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909E13

M2 UNIVERSAL COMMUNICATIONS

Ankur Bansal and Peter Vaz wrote this case under the supervision of Professors Srinivas Krishnamoorthy and Peter Bell solely to
provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial
situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of
this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to
reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of
Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail [email protected].

Copyright © 2009, Ivey Management Services Version: (A) 2009-10-08

The continued robust growth of the industry indicates that marketers increasingly
understand and appreciate the benefits of interactive advertising. Marketers large and
small have come to accept digital media as the fulcrum of any marketing strategy.1

It was June 25 2008, and Peter Vaz, vice-president of M2 Universal Communications (M2), was sitting in
his Toronto office thinking about the task ahead of him. Teleco Inc. (Teleco), an established telecom
conglomerate with a significant position in the Canadian wireless business, had engaged M2 to plan its
digital media spending strategy for the upcoming quarter. Recently this sector had experienced significant
growth and, as a result, new wireless pure-play companies had penetrated the market. M2 would have to
help Teleco decide on the ideal investment strategy for its $1.5 million digital media advertising budget, to
effectively counter the threat of the competition’s aggressive advertising campaigns. Digital media had
rapidly changed consumers’ media consumption and the way advertisers planned campaigns, and Vaz
wondered how this would affect M2’s strategic recommendations going forward.

COMPANY INFORMATION

With media billings in excess of $500 million, M2 Universal provided media planning, buying and
research services for many of Canada’s leading advertisers. M2 was a division of MacLaren McCann Inc.,
a totally integrated communications company in Canada. Maclaren’s parent company was The Interpublic
Group, a global leader in advertising and marketing services, with operations in more than 130 countries.

DIGITAL MEDIA SHIFT

Traditional advertising campaigns used television, newspapers, radio, magazines and outdoor media to get
their messages to consumers. Vaz was aware that consumers were now increasingly using digital media

1
Interactive Advertising Bureau - November 2007.

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platforms like websites, social media, search engines and other emerging platforms like mobile and
gaming. These developments dramatically changed the way advertising was distributed. He was cognizant
of the fact that websites and e-mail not only provided new advertising media, they also allowed advertisers
to target their marketing campaigns to very specific segments and obtain real-time feedback on the success
of these campaigns, making digital platforms an increasingly critical part of clients’ advertising strategies.

More Canadians than ever before were using the Web, with over 72 per cent online in any given month,
and this number had grown by over 25 per cent from August 2005 to May 2008.2 The reach of the Internet
stood as a powerful rival to established traditional media like television, radio, newspaper and magazines.
Of these, the Web was the only medium to have increased its reach in the past five years. All other media
had shown some decline in audience reach. Canadian spending on business-to-consumer e-commerce was
over $15.7billion in 2007.3 Digital online advertising expenditures continued to rise and were expected to
reach $3.3 billion dollars by 2011.4

After 20 years in the Media Industry and over 13 years in the digital space, Vaz, a recent graduate of Ivey’s
EMBA program, was confronted by what has been termed by media buying heavyweight Harold Mitchell
as the “greatest shift” in the advertising industry.

The changes this time will see the cementing of the digital age as the permanent force in
media. Everyone is scrambling to catch up. Ad agencies are starting digital divisions;
media companies are boosting their digital arms. Make sure that you’re not left behind
mumbling analogue thoughts that only the dinosaurs can understand.4

DIGITAL MEDIA SPEND PROBLEM

As Vaz pondered the problem, he wondered whether it was possible to provide media buyers with an
important tool to determine the optimum digital media investment required for an effective brand
advertising campaign. He wanted to develop an Optimum Digital Media Spend (ODMS) model that would
provide the parameters and procedure for determining the optimum digital media investment between the
various digital platforms. The direction on the optimal investment for various digital media platforms is
usually governed by the following parameters – cost per thousand, audience reach, frequency, brand
consideration, competitive consideration and impressions planned. (See Exhibit 1 for a detailed
explanation and Exhibit 2 for data regarding these parameters.)

Vaz recognized frequency as the most important parameter since it was the driving factor behind any
consumer action. Although, according to the basic advertising thumb rule, it took an average of three or
more exposures to an advertising message before consumers would take action, the marginal benefit of
repeated exposures started to decline rapidly after six exposures. At the same time, Vaz was concerned
about brand consideration and competitive consideration. Would it be practical to include these parameters
in his analysis? If so, how?

Vaz wondered whether the competitive consideration should directly affect the platform’s budget, as the
client would likely increase its brand awareness in channels where competitive activity was high. But
simultaneously, Vaz argued that a low competitive consideration score would reflect a strategic

2
eMarketer Canada – B2C e-commerce sales, November 2007.
3
Canadian Marketing Association, October 2007.
4
http://stickyads.com.au/2009/01/22/ad-industry-leader-declares-major-shift-to-digital-age-has-occurred, April 24, 2009.

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opportunity for the client to capture a first-mover advantage by building a strong presence in an unexplored
channel.

DECISION

Vaz felt that it would be a manageable task to incorporate all the requirements of the client, like keeping
the media spend at a minimum while making the best use of the budget available. He needed to decide the
appropriate frequency levels for achieving the desired effectiveness of Telco’s digital media portfolio and
whether a single unified frequency level would be sufficient for all separate channels. The task had to be
formulated in a way that would be analytically sound but, at the same time, would have a meaningful
managerial interpretation that would encourage Telco’s buy-in.

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Exhibit 1

MEDIA TERMINOLOGY

A blended cost per thousand for each of the digital platforms

Cost per Thousand
considered for the campaign.

Penetration for the various digital platforms considered for the

Audience Reach target. This gives an indication of which platforms have a higher
reach in comparison to others.

A score of 1-10 that takes into account the importance of each of the
platforms for the brand. For example, if websites are the key driver
Brand Consideration
in a decision-making process for the purchase of a brand, websites
would get a higher score.

Competitive A score of 1-10 provided to each platform, based on the level of

Consideration competitive activity within that platform.

The total number of exposures to a schedule of advertisements (not a

Impressions Planned measure of the number of different people exposed to a
commercial).5

The average number of times the audience reached by an advertising

schedule is exposed to a commercial.
Frequency
Frequency = Impressions Planned / Audience Reach

Total Cost Impressions Planned × Cost per thousand

Source: Abridged version of documents provided by company.

5
Facebook.com’s advertising policy: Facebook allows the client to set a daily budget, which represents the maximum
amount the client is willing to spend for each day it is advertising. Facebook’s system will automatically stop showing the ad
once the client’s budget has been met for the day and the client will never accrue charges in excess of its budget each day.

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Exhibit 2

DATA

PLATFORM COST AUDIENCE REACH (000S) BRAND COMPETITIVE

PER THOUSAND CONSIDERATION CONSIDERATION
(1-10) (1-10)

W EBSITES $12 8,333 9 8

MOBILE $18 2,523 3 2

GAMING $20 1,262 4 2

SOCIAL MEDIA $10 8,832 6 5

VIDEO $15 6,309 7 5

SEARCH $2 11,986 10 9

Source: Abridged version of documents provided by company.

This document is authorized for use only in Prof. Rahul Pandey's MBA 10, T-2, OR-E & F at Indian Institute of Management - Amritsar from Oct 2024 to Dec 2024.