Project 1: Suggested Steps

The procedures described here are intended to get you started on each of the project parts. These are essentially minimum steps that you might follow, but certainly other approaches may work as well.

Many of these steps are basically mechanical and are required of all students. The goal here is to respond to the typical student request, "I’m lost, just tell me how to get started." But the real challenge is to integrate the results of these steps with your reading, class lectures and course Web material to identify and explain implications for media planning. Ultimately, this will require mastery of the substantive material, not just the ability to work through the mechanical steps.

Setup

All aspects of the project are explained in class. Start the project early and pace yourself. The assignment is intended to challenge you intellectually and probably cannot be completed well at the last minute.

Download the Mag20.dat file from the course web site (Advanced Concepts, Project 1).

Choose a target audience: men or women.

For full-page, four-color and black-and-white schedules, verify the accuracy of the target audience base, message vehicle ratio, ratings and cost data for your target audience in Mag20.dat. Use the Project 1, Top Consumer Magazines table as the original source. Remember that Mag20.dat should contain the lower of any two estimates provided by Simmons and MRI. If you find errors, correct your data file using ADplus™ (Plan|Revise).

The continuous advertising budget is $24 million yearly and $2 million monthly.

In ADplus™ open the full-page, four-color magazine data file for your selected target audience.

Follow the optimization procedures described in Chapter 3 of the ADplus™ text. Select the magazine file and create an optimum plan based on message reach 3+ for the monthly budget.

Create a yearly flowchart based on this "typical" monthly plan. Follow flowchart procedures described in Chapter 5 of the ADplus™ text. Assign your optimum monthly plan to each month in one flowchart. For the entire year enter a carry-over rate of 18 percent based on the carry-over power function.

Note the year-end message effective reach 3+ for the last month on the flowchart. This is an estimate of the year-end campaign coverage based on sophisticated procedures.

Revise a copy of the monthly optimum magazine plan created above by multiplying all insertions by 12. The total insertions should match the flowchart totals. The resulting message effective reach 3+ is a year-end estimate of plan effectiveness based on naïve procedures.

Compare naïve and sophisticated estimates of message effective reach 3+ and describe implications for media planning. Why is one approach more realistic than another?

Using the results from Item 1 above, identify year-end vehicle and message reach 1+ and 3+ based on the sophisticated approach.

Create a diagram, such as the circles within circles depicted on page 111 of Chapter 7 of the ADplus™ text. You can do this using the draw function within MS Word, for example.

Repeat the steps above using the results of the naïve procedures obtained for Item 1 above.

Describe the implications for media planning.

Based on the sophisticated results above, compute the following ratios.

(Message Reach 1+ / Vehicle Reach 1+) × 100

(Message Reach 3+ / Vehicle Reach 3+) × 100

What are the implications for media planning? How do these ratios compare to the message-vehicle ratio for full-page, four-color advertisements against your target audience. Why aren’t they the same?  Which computed ratio above is closest to the message-vehicle ratio?

Repeat the steps above for the results of the naïve approach.

If you were to forecast campaign effects based on the sophisticated approach, what would they be? For example, ad exposure probably requires a minimum of one message exposure. Ad awareness or recall may take as many as three or more exposures. Explain the reasoning behind your estimates.

What would your predictions be based on the naïve approach?  How realistic are these?

In ADplus™ open the optimum monthly full-page, four-color schedule against your original target audience. Analyze this plan against another target audience. Do so by revising the target audience description and size, message vehicle ratio and ratings.

Create a new flowchart based on the revised monthly magazine plan by assigning it to each month of the year. Be sure to include the 18 percent carry-over rate and carry-over power function.

Compare the year-end message reach 3+ of this plan against the new target audience with that of the original target audience. Describe implications for media planning.

In ADplus™ open the revised monthly plan against your new target audience. Revise this plan by multiplying the number of insertions by 12. Compare the message effective reach 3+ with that for your original target audience based on the naïve approach. Draw implications for media planning.

Which approach, naïve or sophisticated, shows greater spill-over. What can be learned from this?

In ADplus™, open your original optimum monthly magazine plan and change it from full-page, four-color to full-page, black-and-white. Do this by revising the message vehicle ratio and the ad cost. Now repeat the steps for Item 1 above to create a sophisticated analysis of the yearly plan based on black-and-white instead of color advertisements.

Compare the original full-page, four-color ad flowchart with the revised black-and-white ad flowchart. What differences do you observe? Are changes in effectiveness comparable to changes in cost? Describe implications for media planning.

Revise a copy of your monthly black-and-white schedule by multiplying all advertisements by 12. Compare the revised yearly black-and-white plan based on naïve procedures with your original four-color plan based on naïve procedures. What differences do you observe? Draw implications for media planning.

In ADplus™ revise your original monthly plan based on full-page, four-color ads. Raise the message-vehicle ratio by ten percent (e.g., multiply it by 1.10) which assumes stronger creative effectiveness. Follow the steps for Item 1 above to create a yearly flowchart based on sophisticated procedures.

Compare this flowchart based on a 10 percent higher message-vehicle ratio (e.g., stronger creative effectiveness) with your original flowchart. Draw implications for creative and for media planning.

Repeat the steps above, but lower the message-vehicle ratio by 10 percent (e.g., multiply it by 0.90) which assumes weaker creative effectiveness. Compare this flowchart based on a 10 percent lower message-vehicle ratio with your original flowchart. Describe implications for creative and for media planning.

Revise the monthly plans above based on a 10 percent higher and lower message vehicle ratio by multiplying the number of ads by 12. Compare each of the revised plans with your original naïve plan and draw implications for creative and for media planning.

In ADplus open your original optimum monthly four-color magazine plan.  Note the vehicle and message reach 3+.

Add an additional $500,000 to your original monthly budget. Follow the sophisticated steps for Item 1 above to create a new optimum monthly plan. Again, note the vehicle and message reach 3+.

Compare your original and revised plans in terms of vehicle and message reach 3+. What happened to each of these measures as a result of spending an additional $500,000 per month? Make your comparisons of reach 3+ in terms of absolute differences and in terms of rates of change (e.g., [new – old]/old). Describe implications for media category saturation.

Duplicate the steps above following the naïve approach. Revise the monthly plan above by multiplying each of the monthly ads by 12. Compare these results to those of your original naïve yearly plan, focusing on vehicle and message reach 3+. Describe implications for media category saturation.

Which approaches (vehicle or message, naïve or sophisticated), if any, suggests media category saturation?

Download the network television data from the web (netv.dat). Use the monthly budget for Item 1 above and develop an optimum network television plan against your target audience.

Now cut in half the monthly budget used above. Using message reach 3+, develop separate optimum monthly magazine and television plans for each half of the budget. Use the ADplus™ Mix procedures described in Chapter 3 of the ADplus™ text to combine the two schedules.

For your fixed monthly budget of $2 million, which plan has the greatest message effective reach 3+, magazines (your original plan from Item 1 above), television or the combination of the two media? What are the implications for media planning?

10.  Setting Ad Budgets

Using naïve and sophisticated approaches, what is the minimum cost of achieving 50 percent effective reach 3+ against your original target audience with the budget split between full-page, four-color magazine advertisements and 30-second television commercials? If the recommended budget based on the naïve approach is re-evaluated using a sophisticated approach, what is a more realistic estimate of the naïve plan’s effective reach 3+?

Suggested Steps

These steps are designed to make it as easy as possible to complete Item 10. This item is particularly challenging because it requires that you work backward from goals to identify optimum, multi-media budgets and schedules, taking into account cumulative advertising effects across months.

Hopefully these guidelines will make it easy for you to complete the steps and exciting for you to discover first hand the very serious shortcomings of naïve procedures used in conjunction with the task-objective method of setting advertising budgets. This advertising budgeting method generally is argued to be the most defensible because it requires managers to set communications goals first, taking into account various marketing factors, then determine what levels of spending are necessary to accomplish these communication goals. Watch what happens when you determine what it takes to accomplish goals, 50 percent message effective reach 3+ in this case, using naïve versus sophisticated procedures.

It will be easiest if you begin your analysis with the mixed-media results from Item 9. That’s the schedule with the $2 million budget split evenly between magazines and network television.

Sophisticated Approach

Notice from Item 8 of the project, which deals with saturation, that generally there are diminishing returns to effective reach 3+ due to increases in advertising spending. Double your budget and you will not double effective reach 3+. To see this, repeat the steps for Item 9 of the project, but double your budget and re-optimize the full magazine and network television data files. For example, using the adult media data for the assignment, message effective reach 3+ is 28.5 percent when $2 million is split between magazines ($1 million) and network television ($1 million). If the budget is doubled for both media categories for a total of $4 million split between the two media categories, effective reach 3+ increases to 48.4 percent, a 69.8 percent increase (69.8 = [[48.4 – 28.5] / 28.5] x 100). This also can be considered the "arc elasticity" of effective reach 3+ with respect to spending because the budget was increased 100%.

Now assign this monthly plan to each month of a flowchart and add the 18 percent carry-over rate with power function. Notice how close you come to 50 percent message effective reach 3+. In this example the message effective reach 3+ in December turns out to be 57.8 percent. If you’re high (low) repeat the process by subtracting (adding) the same amount to each media category budget that you believe will lead to 50 percent message effective reach 3+. Then optimize the full data files again at the new budget levels, mix the two media category results then rebuild the flowchart with an 18 percent carry over rate based on the power function.

In this example, 57.8 is 7.8 message effective reach points higher than the goal of 50. In order to decrease message effective reach 3+ by 7.8 points, the total budget must be decreased by 7.8 times the cost-per-effective reach point (CPERP). Here the CPERP equals $830,450 ($830,450 = $48 million / 57.8). Therefore, it is estimated that the total budget must be decreased by approximately $6.5 million ($6.5 million = 7.8 x $830,450). This leads to an annual expenditure of $41.5 million ($41.5 = $48 – $6.5) or $3,458,333 per month split evenly between magazines ($1,729,166) and network television ($1,729,166). With these new budget figures, repeat the optimization, mix and flowchart process above as many times as necessary until the year-end (December) message effective reach 3+ is as close to 50 percent as you can get it. In this example the revised message effective reach 3+ turns out to be 52.7 percent. The non-linear diminishing returns are making it tough to reach the goal directly. One more iteration through this process ought to be successful. But be sure to recalculate CPERP based on these new results.

With practice you’ll get an intuitive feel for the tradeoffs between spending and message effective reach 3+. That’s probably better than mechanically following the steps above because it means that you understand what you’re doing. So feel free to guess at the budget levels if that begins to be faster and easier for you.

When you’ve finished this step you’ll notice that the sophisticated approach suggests that relatively large amounts of money are required to accomplish objectives.

Naïve Approach

Again start with the mixed media results from Item 9 of the project. For both magazines and network television, multiply the number of insertions by 12 and mix the results. Notice the pooled message effective reach 3+ in relation to 50. In this example the message effective reach 3+ turns out to be 77.1 percent.

Follow the procedures described above for the sophisticated approach, but pool insertions without a flowchart, to reduce the budget, split it between the two media categories, re-optimize magazines and network television, and mix the results. This time, since the insertions are pooled, there are very strongly diminishing returns. So expect pretty large budget cuts to be associated with relatively small drops in message effective reach 3+.

When you’ve finished this step you’ll notice that the naïve approach erroneously implies that relatively small amounts of money lead to large effects.

True Effectiveness of Naïve Approach

Finally, determine the true message effective reach 3+ based on the budget recommendation of the naïve plan. Divide the final budget from the "Naïve Approach" procedures above by 12 and use this monthly budget to generate an optimum magazine and television plan based on message effective reach 3+. If the budget is too low to support both magazines and network television, a single media category solution is acceptable. Assign the resulting mixed (or single) media category plan to each month of a single flowchart and apply an 18 percent carry-over rate based on the power function. Notice the final plan cost and the year-end (December) message effective reach 3+. What does this say about the value of task-objective budgeting based on naïve procedures?

11.  Executive Summary

Your report will include an executive summary that outlines the goals, method, results and implications of your project.  Illuminating plain white sheets of paper with interesting, well-written and professionally presented material is the most important aspect of the project.  Every project submitted will include a stack of similar printouts and graphs.  These amount to little if their meaning and value are not amplified.   Spend some time planning, writing and rewriting this report.  Once finished, set it aside for some time and rewrite it again when you're fresh and objective.  You know the drill--polish, tighten and clarify without end.

Write to an executive who may not be familiar with this material.  First write a one or two paragraph overview of the assignment.  Then organize the report following the numbered categories listed in the assignment (e.g., 1. Time Frame..., 10. Setting Ad Budgets).

1. Item goal(s).  State completely, clearly and concisely all that the item analysis is intended to demonstrate.
2. Data and method.  Describe completely, clearly and concisely the type and source of all data used in your analysis, how it was analyzed, and what general steps were followed to complete the item analysis.
3. Results.  For each of your item goals, show the results in summary, table or graphic form.  Be sure to describe them completely yet concisely.  Use examples so that the interpretation will be clear.
4. Implications for Media Planning.  You were provided with a copy of Chapter 7 of the ADplus text, contrasting naïve versus sophisticated media planning procedures.   Use this chapter and supporting lecture material to cull from your results the most important implications for media planning.
5. Appendices.  Include here any data files, printouts, spreadsheets, graphs, background or other material not previously provided.

At the end of your report include a list of references (e.g., MGM, ADplus chapters, Web sites).  Follow the reference/citation style with which you are most familiar, but be thorough.

Here are some suggestions on writing style and presentation details that should help you write professional quality reports.  Avoid the use of personal pronouns.  Double-check your spelling.  Make liberal use of relevant headings, subheadings, graphs and graphics.  Try to integrate text and any primary, supporting graphs and tables.  Color is always nice, but not essential.  Define terms the first time they are used.  Type everything.  Do not include hand-written material.  Underline or italicize publication names.  Don't begin sentences with a number (e.g., 94% of ...).  Vary sentence structures.  Convert repetitive sentences or material into a table.  If using a dot matrix printer, make sure the ribbon is dark.  Break up long paragraphs.  A plastic spiral binding is recommended so that the project opens flat for reading.  Please do not use a three-ring notebook (heavy, bulky, wastes space), plastic slip-on cover and binding (fall apart) or perfect binding (hard to open, won't lay flat).

Enjoy!

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Copyright © 1997-2000 Kent M. Lancaster, Media Research Institute, Inc.  All Rights Reserved.
Revised: March 14, 2000.