Investment Analysis: Measuring the Value of Vehicle Wraps (Part 2)
Measuring Vehicle Wraps
Measuring the exposure of vehicle wraps is easier after an overview of how traditional advertising is bought and sold.
The process of selecting time and space, in various media, for advertising in order to accomplish marketing objectives is known as media planning. Media planners often use three terms in describing a planning process: objective, strategy, and tactic. Although each type of media has unique characteristics, fifty years of TV dominance has had an effect on measurements. The TV standards: audience, target, reach, and frequency are all used for planning and buying.
The target audience is often defined by demographics, product usage and psychographics. Reach refers to the unduplicated proportion of an audience that is exposed to a media schedule (not necessarily to the advertising message) at least once during a designated time period (usually four weeks). Frequency refers to the number of times within a given period of time an audience is exposed to a media schedule. A frequency of 3.0, for example, means that the target audience is exposed to a media schedule three times during a given period of time. Of course, not all audience members are exposed exactly three times; some may be exposed more than three times and some less. A frequency distribution shows how many audience members are exposed at each level of frequency. With a frequency distribution, a media planner can determine effective frequency and effective reach. Effective frequency is defined as the level of frequency that is necessary to achieve the desired communication goals. Effective reach is the reach at the level of effective frequency. Gross rating points (GRPs) are the product of reach and frequency, representing the total gross delivery of a media schedule to the target audience.
Audience size is the currency of advertising media; the basic measurement is exposure. Technically, exposure means, “open eyes or listening ears”. However, exposure measurements are different for each medium. In magazines, for example, persons exposed to a publication are counted if they say they read the publication. But persons exposed to a television program are counted only if they define themselves to be “watching” TV and press a button on a measuring device known as a “people meter”.
People who are not acquainted with measurements of media audiences are surprised to learn that audience numbers obtained from media research such as Simons Market Research Bureau, Mediamark Research Inc. (MRI), or Nielsen Media Research do not count the number of people or households exposed to the advertisements. Even some experienced professionals forget or never knew that media exposure measurements do not show how many persons have read advertisements. And it cannot be assumed that a large audience for a media vehicle automatically indicates that a large number of individuals saw a client’s advertisement.
Perhaps the biggest mistake agencies make is comparing the measurement of out-of-home advertising with that of other media. Out-of-home is not like T.V., which has programs carrying commercials, radio which has stations, or print which has editorial carrying ads. Outdoor has only the advertising. In concept, an outdoor exposure is an ad exposure, while a T.V. or print exposure may not be.
Just as the statement “Potatoes: $2.00” becomes meaningful when expressed as “Potatoes: $2.00/pound,” advertisers use CPM (cost per thousand impressions) and CPP (cost per rating point) to compare media costs. CPM is used for both print and electronic media while CPP is more popular for electronic media.
CPM is calculated by multiplying the unit cost of a media type by 1,000 and dividing the result by the audience size. The unit cost of a media type is the cost for a single ad placement in that venue. For example, if a 30-second commercial in a T.V. program costs $5,000 and the program has an audience of 250,000, then CPM for the commercial will be $20.
CPP is calculated by dividing the unit cost of the media by the rating. If a 30-second commercial in a TV program costs $5,000 and the program has a rating of 10 in the market, CPP for the commercial will be $500. CPP can also be used to compare newspaper or magazine costs if the audience is described as a percentage.