A Quantitative Approach to Determining Optimal Media Investments

When planning advertising strategies, deciding on which media (TV, radio, newspaper, magazine, outdoor, Web, etc.) to focus on is extremely important. Often these decisions are made based on the experience of a media planner. SPI offers media investment strategies based on our experience in addition to a quantitative analysis to determine for advertisers an optimal way of allocating their media investments. As an example of a quantitative analysis, below, we introduce a case study for Company A which sells consumer goods. Their main objective was to increase the number of calls to their telemarketing info center. They do not sell directly to consumers.

Media that drives consumers to call

It is important for any company to be in direct contact with its customers. But even for companies that do not sell directly to consumers, receiving calls from customers can provide very useful information for their marketing strategies and advertising campaigns. For Company A, SPI was able to prove a close correlation between its sales and the number of calls its telemarketing info center receives (fig. 1).

The first step in revising the media investment allocation for this client was to find which media that directly increase the number of calls. Therefore, we had to analyze the number of calls received in the past against historical advertising investments in 5 different media (TV, magazine, newspaper, Web and outdoor). The results below (fig. 2) showed that magazine, newspaper, and Web (online) all turned out to have a positive effect on driving calls. Unlike TV advertising, these three media types require people to actively reach out to come in contact with the advertising. In the end, we concluded that magazines have the greatest call effect among the three.

 

Comparison between pure magazine ads and editorial tie-up magazine ads

Next, we had to analyze which of the two types of magazine advertising better influences people to call. By comparing the correlation coefficients between the ad budgets for both types of ads (pure ads vs. editorial tie-up ads) and the number of calls received, three product categories showed high correlations between editorial tie-up ads and the number of calls received (fig. 3 below, is for one of the three product categories).

 

From these results, Company A decided to increase its investment in editorial tie-up ads in magazines.

In this case, the number of calls received at call centers was used to optimize media investment allocation. Using an index, such as the number of calls received, we quantitatively analyze past trends and were able to determine a very good, strategic allocation for part of the client's media investments. Also, taking other factors into account, such as the cost of advertising and sales, SPI can contribute to increasing the ROI of media investments in a long run.

Author: SPI

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