Here is how most businesses buy advertising.  This is true for print, broadcast and digital advertising, as well as direct mail coupon books.

They meet somebody at a trade show, or a networking event, or get pitched on a phone call and agree to meet.  When the sales pitch occurs, they get inundated with statistics, as well as statements such as:

  • We go to everybody in your community/target market
  • We are free circulation
  • We are less expensive than the competition

I have been pitched this way for a variety of my clients, from direct to consumer companies to companies that sell into the C-suite of organizations to medical practices.  If you are a proprietor that knows how to run his/her business but does not know about buying advertising, it is easy to get bamboozled by the numbers and the sales pitch, or to just agree to buy advertising because you know the rep.

Here is the right way to buy advertising.

  1. Most importantly, determine who your target market is.  A few examples, based on experiences with my clients:
    • Understand your geographic market.  If your target market is eight suburbs, examine media based on those eight suburbs.  If that is your target, buying advertising that covers the entire Chicagoland area probably won’t make sense.
    • Understand your demographic market.  If you are only trying to reach people of a certain age or income, it does not matter how many people outside that demographic you are reaching.  Don’t factor them in when determining your buy.
    • If your target market is CFOs, don’t worry about reaching everybody else in the C-suite.  Just concentrate on how much it costs to reach the CFOs.
  2. After you understand your target market, make the buying decision based on how much it will cost you to reach 1,000 members of your target market (known as cost per thousand, or CPM).  Here is an example.  You can use this for print, broadcast, or digital.
Medium 1 Medium 2
Total reach 500,000 1,000,000
Target market reach 300,000 400,000
Total cost $2,000 $3,000
Total CPM $4 ($2,000/500) $3 ($3,000/1,000)
Target market CPM $6.67 ($2,000/300) $7.50 ($3,000/400)

Clearly, even though Medium 2 reaches more people and the total CPM is less, Medium 1 is more efficient at reaching the target market.

This is a great first step in determining how to spend your advertising dollars.  More next time.