel contribution to the total campaign effect can be separated and measured
· It shows the value of airtime - not simply its cost
· Accountability becomes part of the process.
When adding the CPERP of each channel back into Media negotiations, only the advertiser knows exactly the contribution of each channel to the total campaign result, and the cost of that contribution. Therefore the basis of media contract negotiation has changed and the power shifts back to the advertiser.
Cost per contact is not a measurement of media effect; but it is the only pure and correct media metric. To see brand and business effect more upstream metrics are required (shifts in awareness, top of mind, brand KPIs, saliency, purchase intent and sales).
That is the subject of a future blog.
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Posted by: school_dubl | December 30, 2010 at 09:48 PM