The city Harry and Sally service has 45,000 dog owners, 32% of which have a subscription to “dogster” magazine. H&S are considering running an ad in dogster, for a discounted dog-walk promotion where you can purchase your first walk for $5. The cost of running the ad is $1500.

1. What is the net reach of running the ad in dogster?
2. What is the CPM (cost per thousand impressions) of running the ad in dogster?
3. In response to the ad, H&S sell 150 of the discounted dog-walks. What is the total contribution due to running the ad?
4. What is the average customer lifetime value (ignore discounting) of “full-price” customers (assume original conditions explained at beginning)?
5. If the customers who purchase a discounted introductory dog-walk end up purchasing the same number of walks (15/month) over the same customer lifetime (7 months), what is the average customer lifetime value (ignore discounting) of these new customers?
6. In the month prior to running the ad in “dogster”, H&S had 100 customers. The 150 discounted dog-walks represented a cannibalization rate of 27%. How many existing customers purchased the discount dog-walk (assume every discount was purchased by a unique customer).
7. Assuming the original facts of this case, what was H&S’s profit the month prior to running the ad in “dogster”?
8. Assuming the original facts of this case, and H&S running the ad with the results above, what profit would H&S expect during the month with the ad in “dogster” (assume every new and old customer purchases 15 walks during the month).