Promotion: Message Credibility and Cost Assessment

Message Credibility: High vs. Low

The perceived control of the message can influence the target market’s perception of message credibility. For example, many customers viewing a comparative advertisement in which a product is shown to be superior to a competitor’s product may be skeptical about the claims since the company with the superior product is paying for the advertisement. Yet if the same comparison is mentioned in a newspaper article it may be more favorably viewed since readers may perceive the author of the story (e.g., reporter) as being unbiased in her/his point-of-view.

Cost Assessment: Exposure vs. Action

Promotional cost is measured in several different ways. One commonly used method is based on assessing the cost of a promotion compared to the number of people exposed to the promotion. One method called cost-per-mille (CPM), relates to how many are exposed to a promotion in relation to the cost of the promotion. (CPM is also referred to as cost-per-thousand as mille means thousand and calculates how much promotion costs for each 1,000 exposures). CPM is a commonly used promotional measurement for mass media outlets, such as print and broadcast markets, although in the online advertising industry it is also used, though it is sometimes referred to as cost-per-impression (CPI). A national or international television advertisement, while expensive to create and broadcast, actually produces a very low CPM given how many people are exposed to the ad. Yet a low CPM can be misleading if a large percentage of the promotion’s audience is not within the marketer’s target market, in which case another measure, cost-per-targeted exposure (CPTE), may be a better metric for gauging promotion effectiveness. The CPTE approach looks at what percentage of an audience is within the marketer’s customer group and, thus, legitimate targets for the promotion. Clearly, CPTE is higher than CPM, but it offers a better indication of how much promotion is reaching targeted customers.

An even more effective way to evaluate promotional costs is through the cost-per-action (CPA) metric. With CPA, the marketer evaluates how many people actually respond to a promotion. Response may be measured by examining purchase activity, website traffic, taps on smartphone advertisements, number of phone inquiries, and other means within a short time after the promotional message is delivered. Unfortunately, measuring CPA is not always easy and tying it directly to a specific promotion can also be difficult. For example, a customer who purchases a snack product may have first learned about the snack product several weeks before from a television advertisement. The fact that it took the customer several weeks to make the purchase does not mean the advertisement was not effective in generating sales, though if the CPA was measured within a day or two after the ad was broadcast this person’s action would not have been counted..

However, marketers have at their disposal an ever-growing array of sophisticated customer tracking and analytics techniques, especially for promotions delivered through the internet and mobile networks. These techniques are continually improving marketers’ ability to match exposure to action. Consequently, CPA is bound to one day be the dominant method for measuring promotional effectiveness.

Promotion: Demand Creation and Message Control
Promotion Mix