Low Budget Analytics

So. You want to utilize analytics in your business. You want to create actionable insights and concrete results. But, you're short on money, time, and know-how. This is the post for you! Below are a few areas that a well implemented low-budget solution can work very well in.

You know that targeted advertising is a great way to boost campaign effectiveness, but you just don't have the web presence to enable utilizing Google AdWords. Well, there are still ways to target consumers more likely to have interest in your product or service category, they just require a bit of outside the box thinking. Or, perhaps you already have an online advertising set-up that you're comfortable with, but want to branch out into traditional media. Either way, this tutorial will help you succeed.

Step 1) Determine a key demographic or psychographic variable. This needs to be something that can be used to separate your customers from non customers. (For instance, customers are often stay-at-home moms.) This can be done a number of ways, each requiring a different amount and type of effort. One method is surveys, often incentivized with a coupon or exclusive offer. These require a great deal of legwork to produce, distribute, collect, and interpret. This is a good task for a summer intern, or for working with a local university, however (many business schools use this as a way to get students supervised work experience). Another method is to use your best judgement. This is not encouraged, as this blog is data focused. However, if you've been running your business for a number of years, I could be persuaded to look the other way (although under severe duress).

Step 2) Determine what channels and media vehicles to use. In english, this means determine what type of media you're going to use (magazines or TV, for instance) and then what show or publication within that media is going to be your selection to carry your message to the audience (so, Good Housekeeping vs This Old House or Jerry Springer vs Frasier). Again, there are several ways to go about this. However, the easiest is to simply contact an account executive, sometimes called an "account representative" or known colloquially and traditionally as an "ad guy." These individuals are responsible for securing revenue for the publication or station by selling advertising spots. Often, they have a breakdown of subscriber information or a ratings breakdown sheet showing the age and gender of their viewers, by percentage.

Step 3) Shop around for the best deal. Remember that this does not necessarily mean the option with access to the most eyeballs. It is necessary to consider two key things: audience and cost. It is remarkably inefficient to select a show that only has five people from your target market watching, even though it might have the highest rating. By the same token, it is not always worth the corresponding price increase for marginal upticks in exposure. Therefore, I want to introduce you to two very useful metrics: Cost per Thousand Exposures and Targeted Cost per Thousand Exposures.
These are abbreviated CPM and TCPM (the M is because of the metric system, in case you were wondering). Mathematically, they look like this:

CPM = (Ad Cost/Total Number of Exposures)*1000
TCPM = (Ad Cost/Number of Targeted Exposures)*1000

Exposures comes from ratings or subscribers + newsstand sales. Because there are a lot of moving parts, I have a few examples below. Using a bit of basic math, we can make the choice which is most efficient, but might not be immediately apparent. (Note, I've left off the step of converting ratings from a percentage to a number. This is quite simple to do, but adds another level of complexity to an already potentially confusing process. For an in depth exploration, look below.) For this example, we are a small business selling patio furniture. (All numbers are, of course, hypothetical. The concept and math are the important parts, here.)

The Office Midday Rerun: $300 for a 30 second spot, 1,550 viewers, 25% of which fall into our target market.
CPM= ($300/1,550)*1000= $200
TCPM=($300/[1,550*.25])*1000= $774.19

Jerry Springer Syndication: $250 for a 30 second spot, 1,400 viewers, 15% of which fall into our target market.
CPM=($250/1,400)*1000= $178.57
TCPM=($250/[1,400*.15])*1000= $1,190.48

Locally produced program about gardening- Garden Time: $100 for a 30 second spot, 750 viewers, 90% of which fall into our target market.
CPM=($100/750)*1000= $133.33
TCPM=($100/[750*.90])*1000= $148.15

Local News- News 69 Tonight!: $500 for a 30 second spot, 4,300 total viewers, 25% of which fall into our target market.
CPM=($500/4,300)*1000= $116.28
TCPM=($500/[4,300*.25])*1000= $465.12

Many people, when first looking at the data, would probably assume that The Office would be the best choice for an ad buy. Although the amount of people who watch the show and are in our target market could certainly be higher, it seems to be a well rounded option. By the same token, the local news seems to be the least favorable option, as it is the most expensive. However, after applying the CPM calculations, a different picture emerges. Looking at TCPM, The Office and Jerry Springer are grossly inefficient. However, Garden Time's small but focused audience and correspondingly low price offer a bargain price for our ad buy. If we are interested in reaching a wider audience, however, the local news becomes a quite appealing option.

Although not, strictly speaking, analytics, this analysis does employ data in a quite crucial manner. By performing a bit of basic math, some interesting conclusions can be found. In this way, a company can perform in a more efficient manner while buying advertising.

url and counting visits
Accurate VisitsIn Depth Math:
Cost per Thousand Exposures (CPM)
CPM = (Ad Cost/Total Number of Exposures)*1000

Targeted Cost per Thousand Exposures (TCPM) also called Cost per Thousand Targeted Exposures (CPTM)
TCPM = (Ad Cost/Number of Targeted Exposures)*1000

Rating: Percentage of the population which was exposed to the content
Expressed as a number, 10 means 10%.

Targeted Rating: Percentage of target market which was exposed to the content.
Expressed as a number, 5 means 5%.

Exposures: Total Views
Targeted Exposures: Total Views from target market

Share: A number that you should ignore if you see it, at least for now.

Again for this scenario, we are a patio furniture business. Below are some hypothetical numbers, and some very concrete math. For this scenario, we will also assume that the population of the broadcast area is 50,000 (a nice round number, although on the small end. Be sure to substitute your own local population data for this when you're applying this technique). As well, we will assume that 30% of the total population falls into our target market (for a total of 15,000).

The Office Midday Rerun: $300 for a 30 second spot, 3.1 rating, 25% falls into our target market.
Rating: .031*50,000= 1,550
Targeted Exposures: 1,550*.25= 387.5
Targeted Rating: 387.5/15,000*100= 2.5
CPM= ($300/1,550)*1000= $200
TCPM=($300/387.5)*1000= $774.19

Jerry Springer Syndication: $250 for a 30 second spot, 2.8 rating, 15% falls into our target market.
Rating: .028*50,000= 1,400
Targeted Exposures: 1,400*.15= 210
Targeted Rating: 210/15,000*100= 1.4
CPM=($250/1,400)*1000= $178.57
TCPM=($250/210)*1000= $1,190.48

Locally produced program about gardening- Garden Time: $100 for a 30 second spot, 1.5 rating viewers, 90% falls into our target market.
Rating: .015*50,000= 750
Targeted Exposures: 750*.90= 675
Targeted Rating: 675/15,000*100= 4.5
CPM=($100/750)*1000= $133.33
TCPM=($100/675)*1000= $148.15

Local News- News 69 Tonight!: $500 for a 30 second spot, 8.6 rating, 25% falls into our target market.
Rating: .086*50,000= 4,300
Targeted Exposures: 4,300*.25= 1,075
Targeted Rating: 1,075/15,000*100= 7.17
CPM=($500/4,300)*1000= $116.28
TCPM=($500/1,075)*1000= $465.12