What it means
Media buying is separate from creative work. Someone else decides what the ad says; the buyer decides where it runs, when, at what price, against which audience, and how the budget is split across channels.
It matters because media is usually the largest line in a marketing budget and the easiest place to waste money. The same $50,000 can produce very different results depending on placement quality, audience targeting, frequency caps and whether the buyer negotiated rate or accepted the published price.
Buys are priced in a few standard ways. Cost per thousand impressions (CPM) is common in awareness campaigns, cost per click (CPC) in search and social, cost per acquisition (CPA) where the seller carries performance risk, and fixed placement fees for sponsorships and out of home sites.
Modern buying is largely programmatic, meaning inventory is bought through automated auctions in the fraction of a second before a page loads. This gives precise targeting and fast optimisation, but it also introduces problems the buyer must actively manage: invalid traffic, ads that never actually appear on screen, and placement next to unsuitable content.
The measurement question is what separates a competent buy from an expensive one. A buyer should be reporting cost per acquisition and return on ad spend rather than impressions delivered, and should be honest about attribution windows, because the same conversion can be claimed by three channels at once.
In practice
Real-world examples.
Example
A regional car dealer group buys radio across four stations for six weeks at a fixed $34,000, weighted to drive time. Calls are tracked with a dedicated number, and 210 enquiries at a $162 cost per enquiry justify repeating the buy the following quarter.
Example
A software company shifts $200,000 of budget from broad display to search and trade publication sponsorships. Impressions fall by 80% but demo requests rise by a third, because the audience is now people already searching for the category.
Example
A fashion brand runs a programmatic campaign and finds 22% of impressions were never in view. The buyer renegotiates on a viewable CPM basis, which raises the unit price but lowers the effective cost per genuine impression.
Formula
Calculation
Media cost = (Impressions / 1,000) x CPM
Return on ad spend (ROAS) = Revenue attributed / Media cost
An online homeware retailer books a display and social campaign delivering 4,000,000 impressions at a negotiated $12 CPM.
Media cost = (4,000,000 / 1,000) x $12 = 4,000 x $12 = $48,000
The campaign achieves a 0.5% click through rate, so clicks = 4,000,000 x 0.005 = 20,000, and cost per click = $48,000 / 20,000 = $2.40. Of those clicks, 3% convert, giving 20,000 x 0.03 = 600 orders and a cost per acquisition of $48,000 / 600 = $80. At an average order value of $250, attributed revenue is 600 x $250 = $150,000, so ROAS = $150,000 / $48,000 = 3.125. At a 40% gross margin the campaign generates $150,000 x 0.40 = $60,000 of gross profit against $48,000 of media cost, a contribution of $12,000, which is thinner than the headline ROAS suggests.Case study
Seen in the real world.
The following is an illustrative and entirely fictional example. Norbury Green, an invented outdoor clothing retailer, spent $600,000 a year on media split roughly evenly across display, social, search and print, and reported an overall ROAS of 2.4.
A new head of growth at the fictional company insisted on channel level reporting rather than a blended figure. Search returned $6.10 of revenue per dollar, social $3.20, display $0.90 and print an unmeasurable amount that the agency had been allocating a share of credit to by assumption. Display alone was consuming $150,000 and returning around $135,000 of revenue at a 42% gross margin, so it was losing money on every impression served.
Norbury Green cut display to $30,000 for retargeting only, moved $120,000 into search and social, and held print flat for one more season to test it with regional split. Total media spend stayed at $600,000, but revenue attributed to media rose from $1,440,000 to roughly $2,100,000, lifting blended ROAS to 3.5. The illustrative point the head of growth made to the board was that the improvement came from reallocation rather than extra budget, and that a blended average had been hiding a loss making channel for two years.
Watch out
Common mistakes.
- Judging a buy on impressions or reach delivered rather than on cost per acquisition and return on ad spend.
- Reporting a blended ROAS across all channels, which lets a strong performer disguise one that is losing money.
- Ignoring viewability and invalid traffic in programmatic buys, so a large share of the budget pays for ads no person ever saw.
Questions
People also ask.
What is the difference between a media buy and media planning?
Planning decides the strategy, audience and channel mix, while buying negotiates and executes the actual placements against that plan.
Is a lower CPM always better?
No, because a cheap CPM against the wrong audience or in poor placements usually produces a worse cost per acquisition than a more expensive, better targeted buy.
How long should a campaign run before judging it?
Long enough to cover the normal purchase cycle and gather a meaningful number of conversions, which for considered purchases can mean several weeks rather than a few days.
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