Posted in Marketing and Strategy Terms, Total Reads: 350
Definition: Above the Line Cost
Above the line cost can be defined as that part of marketing cost that is incurred in targeting the customers through the medium of mass media such as television, radio, internet etc. This cost of marketing has a low return on investment and mainly focuses on brand building, consumer awareness over a longer time horizon. The cost of above the line marketing is significantly higher than then its sister counterparts- Below the line marketing and through the line marketing.
Suppose a company X has a budget of 65 crores for marketing out of which it spends 10 crore on TV advertisement, 10 crore on radio advertisement, 15 crore on distributing a pamphlet to a particular area of the locality, 10 crore on google ad words targeting a particular segment of population in the age group 25-35, 10 crore on targeting the same population through Facebook marketing, 20 crore on brand building through a video on YouTube.
Then the company can be said to spend 40 crore on above the line marketing and it primarily consist of following;
1. 10 crores spend on TV Advertisement
2. 10 crores on radio advertisement
3. 20 crores on YouTube marketing
Other form of marketing have been neglected because they target a very specific segment and have not been used for targeting masses.
Where it is used
A start up generally tends to avoid above the line marketing because of its low ROI and a greater time horizon. It is generally used by established player who have deep pockets and can wait over a period of time. Also since the cost of marketing is generally high in above the line marketing so it tends to be avoided by the start-ups and small players.