Company X runs three advertising campaigns simultaneously. The TV campaign reaches $1.2$ million people at a cost of $£120\,000$, the radio campaign reaches $800\,000$ people at a cost of $£70\,000$, and the online campaign reaches $1.5$ million people at a cost of $£150\,000$. Market research shows that $30\%$ of the TV audience also hears the radio campaign, $20\%$ of the TV audience also sees the online campaign, and $25\%$ of the radio audience also sees the online campaign. In addition, $100\,000$ people are reached by all three campaigns.

(a) Calculate the total number of unique individuals reached by the three campaigns combined.
(b) Determine the average cost per unique individual reached.
(c) If the company were to drop the radio campaign and run only the TV and online campaigns (with the same costs and the same overlap of $20\%$ between them), would the average cost per unique individual be lower? State the new average cost and answer yes or no.

Question

Company X runs three advertising campaigns simultaneously. The TV campaign reaches $1.2$ million people at a cost of $£120\,000$, the radio campaign reaches $800\,000$ people at a cost of $£70\,000$, and the online campaign reaches $1.5$ million people at a cost of $£150\,000$. Market research shows that $30\%$ of the TV audience also hears the radio campaign, $20\%$ of the TV audience also sees the online campaign, and $25\%$ of the radio audience also sees the online campaign. In addition, $100\,000$ people are reached by all three campaigns.

(a) Calculate the total number of unique individuals reached by the three campaigns combined. 
(b) Determine the average cost per unique individual reached. 
(c) If the company were to drop the radio campaign and run only the TV and online campaigns (with the same costs and the same overlap of $20\%$ between them), would the average cost per unique individual be lower? State the new average cost and answer yes or no.

Accepted Answer

Total unique reach = 2.8 million; average cost = £0.12 per person; TV + online average cost = £0.11 per person; Yes, the cost is lower.

Gce Model Questions Vol1 2022 Commerce Question 46

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