Buying on a Budget

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Contestants aren't the only ones who can hit the jackpot on ABC's hit "Who Wants to Be a Millionaire."

By holding back about 20% of its $15 million to $17 million media budget for opportunistic TV buys, contact lens marketer 1-800-Contacts was able to slip one of its 15-second spots onto the show in June on a night that fortuitously featured a million-dollar winner.

Luck, in the form of a last-minute opening on the schedule, was the only way 1-800-Contacts was going to get national network time on "Who Wants to Be a Millionaire." But the opportunistic buy shows that the upfront is not the final answer for small-budget advertisers.

The buy added shine to 1-800-Contacts' cable, network and syndication TV plan, 80% of which was bought during the upfront. Empower MediaMarketing, Cincinnati, handles the media. Creative is handled in-house.

With overall TV ad rates up 30% to 40% the last three years, TV has gotten pricy even for heavyweights such as Procter & Gamble Co., says Erwin Ephron, president of Ephron Papazian Ephron, New York. But advertisers in the $10 million to $30 million range have been burned even worse by the hot market.

Still, media planners, buyers and their clients see plenty of opportunity for brands with small-to-mid-range budgets through a combination of tighter targeting, greater flexibility and smarter buying.

"I think the key is flexibility," says Mr. Ephron. "And if you want to do well on a smaller budget, you have to have good intelligence about what's going on with all suppliers."

For instance, in the recent strong market for spot TV, regional network time has been a better buy, says Peter Knobloch, president of R.J. Palmer Inc., New York, the media buying arm of EPB Communications.

"We've been able to pick off regional network opportunities," he says. "Executed on a local basis, the same time would have been double what it was on a regional basis."

Close communications between buyers and planners is one key to smart buying, Mr. Knobloch says, allowing adjustments in the media plan to compensate for changes in the marketplace.

Mr. Knobloch sees clients shifting budgets to print to conserve money, but he believes research does not justify such moves as cost-effective. Budget-minded clients sacrifice the quality of their TV buys, he says, by moving to 15-second spots or less-expensive dayparts.

1-800-Contacts learned that cheaper isn't always better. Direct response business helps the company know almost immediately when its media is working and is an easy way to test the effectiveness of the media buy, says Kevin McCollum, VP-marketing for 1-800-Contacts.

When 1-800-Contacts started airing TV commercials in July 1998, sales grew 50% a week, every week, for six weeks. TV has been a key driver in pushing sales to $100 million last year, from $500,000 in 1995, the year it was founded.

Targeting, both demographically and psychographically, has been key for 1-800-Contacts.

"Only one in 10 people wear contact lenses," Mr. McCollum says. "When the incidence is that low, you can get very inefficient very quickly if you don't have a lot of attention to detail."

Contact lens wearers tend to be upscale, he says. Budget constraints might tempt the company to use daytime and other lower-cost dayparts, the brand's consumers are better reached in prime time, after working hours.

"Moving dayparts has significantly improved our television efficiency," Mr. McCollum says. Fortunately, the brand's selling proposition of offering contact lenses via fax, Internet or telephone is fairly straightforward, allowing it to use 15-second commercials at roughly half the cost per gross rating point compared with 30-second spots, he says.

"What we found is that it's not all about cost efficiencies, but also about cost-value and targeting," says Lyn Jarc, partner and senior VP with Empower MediaMarketing, Cincinnati, media agency for 1-800-Contacts. Empower has kept the brand on air 52 weeks a year, despite an advertising budget under $20 million.

Cost efficiencies don't " always necessarily mean the cheapest stuff out there. We have cases where we can deliver fewer absolute GRPs, but they are better targeted and more productive," she says.

While the brand spends about 80% of its dollars in the upfront, it holds back 20% for opportunistic and scatter buys. That reservoir has gotten 1-800-Contacts advertising onto "Late Night with David Letterman" and syndicated programs such as "Entertainment Tonight" and off-network syndicated fare such as "Friends" and "The Drew Carey Show," Ms. Jarc says.

The brand also has used direct-response rates for cable networks such as Arts & Entertainment and Discovery Channel, which run 30%-40% below the networks' regular rates, she claims.

The increasing cost of overall TV commercial time has been hardest on new advertisers coming into the market in recent years, Ms. Jarc says, adding that established clients, even in the $10 million to $30 million range, tend to get more breaks based on established relationships.

For new advertisers, flexibility and willingness to take risks are keys to getting breaks, she says.

"One thing we've done on our cable schedule for 1-800-Contacts and other clients is try some of the new up and coming networks that don't necessarily have all the ratings or the highest household penetration now. But we think they're going to be up and comers, and if you get in with those networks on the ground floor, you get favorable pricing down the road."

More established networks are willing to cut deals if you're willing to advertise on one their new spinoffs, she says, citing E! Entertainment Television, which sells time in a package with its spinoff channel, Style.

In a similar vein, multimedia packages combining TV and Internet buys can also be a good deal for new advertisers, she says, especially when they plan to do interactive advertising anyway.

Being outspent doesn't have to mean being outmaneuvered, as Playtex Products Corp. has learned.

Playtex Products' Playtex tampon brand was outspent $37 million to $26 million by Procter & Gamble Co.'s Tampax in 1999, according to Competitive Media Reporting. Tampax also had the advantage of being part of a $2 billion U.S. media budget for P&G. Yet Playtex sales were up 10.6% to $165.4 million in the 52 weeks ended March 26, compared with a decline of 3.6% for category-leading Tampax, according to Information Resources Inc.

Tight targeting has been one key for Playtex, says Chris Kurjanowicz, VP-marketing for Playtex Feminine Products. The tampon's ads and media buys have been almost entirely directed at the "point-of-entry" market -- girls and in their teens -- with media buys targeted at teen magazines and teen-oriented broadcast TV programming, such as WB's "Buffy the Vampire Slayer" and "Dawson's Creek."

Similarly, Planetfeedback.comis looking to target its estimated $20 million media budget tightly toward consumers with the highest propensity to provide feedback to marketers.

Planetfeedback is using several dimensions of targeting, seeking not just the right demographics and psychographics, but also "the feedback moment." That's what VP-Marketing Mike Nazzaro calls the moment when consumers are most likely to want to vent.

Search for feedback moments has driven Planetfeedback to airports and air travel, which can produce some of the highest volume and intensity of feedback. An early run of print ads from DDB Worldwide, New York, broke in July in-flight magazines, with plans for airport display advertising this fall.

TV advertising, too, will be pitched to consumers most likely to provide feedback. Although Mr. Nazzaro says the specifics of the TV buy have not been decided.

"DDB's own research shows consumers most likely to provide feedback also tend to be more politically active and contribute more to charities, suggesting news and public affairs programming, even sponsorship of local public radio programming, as good venues," Mr. Nazzaro says.

Mr. Nazzaro, a former P&G brand manager, finds himself in a new situation as he navigates in tighter budgetary straits with a start-up.

"You don't have as much room for error or discretion in this budget range," he says. "You're definitely spending it as if it's your last dollar and hoping each one is very productive for you."

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