← All playbooks·TV budgeting

What you need first

• Rate card gross CPP for the target audience and daypart, from the station rate card
• Discount grid with tier thresholds and rates, from the station's sales contract or agency rate agreement
• Current negotiated gross budget and the campaign's TRP target, from the campaign brief
• Proposed additional spend amount raised in the negotiation, from the client or agency negotiator
• Net CPP and TRP total from the prior pass, from the Budget Iteration Loop worksheet

The procedure

1. Pull the discount grid and confirm the gross-spend boundary of each tier, producing a validated threshold table
2. Add the proposed spend to the current negotiated gross budget, producing the new gross total
3. Locate the new gross total on the threshold table, producing the applicable discount rate for the full budget
4. Apply that discount rate to the gross CPP, producing the revised net CPP
5. Divide the new gross budget by the revised net CPP, producing the new achievable TRP total
6. Subtract the old TRP total from the new one and compare the new total to the campaign's TRP target, producing the TRP delta and the remaining gap to target
7. Log the revised net CPP and TRP total back into the Budget Iteration Loop worksheet, producing the input for the next negotiation pass if the gap is still open

Worked through with numbers

Gross CPP on the rate card is €620. The discount grid runs 18% on gross spend up to €80,000, 24% from €80,001 to €150,000, 29% from €150,001 to €220,000, 33% above that. Current negotiated budget is €140,000 gross, sitting in the 24% tier: net CPP = 620 x 0.76 = €471.20, TRP total = 140,000 / 471.20 = 297.1 TRPs. The client offers €15,000 more, taking gross spend to €155,000, which crosses into the 29% tier: net CPP = 620 x 0.71 = €440.20, TRP total = 155,000 / 440.20 = 352.1 TRPs. Had the discount stayed at 24%, the same €155,000 would only buy 155,000 / 471.20 = 328.9 TRPs. The tier jump is worth an extra 23.2 TRPs on top of the linear increase, and the marginal cost of the added €15,000 works out to 15,000 / (352.1 - 297.1) = €272.73 per TRP, well under the €471.20 blended cost of the original budget. Read this as: the added spend is worth taking, because it is buying TRPs at roughly 58% of the original average cost, not because 297.1 TRPs was ever the true ceiling for that budget.

Where it goes wrong

• Apply the new discount rate to the full gross total once the threshold is crossed, since most station grids are retroactive across the whole spend, not applied only to the incremental piece added
• Convert the discount rate into net CPP before dividing into TRPs, rather than dividing the gross budget by the gross CPP and discounting the TRP result afterward
• Re-check the tier boundary after every added-spend proposal in a negotiation, since a single check at the start of the session misses later increments that push the total into a higher tier
• Recompute the TRP delta against the client's actual target, not just against the previous pass's TRP total, since a tier jump can close a gap that looked larger before the recalculation

How to know it is right

Terms used

• Budget Iteration Loop
• Discount Tier
• Net CPP

← All playbooks Calculated in TV Budgeting →