Advertising Spending Analysis 2021

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Questions and Answers

Which company had the highest advertising spending in 2021?

Amazon (correct)

Comcast Corp.

Alphabet (Google)

Walt Disney Co.

Which company spent the least on advertising in 2021 among the top ten?

American Express Co.

Verizon Communications

Warner Bros. Discovery

Charter Communications (correct)

What is the primary aim of a media plan?

To find the best combination of media to effectively communicate a message. (correct)

To decide the target audience.

To reduce the number of advertisements in the market.

To increase advertising costs.

Which of the following companies spent over $5,000 million in 2021?

Procter & Gamble Co. (B) Signup and view all the answers

How much did Verizon Communications spend on advertising in 2021?

$3,394 million (B) Signup and view all the answers

What is a critical consideration when planning media for advertisements?

Reaching the largest number of potential customers at the lowest cost. (B) Signup and view all the answers

Which company ranked third in U.S. advertising spending in 2021?

Procter & Gamble Co. (C) Signup and view all the answers

Which two companies had advertising spending figures closest to each other?

Alphabet (Google) and Warner Bros. Discovery (C) Signup and view all the answers

What are sweeps periods primarily used for in media planning?

Setting advertising rates (A) Signup and view all the answers

What is indicated by a high index number in market analysis?

High potential of a market segment (B) Signup and view all the answers

Which of the following is a common problem in media planning?

Insufficient information for decision making (B) Signup and view all the answers

Which factor is considered an external factor influencing media planning?

Changes in technology (B) Signup and view all the answers

What does the index formula help to measure?

Potential user demographics (D) Signup and view all the answers

What drawback is associated with using high index values?

They can be misleading about market potential (B) Signup and view all the answers

Which of the following is NOT a part of internal factors in media planning?

External competition (A) Signup and view all the answers

In what context are sweeps periods relevant in media planning?

They set advertising rates based on audience measurement (B) Signup and view all the answers

What is media planning primarily concerned with?

A series of decisions on delivering promotional messages (D) Signup and view all the answers

Which of the following best defines media objectives?

Goals set to guide the media planning process (D) Signup and view all the answers

In the context of media planning, what is the difference between reach and frequency?

Reach indicates the number of unique audience members exposed while frequency counts how often they are exposed (C) Signup and view all the answers

What characterizes a media vehicle?

The specific carrier within a medium category (A) Signup and view all the answers

What is coverage in media planning?

The potential audience that might receive the message through a vehicle (D) Signup and view all the answers

Which statement about media strategies is correct?

Media strategies are action plans designed to achieve media objectives (B) Signup and view all the answers

What does integrated IMC refer to in media planning?

Employing multiple media vehicles to deliver a consistent message (D) Signup and view all the answers

What is typically not considered a characteristic of a medium in media planning?

The organizational structure of the advertising agency (C) Signup and view all the answers

What does the Target CPM (TCPM) specifically calculate?

CPMs based on the target audience. (B) Signup and view all the answers

What is a key factor in digital pricing models regarding ad placements?

Bidding as part of an auction process. (C) Signup and view all the answers

Why might the pass-along rate be considered subjective?

It relies on estimates of readership that may vary. (D) Signup and view all the answers

According to media strategy considerations, what must be analyzed for effective media selection?

Unique characteristics of each medium. (B) Signup and view all the answers

Which aspect is important to evaluate regarding the success of media strategies?

Achievement of media objectives. (B) Signup and view all the answers

What does unduplicated reach refer to?

Number of unique individuals exposed to an ad once (A) Signup and view all the answers

What is the primary purpose of calculating gross ratings points (GRPs)?

To evaluate the combined reach and frequency of an ad (A) Signup and view all the answers

Which statement about advertising exposure frequency is true?

Exposure frequency should be prioritized over reach in media planning. (D) Signup and view all the answers

Target ratings points (TRPs) are defined as what?

Number of individuals in the primary audience reached multiple times (C) Signup and view all the answers

What is a common target range of GRPs preferred by most advertisers?

500 to 700 GRPs (C) Signup and view all the answers

Why might increasing exposure frequency lead to diminishing returns?

Ad fatigue can lower engagement levels after a while. (A) Signup and view all the answers

What denotes duplicated reach?

Potential audience exposed more than once on multiple shows (C) Signup and view all the answers

Beyond which exposure level does advertising effectiveness build at a decreasing rate?

Three exposures (B) Signup and view all the answers

What is effective reach based on?

The percentage of the audience reached at each effective frequency increment (D) Signup and view all the answers

Which of the following factors is NOT considered when determining frequency levels?

User engagement (A) Signup and view all the answers

What is the average frequency used for calculating GRPs?

The number of times the target audience is exposed to a vehicle over a specified period (B) Signup and view all the answers

How many exposures are generally considered necessary to maximize attitudes according to effective frequency?

10 exposures (B) Signup and view all the answers

What is the primary cause of wearout as suggested in the content?

Creative or copy problems (A) Signup and view all the answers

Which of the following is NOT a factor affecting frequency levels?

Media costs (B) Signup and view all the answers

What is the relationship between recall and exposure according to effective frequency principles?

Recall increases linearly with additional exposures (A) Signup and view all the answers

In determining effective reach, what is the assumption made about ad exposure?

Multiple exposures are needed to convey the message effectively (D) Signup and view all the answers

Study Notes

Learning Objectives

Define key terminology in media planning
Explain how to develop a media plan
Describe the purpose of media objectives
Describe how to develop and implement media strategies
Compare the characteristics of various media

Overview of Media Planning

Media selection has numerous options for delivery
Media selection is complicated due to the nature of various media
Each media option offers distinct advantages
Media selection relies on the product or service being advertised
Companies often utilize integrated marketing communications (IMC) and multiple media vehicles

Some Basic Terms and Concepts

Media planning is the series of decisions involved in delivering a promotional message to prospective consumers
Media objectives are objectives crafted to structure a media plan
Media strategies outline plans of action for attaining set media objectives
A medium is a general category for available delivery systems

Some Basic Terms and Concepts (continued)

Media vehicle is a specific carrier within a medium category
Reach is a measure of distinct audience members exposed to a media vehicle during a specific period
Coverage refers to the potential audience that might receive a message via a particular vehicle
Frequency is the number of times a receiver is exposed to a media vehicle in a defined period

Ad Age's Leading National Advertisers

(Figure 10-1) Lists top advertisers by 2021 U.S. spending, from Amazon to Charter Communications, categorized by total U.S. ad spending and measured-media ad spending.

The Media Plan

Determines the most effective method for delivering a message to the market
Aims to strategically combine media channels to promote messages efficiently and reach the largest potential customer base at the lowest cost

Problems in Media Planning

Insufficient information
Sweeps periods (February, May, July, and November) are used for measuring TV audiences and setting advertising rates
Inconsistent terminology
Time pressures
Difficulty measuring effectiveness

The Relationship between Engagement and Ad Recall (Figure 10-3)

Shows a positive correlation: as program engagement increases, ad recall also increases

Developing the Media Plan (Figure 10-4)

A sequential process, starting with market analysis, followed by establishing media objectives, media strategy development and implementation, and ending with evaluation and follow-up

Market Analysis and Target Market Identification 1

Primary and secondary research determine target groups
Index number reflects the potential of a target market, calculated as (percentage of users in a segment / percentage of population in the same segment) x 100
High index values suggest a potentially lucrative market.

How High Indexes Can Be Misleading (Figure 10-7)

Demonstrates that high index values don't always mean a potentially lucrative market, even if a segment has a high index value compared to the population, the index does not indicate a strong market, and a further analysis is required.

Market Analysis and Target Market Identification 2

Internal factors (e.g., media budget, agency capabilities) and external factors (e.g., economy, technology, competition) influence media planning
A thorough market analysis is critical

Market Analysis and Target Market Identification 3

Indexes aid in determining suitable promotion locations
Survey of buying power index evaluates metro areas, counties, or cities relative to the U.S. as a whole.
Brand development index (BDI) incorporates product usage into market evaluation
Category development index (CDI) focuses on the overall product category potential.

Using CDI and BDI to Determine Market Potential (Figure 10-9)

CDI formula: (Percentage of product category sales in a region / Percentage of total U.S. population in that region) × 100
BDI formula: (Percentage of a specific brand's sales in a region / Percentage of total U.S. population in that region) × 100

Using BDI and CDI Indexes (Figure 10-10)

Combines BDI and CDI to better understand the potential for brands and product categories in specific markets
High BDI and High CDI generally signify a lucrative market
High BDI and low CDI indicates a possible market to advertise in, but monitoring declining sales is prudent

Establishing Media Objectives

Media situation analysis defines specific media objectives
Media objectives support communications and marketing objectives
Media objectives are limited to achievable goals via media strategies

Criteria Considered in the Development of Media Plans (Figure 10-11)

Details crucial elements for media plans, encompassing elements like the medium mix, target market coverage, geographic coverage, scheduling, reach & frequency, recency, creative aspects & mood, flexibility, and budget considerations.

Developing and Implementing Media Strategies 1

Media mix adds versatility to strategies, enhancing coverage, reach, and frequency
Media mix improves the likelihood of achieving overall communication and marketing objectives

Developing and Implementing Media Strategies 2

Target market coverage accurately matches the most suitable media channels to reach the target audience while minimizing wasted media coverage.
Waste coverage is when media reaches people who aren't potential buyers or consumers.
Geographical coverage entails strategically focusing media in areas most relevant to the product.

Marketing Coverage possibilities (Figure 10‐12)

The different possible scenarios for marketing coverage: Full Market, Partial Market, and Coverage exceeding the target market, based on the proportion of the target audience relative to the entire market.

Developing and Implementing Media Strategies 3

Scheduling factors involve aligning promotional efforts with peak buying periods
Continuity, Flighting, and Pulsing are different scheduling methods.

Figure 10‐14 Three Methods of Promotional Scheduling

Visual representation of continuity, flighting, and pulsing promotional schedules over a one-year period.

Characteristics of Scheduling Methods (Figure 10‐15)

Advantages and disadvantages of each scheduling method (Continuity, Flighting, Pulsing) are detailed, including cost-efficiency, audience reach, and potential for exposure fatigue.

Developing and Implementing Media Strategies 4

Reach vs Frequency analyzes how much reach is necessary to reach potential buyers and the required frequency level
Reach: Exposures to potential buyers to promote a message
Frequency: Number of times target audience members are exposed to a media vehicle

Developing and Implementing Media Strategies 5

Establishing reach & frequency objectives
Unduplicated reach: Count of unique individuals exposed by media on single occasion
Duplicated reach: Count of individuals exposed by varied media, potential for overlap

Developing and Implementing Media Strategies 5 continued

Program rating: Measurement of potential broadcast reach
(Figure 10-16) Efficiency of spots in news and sports programs are visually represented.

Developing and Implementing Media Strategies 6

Use gross ratings points (GRPs) to assess reach and frequency
Target ratings points (TRPs) are utilized to calculate the number of people in a target audience

Developing and Implementing Media Strategies 6 continued

(Figure 10‐18) Displays reach estimations based on network TRPs, illustrating the connection between the quantity of target ratings points and potential reach increase with increasing networks.

Developing and Implementing Media Strategies 7

Determine effective reach and frequency levels
Effective reach: Percent of audience reached at each successful exposure level, presumes that a single exposure may be inadequate to convey the desired content
Effective reach (exposure) numbers between 3‐10
(Figure 10‐20) A graphic demonstration of the connection between the increasing number of exposure and the diminishing rate of effective reach.

Developing and Implementing Media Strategies 8

Effective frequency. A frequency level of 10 (or more) may be necessary to improve audience engagement and attitudes (recall grows linearly to this point, then stagnates)

Developing and Implementing Media Strategies 9

Recency Planning: Strategy to maximize reach close to the purchase decision. A short-interval reach at minimum frequency helps optimize promotional timing around purchase decisions

Developing and Implementing Media Strategies 9 continued

Continuous schedule: Allows for a regular period of exposure over time
Reaching as many potential customers as possible is the goal

Developing and Implementing Media Strategies 10

Creative Aspects and Mood: Creative aspects need to be well-suited to the chosen media channel, needing a close collaboration between media and creative professionals to optimize the audience impact. An appropriate mood in the media strengthens the effectiveness of the marketing message.

Developing and Implementing Media Strategies 11

Flexibility: Media plans must be adaptable to changing market opportunities and threats

Developing and Implementing Media Strategies 12

Budget Considerations: Absolute cost is the total cost of the creative message while relative cost is the relationship between the price of an advertising platform and the associated audience impact

Developing and Implementing Media Strategies 13

Digital Pricing models: Digital pricing structure involves bidding
Programmatic: Automated bidding process for digital ad placement

Budget Considerations continued (14)

Target CPM (TCPM): Calculates CPMs based on target audience, not overall audience
Readers-per-copy: Calculation of the number of individuals able to read a given media (e.g., magazine) given its number of copies (copies may not necessarily be read by one person only)
Pass-along rate: the number of people who read a publication without buying it. Can be imprecise.

Evaluation and Follow-Up

Evaluate media strategies towards media objectives and overall marketing/communication objectives
The success of the implemented media plan in contributing to reaching the intended marketing and communications objectives should be measured

Characteristics of Media (43)

Media must match markets because each medium has distinct characteristics
Each situation and available media option needs analysis

Media Characteristics (Figure 10-26)

Tables provide the advantages and disadvantages of different media types (Television, Radio, Magazines, Newspapers, Outdoor advertising, Direct mail, Digital/Interactive media)
- Examples of advantages include wide reach for television, local coverage for radio, and long life for magazines.
- Examples of disadvantages include short life for newspapers, short exposure for outdoor advertising, and privacy concerns for digital media.

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Description

Test your knowledge about advertising spending in 2021 with this quiz. Answer questions about the companies, their expenditures, and the critical elements of media planning. Understand the significance of advertising strategies and the impact on market analysis.