109: When Is An Audience Too Big?

This coming Sunday, corporations will be spending roughly $4 million for each 30 seconds of advertising they obtain.  Even at these rates, available commercial slots for 2014’s big football game sold out in 2013.  It’s the most watched TV show in North America every year with an expected audience of 108,000,000 consumers.

If you’re doing the math at home, that’s 3.7¢ that advertisers spent per potential viewer.  Most media won’t break it down for you like that—instead going with cost per mil (CPM), which means cost per thousand viewers.  In this case, that’s $37.04.

Whenever I see expensive ads like these, I wonder three things:

(1) How many times someone has to see this ad before they decide to purchase?
(2) How many units does the advertiser need to sell just to break even on this commercial?
(3) How much of that product’s average price go to just this commercial?

Take, for instance, the Ford F150.  Ford sold 763,402 F150’s in 2013—the most of any vehicle sold in the US by far. If Ford Motor Company purchased only one 30-second Super Bowl spot and if this were the only ad that they ran all year, every truck’s price would include $5.24 for just this ad.  Based on the number of TV and magazine ads for the F series that I see in my limited broadcast media interaction every year, I wouldn’t be surprised if owners of new F150’s are paying for more than $1,000 in advertising.

Whatever the number is, Ford & Chevy, Verizon & AT&T, and Budweiser & Coors have found it reasonable, if not necessary, to spend so much on mass marketing.  For my clientele, too, a CPM of $37.04 would seem a good deal for their small business marketing, especially their event marketing.

That $37.04 can be deceiving, if not expensive, though.

Half a decade ago, one of my former clients—no longer in business—asked me to advertise a New Jersey construction equipment auction in the Philadelphia Enquirer and the New York Times.  I asked him, “How many people looking for an excavator look in the Sunday classifieds of a metro paper?”  If every one of the combined 2,342,631 subscribers of those papers on Sunday happened to turn to that ad’s page and also perused until they found that tiny ad—still probably only a fraction of 1% of the audience would care about its content.  And that’s the best-case scenario.

For the same amount of advertising spend, he could’ve bought sizable ads in construction equipment publications and on related websites—where the percentage of audience being qualified prospects would be exponentially higher.  Or he could’ve spent less overall for more conservative advertisements across all of the targeted media.  Sure, the CPM would’ve been significantly higher; but the value would be exponentially higher.

Be careful when an ad agency tries to sell you national ads for a campaign that only needs local/regional media or regional/national asset media.  Most ad agencies in the States make a commission—usually around 15%—back from the media for the advertising you buy.  Commissioned sales reps from both agencies and media alike will sell you on audience size (sometimes called “total reach”); but look, instead, at percentage of likely buyers from that audience.

Instead of CPM, I recommend evaluating media use based on cost per qualified prospect (CPQP).  It’s better to pay a lot to reach people who are likely to pay you a lot.

One of my auctioneer friend’s campaign came at a cost of roughly $65 CPQP, but he only mailed to between 75 and 80 people.  From that very small audience, though, he made over $100,000 in one year. That’s an average of almost $1,300 in revenue per prospect.  Not per sale.  Per prospect.  That’s a number that no Super Bowl advertiser can match and that no ad agency can promise.  While this might be on the high end of expectations, the principle it illustrates holds true.

On a related note, I recommend polling your bidders per media outlay to determine what your cost per bidder is from each. Tim Narhi Auctioneer & Associates do a great job of this and can show a seller what they spent per bidder per media for several years’ worth of auction advertising—including almost any one specific auction.  Those numbers trump any statistic an agency or media rep will tout.

The feather-in-your cap ads like those in the Broncos/Seahawks game might appeal to your ego, but targeted marketing will make that net proceeds check appeal to your wallet.
[tip]

We live in a big world, and the religious affiliation of that population is quite diverse—so much so that I don’t know that any one faith system (or lack thereof) includes a majority of the global population.  For those of us who think the eternal stakes of believing an errant way are high, the temptation is to evangelize to the largest audiences possible.

God uses crusades and impersonal pamphlets.  I’ve met people whose life trajectory has changed from them.  He might even use television and radio programs, in spite of the characters that populate most of them.

From my own experience, though, I’ve seen the most efficient sharing to come on an interpersonal level.  Conversations in a coffee shop, book clubs in a cafe, table talk at a church environment.  Life change happens deepest when lives are rubbing against changed lives—when someone can say what the Apostle Paul did, “Follow me, as I follow Christ.”

[footer]Stock photo purchased from iStockPhoto.com.
F150 image screen captured from online commercial.
Volkswagen ad frame downloaded from Google Images.[/footer]