Advertising Revenue Models

What are the 5 primary types of consumer and market data provided in the case you would consider if you were Dana Wheeler? Discuss specific result elements (not a summary of the exhibits). As Dana Wheeler, I would consider the following five primary types of consumer and market data: 1. Cable Ratings: Both Advertising and Affiliate revenue will depend upon these as the usability of a channel to the cable company and advertisers depend upon the amount of viewers a channel has. 2.

Annual Demographic Survey: Provides key data to focus on 18-34 year female iewers. This audience group would be the prime focus as their viewership will attract the advertisers and will have them pay the largest CPM. 3. Advertising Revenue Model: Advertising revenue is the largest source of income for the channel which could go down by 10% if there was no change in the channel strategy. 4. Competition from other Networks: This data allows the channel to find what is most desirable amongst the viewers that’s attracting them to the other channels. . Attitudinal Research Findings: Cluster segmentational Data will provide an insight nto different viewer populations as to what to focus in order to market effectively bringing in high CPM. 2. Consider 3 primary options presented. Discuss the pros and cons of each Broad Multi Segment Approach: This includes targeting viewers from all the age ranges including Fashionistas, Planners ; Shoppers and Situationalists by investing in marketing and advertising campaign as well as programing.

PROS: This approach will lead to approximately 20 % increase in viewership as it will be targeting a broad range of viewers increasing their awareness and liking towards the channel. Also, it will not require an additional programing expense as compared to the other approaches and will deliver about $40 M more in terms of net income as compared to the base income of 2007. CONS: Ad Sales forecasted a decrease by 10% in CPM if the current trend continues. Broad Multi Segment approach still does not present with a different category of viewers to maintain $2. 0 CPM, instead, it brings it down to $1. 80, which is the same 10% decrease. Since this approach does not target specific audience, TFC will still run under risk of competitors as CNN and Lifetime penetrating their premium segments. Fashionistas segment Approach: This includes targeting Fashionistas which are strong in highly valued 18-34 year old female group. PROS: Since this approach mainly targets 18-34 year old females, it will lead to a higher CPM of about $3. 50 from base $2. 00 which will generate a net income of about $100 M more as compared to the base income.

Also, it will help TFC to compete with Lifetime which mainly targets females ranging from 18-34 years. CONS: The amount of viewers targeted in this approach is mere 15 % of all viewers which will decrease the channel’s ratings from current 1. % to 0. 8%. Also, it will cost an additional programming cost of $1 5 M to the channel. Also, targeting one specific audience will not create much awareness or liking of the channel in other viewer groups and they might also lose their loyal viewers. Fashionistas and Planners/ shoppers segment approach: This will include programming targeted to Planners/ Shoppers and Fashionista segments.

PROS: This scenario will yield approximately $115 M more in net income as compared to the base income of 2007 due to an they will also be able to compete with other channels and attract their viewers. CONS: This approach is the most expensive approach with a total incremental cost of $20 M. Also this change in programming might cause the channel to lose their loyal viewers and might result in declining viewership 3. If you were Dana Wheeler, what solution would you recommend and why? As Dana Wheeler, I would suggest approach 3 i. e. Fashionistas and Planner/shoppers segment approach, due to the following reasons: 1.

The “Broad Multi Segment Approach” would lead to an increase in ratings from 1. 0% to 1. 2% but as it is not targeted to specific audience, here is a high risk of losing that rating to the competitors. Also, the amount of net profit made would be least in this case i. e. about $40 M yielding a profit margin of 29% which will be a mere 10% more than base profit for the current year. 2. The “Fashionista Segment Approach” would attract the highest desirable audience population i. e. females ranging 18-34 years thereby leading the channel to increase the CPM from $2. 00 to $3. 50.

The amount net profit made in this case would be about $100 M more, yielding a profit margin of 37% which will be a significant 18% more han the base profit. This approach leads to a decline in the ratings from 1. 0% to 0. 8%, as it targets only 15% of the audience population. Also, it requires an additional expense of 15 million and a risk of losing current the loyal clients if the channel becomes too targeted on Just one kind of audience. 3. The “Fashionistas and Planners/Shoppers Segment Approach” seems most favorable as despite the $20 M programming cost, this approach targets 50% of its audience which will enhance viewer ratings from 1. % to 1. 2 % as it will enable the channel to attract audience rom competitor channels as well. This approach is not too drastic but will also cover the desirable viewer range of 18-34 year females, yielding a CPM increase from 2. 0% to 2. 5%. As a result, this approach would yield a net profit of $1 15M more leading to a profit margin of 39%, which is 20% more than the base profit.