Oracular Consulting wants to increase its exposure to the public in order to increase
business. We are planning to split our advertising budget among three venues:
We have a maximum of $50,000 to spend on advertising per month. Ads in the airline
magazine cost $25,000 for a one page ad each month. The magazine is seen by about 600,000
people each month. The newspaper ads cost $210 per square inch for an ad that runs in all
four Sunday issues in one month. The smallest ad available is four square inches; the largest is
a half-page ad (115 square inches). The newspaper has a circulation of 900,000. Market
research has shown that the number of people who pay enough attention to the ad to count as
having seen it is dependent on the number of square inches of the ad according to
the formula (where ”units” stands for the number of units, in square inches, of the
ad):
The web ads are randomly generated whenever someone visits the web site. The
price we pay is based on the priority our ad is assigned. For every 0.1% chance of
our ad being shown, we pay $60. The website will not allow us to purchase more
than 25% of the ad space. The web site gets an average of 800,000 hits per month.
Obviously, we want Oracular to be seen by as many people as possible. Keep in
mind, though, that many of the circulation numbers above are approximate, so
give us some idea of what range of results we can expect if these numbers change.
Also, you should be aware that Albatross Airlines has been having some difficulties
lately, and the number of passengers is expected to drop; they will probably raise
prices for ads to compensate a little. We need to know at what point we should stop
advertising in their magazine. Finally, the monthly advertising budget fluctuates as
much as $10,000 per month; how will that effect our decisions about what ads to
place?
Attachments: None To: Analysis Staff
From: Advertising Director
Date: May 30, 2008
Re: Advertising for Oracular
