Tips 57

Fixed vs. Controlled Media Costs

One appeal of performance-based media (aka Per-Inquiry Advertising) is fixing the cost-per-action of each phone call, completed sales lead, or web visit.  On the face of it, P.I. is a great way to drive your business volume with predictable margins.  The logic is attractive... "Hey, I advertise on national TV and pay only for the parts that work! Sign me up!"

However, fixing your cost is not the same as controlling your media cost.  Specifically, PI is a limited universe. There is only so much unsold inventory out there that stations are willing to risk on a pay-for-performance basis.  What if you want more customers that PI can serve?  How do you air in major markets at peak times of viewing or listenership?

Consider the following media hierarchy. Per-Inquiry advertising is risk-free and inexpensive, but there's a limited supply. As you move down the list, availability increases, but so does the cost.

  1. Per-Inquiry
  2. Fire-Sale remnant inventory
  3. Upfront, bulk media purchases
  4. Media brokerage purchases
  5. National rep firm sales
  6. Direct national buys

To maximize the cost-effectiveness of your advertising, you'll want to start with as many per-inquiry leads and last-second remnant buys as you can get. If you've still got an appetite for more, move on to the next steps and exhaust that universe before graduating to the next level.

Controlling your media cost also means controlling the volume of your media purchase - at a predictable rate.  That's why we recommend that growing companies unsatisfied with just PI use the unique Aggregated Local Cable.  The system provides predictable volume - quite often at a lower average cost than per-inquiry!

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