Question

Grazyna owns a restaurant in Bozeman, Montana, called the Bluehorn Buffalo Diner. Her restaurant is very popular among Californian Sacramento residents who visit her town and restaurant in large numbers during the summer. With the recent expansion and remodeling of her restaurant, she has decided to run television ads in Sacramento during the winter to promote her renewed restaurant. So, she contacted you because of your position as the television advertising salesperson of a main TV channel in Sacramento. Grazyna wants to know whether her restaurant's campaign would be more effective being broadcasted on a news program, sit com, or talk show. You answered that she needs to consider three variables: reach, frequency, and revenue per ad dollar. Using Skype, you gave a PowerPoint sales presentation explaining the variables and corresponding concepts in relation to the three campaigns that Grazyna requested. You said that: Reach and frequency are terms typically used when planning an advertising campaign. Reach is the number of people who are exposed at least once to an advertising message over a specific period of time, usually four weeks. Frequency is the number of times a person is subjected to an advertising message over a certain interval of time. You added that it is important to determine which is more effective, to touch 100 viewers once or 25 viewers four times? Impressions refer to the total number of exposures to your advertisement (i.e., reach multiplied by frequency). The media cost is the price you pay the TV channel to broadcast your advertisement. The target market is the total number of people who could potentially be exposed to your advertisement. The rating is a number, ranging between O and 100, that corresponds to the amount of estimated viewers of a particular television program (or, the target market size reached by a campaign when it is broadcasted on a local TV program). These data are sourced from surveys or research companies such as Nielser Using the data below, you worked with Grazyna to calculate the revenue per ad dollar of the three TV campaigns being broadcast to Sacramento viewers during various programs Television Campaign: Local News Program Number of Spots: 5 Rate (Ad Cost per Spot) $80,000 Target Market (Sacramento, CA) 466,488 Rating (Obtained from Nielsen Data): 3.8 Revenue per Impression (Obtained from Company Data) $65

Answer 1

Media cost for local News program - $400,000 Media cost = frequency of the ad times Rate per advertisement = 5 (Number of spots for local News program) times $ 80,000 (Rate period) = $400,000 Media cost for sitcom = $ 200,000 = theta(Number of spots forsitcom) times $ 35,000(Rate per ad) = $280000 Media cost for talk show = $ 150,000 = 10 (Number of spots for Talk show) times $ 15,000 (rate per ad) = $ 150,000 Reach = (Target Market times Rating)/100 Reach for local news ad = (466, 400 times 3.0)/100 = 17.727 Reach for sitcom ad = (466,400 times 2.5)/100 = 11,662 Reach for talk show ad = (466,400 times 16)/100 = 7464 Impression = (Reach times frequency) impression for local News = (17727 * 5) = 88,635 impression for sitcom = (11,662 * 0) = 93,296 Impression for talk show = (7464 * 10) = 74640 Revenue per ad dollor = (Total Revenue/Media cost) \r\n In order to calculate this, first the total revenue needs to be calculated for each medium.