This paper presents an expanded digital media budget analysis for Zap Cars, examining three key initiatives that together represent 60% of a $5 million total marketing budget. The strategies analyzed include the development of the Zapped! website and ZapMe! MP3 music label ($1.5M), a pre-emptive web marketing campaign leveraging search engine optimization and analytics ($750K), and a rich media advertising campaign across Google, MSN, and Yahoo ($750K). For each initiative, the paper details projected costs, anticipated benefits, and financial metrics including Net Present Value, Internal Rate of Return, and payback period, targeting a college-educated, primarily male audience in their 20s and 30s.
The second phase of the Zap Cars Digital Media (DM) Budget is to analyze in depth three of the most promising strategies proposed. These include: the development of the Zapped! website and free music downloads on the ZapMe! label, budgeted at $1.5M; the development of pre-emptive web marketing campaigns with a heavy reliance on analytics for $750K; and the launch of a globally-based rich media advertising campaign on Google, MSN, and Yahoo, budgeted at $750K. Taken together, these three initiatives define 60% of the total $5M budget, or $3M.
A key consideration in moving forward with each of these strategies is the potential each has to quantify its relative contribution to Zap Cars' awareness levels, from both an unaided and aided standpoint. The target audience for the Zap Car is emerging as consumers who are in their 20s and 30s, college-educated, and primarily male. Each of the three strategies refined in this paper has the potential to be quantified in terms of its contribution to increasing awareness as well as moving potential customers through a sales funnel. These three strategies are analyzed from a financial perspective below.
Budgeting $1.5M for this online initiative — which includes the development of an entirely new website, the creation of a download site and services, and the research and development necessary to create an entirely MP3-based record label called ZapMe! — must first account for the necessary hardware, software, and services to get the three initiatives online, and second, support them over time. The costs associated with attracting talent and promoting specific musical acts for the ZapMe! label are not included in this analysis. Those promotional, public relations, and media relations costs are part of the overall operating budget for Marketing Communications. The costs concentrated on here are direct costs that apply specifically to the development of the website, music download service, and ZapMe! label.
Table 1 (Zap Cars Digital Media Budget) covers the costs and anticipated benefits of investing in a website, music downloads service, and the ZapMe! label, which will be comprised entirely of MP3 downloadable songs for iPods and MP3 players. The total outlay assuming this budget is $1,030,450, which consists of the initial investment in the website of $270,000 and the costs excluding capital equipment of $760,450. This leaves $469,550 for promotional and marketing costs related to launching all three initiatives.
Creating the website, defining and developing a music downloads area, and creating the ZapMe! label can all be hosted on the same hardware, software, and services platform. There is no need to create separate hardware platforms for each initiative; all three can be hosted on a single server. The assets — hardware, software, and services — will need to be depreciated over a three-year period, hence the corresponding entry in the costs table. Of the three initiatives, the ZapMe! label will require the largest initial investment of $125,000, comprising the microsite at $50,000, the billing system at $25,000, and the Label Partnership and Website Artist Alliance at $50,000. The latter two areas rely on a hosted application platform that requires a monthly fee to operate. The ZapMe! label microsite is also hosted, though its costs decrease over time as initial development is completed in the first quarter, with subsequent costs primarily consisting of hosting and maintenance fees.
The benefits from the website, downloads service, and ZapMe! music label are expected to begin accruing in the first quarter of operations. This is due to these three initiatives enabling direct sales of music — which will become an integral part of the branding strategy — as well as supporting lead generation and escalation for upper- and lower-funnel sales strategies, reducing travel costs by using the website for dealer training, and reducing printing costs by making brochures and literature available online.
The largest gains from pursuing these three strategies in conjunction with one another come from the incremental increase in car sales both directly resulting from lead generation and from the escalation process being handled entirely electronically for both Zap Cars and its dealers. The incremental sales resulting from managing the entire selling process — from lead generation to closed sales — online represent a significant cost savings. Incremental car sales based on enhanced promotional and salesperson effectiveness strategies alone will net $420,000 in revenue in the first three quarters of launch, and an additional $285,000 will be generated by having the lead escalation process fully automated online.
In summary, based on the anticipated revenues generated from this strategy, the Net Present Value (NPV) of the $1,030,450 invested is $211,866, generating an Internal Rate of Return (IRR) of 40.9% with a payback period of 1.8 years. The cumulative cash flow from this project turns positive in the second quarter, edging up to $36,126 and then accelerating to $289,809 as start-up costs are covered in the first quarter and then gradually decrease over the second and third quarters.
"SEO phases, personalization, and analytics rollout"
"Paid search media plan across three major platforms"
You’re 35% through this paper. Sign up to read the remaining 2 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.