How much should I charge to create an online media plan for a small
software company? I'm in Colorado, they sell high priced systems but
have relatively small marketing budget. Please answer asap, thanks!

Hi MHC,

I may be just the guy to answer this question. I've owned an
advertising agency for many years, and written quite a few media plans
over the years. We are now more focused on online marketing, including
online media plans.

We've always priced online media plans the same way we price
traditional media plans. So I'll use the term interchangeably.

A "media plan" also comes in a couple of varieties, and the charge
will be based obviously on what you do. On one end, you analyze the
customer's client demographics and select media based on your personal
knowledge of the industry and the available media. On the other end,
you help the client determine his actual target market, do research on
where that target market resides online, investigate strategic
opportunities, analyze media kits from potential media, and negotiate
rates.

There are two "industry standard" ways to charge for a media plan,
whether online or using traditional media:

1) The most common way is to charge a flat 15% commission on total
billings. This would be for a full-service approach where you develop
the plan, buy the media, track results, and reconcile billings. (The
customer of course pays the invoices directly.) In traditional media,
you would expect to receive commissions up to 15% from the medium. It
is expected that these commissions will be deducted from what you
charge the client. If everone were to give you a 15% commission, you
would charge the client nothing. Many online media also pay
commissions to agencies, but that industry is not nearly as
standardized. Many others pay nothing at all. In a competitive
environment the standard 15% is reduced to as little as 8 or 9% if the
customer is billed.

2) Another common pricing methodology is to charge by the hour or by
the project. Typically an hourly rate can go from $75 to $125 an hour
in many metropolitan areas. This may be more appropriate when a client
simply wants the online media plan document and plans to do all the
leg work himself. As you may know, media plans can grow to be rather
time-consuming affairs so be sure to build in sufficient hours if you
bid by the project.

Unfortunately for you, online media plans are often presented to
clients as a come-on to get the client to do all the buying through
them in return for the additional commission. In other words, online
media plans are generally priced pretty cheap in relation to the
expertise and work involved. Therefore if all you're doing is writing
a media plan without any back-end buying, you shouldn't plan on
getting rich.

As an aside, in some ways it's easier to market high ticket items
online. It may take only a few sales to pay for the entire campaign.
And if you're judicious in your purchase recommendations, it's easier
to look good. :)

In addition to my personal knowledge, I wanted to check on how other
companies handle charges for online media plans. Doing a search on
Google for media plans I found a small media planning company in
Atlanta.

The Media Plan, Inc.
http://themediaplan.com/

I called and talked to the owner at some length. (Someone emailed him
with a similar question yesterday, and I'm assuming this might have
been you since he ranks so well on Google. :) Nevertheless he had good
information.) For full-service media plans he charges a sliding scale
wich tops out at 10% for budgets under $250,000. On quoted flat-fee
projects - media plan only - he charges 10 to 25% down with the
balance upon completion.

The Bottom Line
Prices are going to be across the board depending on how big the
client and the budget. However, if I was held with a gun to my head
I'd throw out the following specific prices. The caveat is that I
don't know squat about your current client, market, or budget. So take
these figures as wild guesses based on what little I know.

Full Service Pricing
$5,000 budget and under - $950
$5,000 to $100,000 - 15% of total budget - 15% of total
$100,000 and over - 7% to 10% of total budget

Media Plan Only
$100,000 budget and under - $500 to $1,500 based on the amount of
detail and research involved. Alternatively, $75 to $125 an hour.
$100,000 and over - $2,500 up, equating to at least the hourly rates
above. Or charge hourly. A project quote should be based on the
expected number of hours times the above rates.

Here are some additional resources you may want to check out:

Strategy Magazine
http://www.strategymag.com
A recent issue presents a number of award-winning media plans and may
be well worth the required subscription price.

Nielson Net/Ratings
http://www.nielsen-netratings.com/marketing/what_we_do_landing.htm
Nielson Ratings provides ratings for a host of online media. This
should be a first stop.

Lycos Online Media Kit
http://advertising.lycos.com/destinations/foxsports.asp
The name says it all.

News Directory
http://newsdirectory.com/
This site features links to hundreds of media that you may want to
consider for your plan.

Mhc, I really don't know your particular situation. If you'd like to
respond with a clarificaton request and tell me a bit about your
client, perhaps I can refine my answer with additional details.
Primarily, the size of the budget would help.

At any rate, thanks for the question! I've enjoyed it.

Prof

This was more than I could have hoped for. Awesome answer. If this is
the level of quality I can come to expect from this service I will use
it often.