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Sunday, August 8, 2010

The Old Metric Lives

Since the early 1960’s (before my time) many people used a very simple calculation and still do to determine whether a retailer should advertise on spot television. Fast food is where it has received the most acceptance but I have seen it work against several categories over the years.

The metric is very simple. Divide the number of retail locations (points of distribution) that an advertiser has in a Nielsen DMA in to the total number of TV households in the DMA (Designated Market Area). If the number is under 30,000 Spot TV has an excellent chance of paying out. If it is in the 30-50k range per point of distribution it is an iffy proposition. Over 50k per retail location and TV is very hard pressed to pay out other than with a destination venue such as a luxury car dealer or huge big box retailer. Keeping this metric in mind saved me a lot of pain over the years and won me the love of some radio stations who thought I was simply helping them. The reality is that TV is wasteful for some retailers and a bonanza for many others.

In the last few weeks, I spent a lot of time in New England. I was not in Boston or Hartford but spent most of my time split across the other DMA’s in the region. Something amazing was going on. I sampled the 6pm local news in each mostly to get the weather report for the next day. In a few markets, there were small retailers buying the local news. I do not know what they paid but was stunned simply to see them there. Once restaurant with two locations advertised across a DMA with 619,610 TV households. So, TV households per unit were not in the vicinity of 30 thousand but were nearly 310 thousand per location! How could that possibly pay out for the advertiser? Another advertiser, a marine supply company with one location advertised in the news in the same DMA. As I moved across much of the six state area, I saw other questionable placements but none quite as bad as the two mentioned above.

Don’t get me wrong. I applaud local stations for the chutzpah to bring new advertisers on the air in a difficult environment. Yet, realistically, the odds of some of these people succeeding seem very remote. These advertisers belong on local cable not on over the air TV. Period!

How does it happen? Many young planners and buyers do not do their homework. There is no analysis. They have never heard of the 30,000 TV households per store rule because no one taught them such simple rules which cover a multitude of sins. Perhaps their clients were eager to get on TV and pushed them to it. An experienced media person would tell the client what a long shot such a buy has of ever paying out.

As I have said before here, we need a back-to–basics approach with media planning. In my home region of New England, they clearly need it more than most. The old 30k metric remains a decent yardstick. It should be the first screen a planner makes before considering local television.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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