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DRTV - Allowable Advertising Expense & Media Efficiency Ratio Calculator
This tool will calculate the "ad allowable" and "media efficiency ratio" for a DRTV infomercial campaign. The ad allowable tells you how much you can afford on a cost per order basis. The ad allowable is the dollar amount determined to be the maximum media expense for each unit sold in order to generate a specified level (%) profit. The Media Efficiency Ratio (MER) is the total number that decides an infomercial’s overall success or failure. The ratio is derived by dividing total sales by the media cost. Sales/Media Cost = MER. Generally speaking, to have a successful campaign, your MER should exceed your breakeven ratio.
Instructions (Click to Open)
In the table below, enter your products, selling prices, the shipping and handling for each product, the cost of each product, the royalties as a percentage of the retail being charged, the percentage of customers ordering the primary offer plus each of the up-sell offers, and the fulfillment cost for each product. You may enter up to five up-sell products that will be sold to the customer at the time of their purchase. Enter the credit card discount rate (the rate the credit card company charges you as a percentage of your total order value), the credit card transaction fee charged per order, and the percentage of orders that that will be charged to credit cards. Enter the inbound telemarketing cost per order, the percentage of bad debit, returned orders, and other overhead expenses that will be charged against the order. Finally, enter the percentage of profit that you must have after advertising costs to make this an acceptable campaign. If your objective is only to breakeven with the initial orders generated from this campaign, then enter zero (0) for the percentage.
All of the data entry fields are white with blue type. To reset this calculator to the initial zero values, click on the "RESET" button at the top of the tool.