Appendices

Our Budget:        Our proposal was given a budget of $1 million to be allocated by each media platform throughout the 2016-2017 calendar year and be adequate enough to sustain a national reach for all of our 20 million DIRECTV subscribers. Within our suggested advertising methods, potential promotions, and redesigned costs of additional interactive media platforms, we have allocated results below this budget amount, amounting to a total of $943,183.22 throughout the duration of this campaign.

The costs associated with our budget were calculated in part due to research based on information provided by Marketing EDGE with respect to DIRECTV, CPC rates of social media platforms, unit costs associated with traditional advertising methods, hourly wages for outside agency costs, etc. Likewise in order to provide the most accurate results possible for management, so that they could effectively make an investment decision based on the overall profitability of this campaign, we precisely measured the quantity allocated to each media platform as well as promotions, using algebraic methodology.  Such costs including more detailed calculations, will be visible within our Excel Document.

Advertising

Through our campaign we utilized various platforms to promote DIRECTV’s Refer-A-Friend program to our targeted audiences. As described above, these platforms include Facebook, LinkedIn, billing statements, television, YouTube, and newspaper. Below, we will break up the following categories describing in particular the unit cost associated with each, how we determined the “quantity” associated with each method, and the overall cost allocated to each method. *Note: all media platforms assume no growth in the amount of current users accessing the website*

FacebookDIRECTV currently has 4.3 million “likes” on Facebook. Because we are only interested in

reaching DIRECTV’s current customers at this time we determined that this 4.3 million would be the most efficient to use, and we believed that it could be assumed that most if not all of these followers of our social media page are a customer of DIRECTV. Through information provided by Marketing EDGE it was stated that via Email approximately 1.2% of customers who currently refer click the promotional material for the Refer-A-Friend program compared to 0.5% of those who do not participate. Because we were not provided with information regarding social media click rates, we used this as our guideline for calculations and will continue to utilize it via other advertising methods. Likewise we used 10% as the amount referring to those who participate in the Refer-A-Friend program because we were not given the exact amount, and thus 90% was used as the complement to represent the total amount that do not participate in the program. Using these numbers via our formula provided in Excel we anticipated a click amount totaling 24,500. When combined with researched CPC (Cost Per Click) rates of Facebook advertising we budgeted a cost of $11,274.60 to this platform.

LinkedInSimilar to Facebook, LinkedIn was one of our most sought after social media platforms

because we were able to track exactly how many media users currently follow our DIRECTV page. Due to the fact that this represents our sought after market, current customers, as well as

encompasses a large percent of our demographic, high-income males, we determined this would be an effective platform to utilize. Currently LinkedIn has 59,200 followers of DIRECTV. Unfortunately the company’s methodology for determining ad costs is much more complicated than Facebook’s and rather than operating at a Fixed Rate, they determine prices based on a bidding structure. Through research, we were able to determine that the average bid was around $2 to secure a spot, but the higher you bid the greater your chances of being seen regularly were. Therefore we decided to budget a cost of $3 to potentially gain the most foot traffic to our page. Similar to Facebook this $3 would then be associated as our LinkedIn CPC rate. Using the above methodology for Facebook with our 1.2% click rate for current DTV referrers and 0.5% for non-referrers we determined a total cost of this platform to be $1,013.86.

Billing Statement To determine costs connected with our billing statement we associated the costs of additional

ink required. These additional added to our current bill, include the bill amount comparison when referring a friend, as well as promoting the app itself. Provided by Marketing EDGE we were given a $0.42 CPP (price out production costs) for mailing house. Determining that the average words/page was 250 for Times New Roman 12 size font we reduced this cost to the amount of words we anticipated adding; adding 25 words correlated to cost of $0.042/page. We did this because we would only be utilizing DIRECTV’s current billing statement structure that they send out on a regular monthly basis but adding the additional promotional material to it. However, due to a smaller budget and relatively high CPP costs we suggested allocating this platform to 5% of DIRECTV’s customers (4 million) and doing so for only 1 month which we suggest right before the summer months as new homeowners begin to seek out potential television providers; providing an excellent opportunity for neighbors who have DTV or friends who do to refer them as a friend and save money off their bill. Ideally we would like to see this direct mail reach all 20 million customers but due to our budget the 4 million reach equates to a total of $168,000.

Television“DIRECTV currently uses existing inventory for commercials that are only run to DTV

subscribers, so the costs are not as great as a true media purchase for national coverage. These costs correlate to $1000/30 second spot run regardless of airing time of day time.” However, since our implemented commercial was 60 seconds long we budgeted a cost of $2000/spot (Marketing EDGE, personal communication, May 14th, 2015).  

Because DTV uses inventory that runs to all 20 million of their existing subscribers we thought this platform was critical to our campaign. However, although exceptionally low in cost we did not want to utilize too much of our budget with this media platform. We suggested advertising throughout 2 different months of the year; May and September (total of 61 days). We chose to advertise via the popular News Stations such as NBC or ABC twice a day, once with the 7am News before our demographic goes to work and at 11pm, when our demographic watches the News before bed. This would be done in May, in order to promote referrals during new homeowner season. Likewise during the month of September, twice a day, in the morning at 7am and at night at 11pm via the SportsCenter Channel so we can reach a large potential audience during the beginning of Football Season. Due to our total spots (61 days twice a day) we estimated a total budget for this media at $244,000.

YouTubeThrough YouTube we believe that we can access the younger generation of our current

demographics, as they are more likely to use this platform. YouTube advertisers can target viewers by age, gender, location, etc. however, because we could not determine a particular percentage of

DTV customers who access YouTube we assumed that all 20 million participate. Likewise we used the previous Referral vs. Non-Referral Click rates of 1.2% and 0.5% respectively to determine the amount of users who view our video, which we determined to be 114,000 as seen within our Budget. Through research we were able to determine the average advertising costs of YouTube which equate to 3 possibilities; $0.10, $0.20, and $0.30. We chose $0.30 as our CPC because this cost was associated with an “in stream” advertisement that plays before the viewer can watch their video. Through this CPC rating and our budgeted 114,000 views we determined an allocated cost of $34,200 to this platform.

NewspaperOur final platform we chose to utilize; The Wall Street Journal; home to 2,378,827

subscribers across the US. Typical Wall Street Journal enthusiasts bluntly consist of high-income males. This is why we chose this platform; to reach our current demographic within an environment they are comfortable with and with a product they use on a daily basis. Although currently having no data available to us with regards to how many DTV customers are subscribed to The Wall Street Journal, we estimated that approximately 10% of WSJ subscribers are DTV customers, which we think is a safe estimate considering we have over 20 million subscribers of which consist mostly of high-income males. Through research we found that the average cost of a ½ page black/white ad in the WSJ equates to $96,900. Therefore this is our projected budget allocated to this platform and we plan to utilize it one time; in the “Money & Investing” section, following the June release of Q2 Earnings.

Interactive Platforms

Web RedesignAs a part of the success to our marketing campaign we believe that revamping our current

website is crucial. A part of this redesign will consist of basic layout changes but more importantly interactive design features that operate similar to our mobile application. Through our research we found that typical hourly web redesign costs are approximately $120/hour. In addition to research and specifics to what our website required we found that the average amount of hours spent on redesigning a full-featured e-commerce website consisted of 87 hours (10 hours for planning an e-commerce system, 8 hours for graphics, 4 hours for migrating the products, 50 hours of programming, 15 hours of testing). Likewise we noted that our website needed the capability to be responsive to our mobile phone app and so research suggested we allocate an additional 25-30% for further design, programming and testing which accumulated to a total of 105 hours. Thus our budget for redesigning our website totaled $12,600.

Mobile ApplicationThe most significant feature to our campaign is our interactive, engaging mobile application.

We believe that this is key to enhancing the DIRECTV referral experience by increasing participation in our loyalty program. For this reason we budgeted a great portion of our $1 million towards our mobile application to ensure that it would be efficient enough to satisfy the needs of our customer base. Through extensive research we determined that a “Native” mobile app would be the most beneficial to the needs of our application. Through additional research we concluded that for a large corporation such as DIRECTV, our development cost for our “Direct Your Experience” mobile application would be around $153,000 and the monthly maintenance cost would be on average around $17,000. Thus we would need to budget a cost of $357,000.

Promotional Material

Despite the guidelines of Marketing EDGE stating that we were required to only factor in the costs associated with acquiring customers through media platforms we felt that it was essential to include some of the costs that would be incurred outside of DIRECTV’s typical promotions. The promotional material that we will be utilizing, with respected costs that will not be included, consist of the $200 total offer cost for both referrer and referee, movies (4 free movies selected/month for 1 month when referring 1 friend successfully), HBO/Showtime/Starz (3 month subscription when referring 2 friends successfully), Genie HD DVR (free when referring 3 friends successfully), NFL Sunday Ticket/NHL Center Ice/NBA League Pass (free for 1 season when referring 4 friends successfully). In addition we did not include the costs for creating: our social media advertisements, our monthly direct email (flyer) and our WSJ article as they were also not associated with the media costs allocated to acquiring customers but also because we believe that there tasks were relatively simple and the costs associated with them would be included in the daily tasks of DIRECTV employees (Marketing EDGE, personal communication, May 1st, 2015).

The following additional costs however, were included in our budget:

Super Bowl 50 TicketsA great deal of customers chose DIRECTV because of their exclusive right to the NFL

Sunday Ticket. The DTV customer is enthralled with football season. As a way to reward our customers who have participated in the DIRECTV Refer-A-Friend program we want to raffle off 2 tickets to the 2016 Super Bowl. The raffle is simple; essentially each friend successfully referred equates to one raffle ticket. At the beginning of PLAYOFFS in January, 2016 all raffle tickets will be collected and one will be randomly selected from the “pot” and it will be announced who the winner of the raffle is. The winner receives 2 tickets with the goal of promoting and encompassing the idea of the Refer-A-Friend program; allowing a customer to bring one of their referred friends. Based on our research we have concluded that the average ticket price for the Super Bowl is $3,950 and thus our total budget for this promotion is $7,900.

NFL TicketsWe realize that by only administering 2 tickets to one of our lucky fans, we are not exactly

satisfying the hopes and dreams of all DIRECTV football fanatic customers. To help them out we provide them with a guaranteed opportunity to win 2 tickets to a football game of their choosing where they can bring along a referred friend of their own. To budget this we looked at two factors; 1) the average cost of an NFL ticket, and 2) the projected amount of customers we expect to win this award. Addressing the first part, through research we were able to determine that the average cost in 2014 for an NFL ticket was $83.33. When looking at the number of customers expected to cash in on this opportunity we used an algebraic formula, taking into account our expected new referral rate via our app and raising it to the fifth power (probability of referring five friends). This equated to a projected 122 customers referring five friends and taking advantage of this opportunity, thus an overall cost of $10,294.76.

Detailed Budget Allocated By Media:

Media Schedule

Our Forecasted Results:To forecast results for our campaign throughout the 2016-2017 calendar year we utilized

several critical factors including our marketing campaign cost, acquisition cost, control promotion referral rate, promotion referral rate, and the average revenue of customer/month. To determine the success of our campaign we used metrics such as profit and ROI, which required finding the total revenue brought about during this calendar year for new referrals as well as calculating the cost, incurred throughout this campaigns duration. Before we could make such calculations we needed to first determine the amount of people we expected to refer which needed to consider the amount of people actually referring and how many times they would be doing so. Anticipating an expected referral rate of 25%, nearly 15% higher than that of the current rate, we sought to determine how many customers would refer. As shown in our excel sheet (forecasted results section), we anticipate a total of 250,014 customers downloading our app. The purpose of our campaign is to utilize all social media methods and create foot traffic to our mobile application where we will increase the referral rate of our customers; our success will be determined based on the amount of customers on our app.

To continue, using our new anticipated promotional rate of 25% via our app we calculated an expected amount of 62,503 customers referring approximately. Assuming that each customer referred one person, the additional number of new customers referred would be the same. However, we wanted to precisely calculate the amount added via our referral program by also factoring in the odds of each customer referring more than one friend. Using algorithms as shown in the Excel document we placed our new referral rate (25%) to the power of the number of customers referred. So for example, calculating the odds of referring three friends would be (.25)^3. Assuming a max of five friends referred in a calendar year, we summed these amounts together to get our adjusted referral rate at 33%. Multiplying this new percentage by the number of customers on the app we estimated 83,257 customers being referred approximately via our campaign.

Moving forward with this information we calculated total revenue from our campaign by multiplying the number of customers added via the app (83,257) by the revenue generated by a particular customer in a calendar year; $1,224 (this amount was determined through research that stated an average DTV customer generated revenue of $102/month). Together this amounted to a total revenue of $101,906,049.92 as a result of our campaign.

To calculate costs we were told that we should ignore all costs of maintaining the customer throughout the calendar year. Thus we included only the costs associated with our marketing campaign, $943,183.22, and the costs associated with initially acquiring a customer, $250 (“on average customer acquisition costs of DTV are between $200-$300”). By multiplying this acquisition cost rate by the number of customers added (83,257) and adding to that our marketing campaign costs, we were able to calculate a total cost for our campaign at $21,787,327.40.

To measure profitability via our campaign we subtracted our total revenue ($101,906,049.92) from our total cost ($21,757,327.40) and calculated this to be $80,148,722.52. Using this profitability we additionally calculated the ROI (TR-TC)/(TC) which equated to 368%. Although an astounding figure for investment purposes we believe this number is skewed due to the lack of implementing costs associated with maintaining the customer (Marketing EDGE, personal communication, May 1st, 2015). Within our Excel graph you will also see two other potential calculations based on acquisition costs of $200 and $300 rather than just the average of the two, which we calculated above.

**Download Excel Sheet in Google Drive to see full campaign budget and forecast calculations**

Creative Samples:

Figure 1:  “Direct Your Experience” page; addition to the DIRECTV mobile app

Figure 2: Customer earns four free movies after their first successful referral

Figure 3: Customer earns three month subscription to a premium channel of their choice after their second successful referral

Figure 4: Customer earns a free Genie HD DVR system after their third successful referral

Figure 5: Customer earns a one-year subscription to a premium sports package of their choice after their fourth successful referral

Figure 6: Customer earns two tickets to an NFL game of their choice after their fifth successful referral

Figure 7: New ad on the side of a customer’s billing statement, along with what their new balance would look like if they participated in the Refer-A-Friend program

Figure 8: Digital flyer that will be sent to customers via email to promote the Refer-A-Friend program and the new DIRECTV mobile application

Consumer Facing Acquisition Spot:

https://www.youtube.com/watch?v=ZUe_8dk7cXQ&feature=youtu.be

Survey Link:

https://qtrial2015az1.az1.qualtrics.com/SE/?SID=SV_26qcnUYB6YkEZbD

Interview Questions Breakdown:

Focus on the participants’ relationships with their TV provider

o Current provider Why did they choose this provider? How did they become aware of it? What made them choose this provider over the competition?

o Past providers, Past experiences Why did they previously choose these providers? What experiences did they have that made them switch to a different provider? What would they have liked to see from previous providers?

What factors are most important to them?o Cost? Benefits? Customer Service? Quality? Content? Consistency? Promotions?

Advertisement? Image? Equipment? Location? Assuming they had access to any cable/TV provider, which would they prefer?

o Why? Top 3 networks/channels? What kind of shows do they watch on TV?

o Drama, Comedy, Sports, etc. What brands are they loyal to?

o In what ways have they expressed loyalty? Rewards cardholder, brand exclusive, reviews, refer friends, etc.

Do they write online reviews? o For what businesses/services?o How often?o What motivates them to post a review?

How likely are they to respond to the company reaching out to them with promotions?o Examples of previous promotions they responded to (Company, service, promotion)o How has a company’s promotion resulted in their changed behavior?

What are the modes of media they would most likely respond to?o Direct mail, email, TV spot, online ad, etc.?o Favorite social media platforms?

Do they talk about these brands with friends, family, and acquaintances? What perks of TV would you like to have?

o DVR, HBO, Sunday Ticket, etc.

Citations (APA Format):

How Much Should I Spend on a Website Redesign? (2013, October 9). Retrieved from http://www.executionists.com/blog/how-much-does-it-cost-to-redesign-a-website/

Greenberg, J. (2014). 2014 NFL Fan Cost Index. Retrieved from https://www.teammarketing.com/tmr/66

How many average words can you type on one page? (2007). Retrieved from https://answers.yahoo.com/question/index?qid=20070422220710AAnysl4

Alleger, J. (2014). How Much Do Ads on YouTube Cost. Retrieved from http://www.pennapowers.com/how-much-do-ads-on-youtube-cost/

DIRECTV Satellite TV - Official Site | 1-800-490-4388. (2015). Retrieved from http://www.directv.com/

ABOUT DIRECTV, LLC. (2015). Retrieved from http://www.marketingEDGE.org/marketing-programs/collegiate-echo-2014-2015

Collegiate Echo Challenge FAQs. (2014). Retrieved from http://www.marketingEDGE.org/marketing-programs/collegiate-echo-2014-2015/faqs

DIRECTV. (2015). Retrieved from https://www.facebook.com/directv

DIRECTV. (2015). Retrieved from https://twitter.com/DIRECTV

DIRECTV (2015). Retrieved from https://www.linkedin.com/company/3744?trk=tyah&trkInfo=clickedVertical:company,idx:2-1-4,tarId:1431557747028,tas:directv

Lulofs, N. (2013, April 30). Top 25 U.S. Newspapers for March 2013. Retrieved from http://auditedmedia.com/news/blog/top-25-us-newspapers-for-march-2013.aspx

Costs for Advertising in Newspapers. (n.d.). Retrieved from

http://www.gaebler.com/Newspaper-Advertising-Costs.htm

Lipka, M. (2015, January 19). Average Super Bowl ticket price: $3,950. from http://www.cbsnews.com/news/average-super-bowl-ticket-selling-for-3950/

Apple iPhone iOS App Development, Android Apps Cost Estimate / Average Pricing. (2015, February 24). Retrieved from http://www.comentum.com/mobile-app-development-cost.html

Native vs Hybrid / PhoneGap App Development Comparison. (2015, January 26). Retrieved from http://www.comentum.com/phonegap-vs-native-app-development.html

Infographic: See Which Devices Your Target Audience Is Using. (2015, April 12). Retrieved from http://www.adweek.com/news/technology/infographic-here-are-devices-your-target-audience-using-164026

Guimarães, T. (2014, December 12). REVEALED: The Demographic Trends For Every Social Network. Retrieved from http://www.businessinsider.com/2014-social-media-demographics-update-2014-9