Perhaps it’s the most common question in the business: “How much are television advertising costs?” Often, the prospective advertiser is really asking two other questions – whether advertising is affordable and whether it will produce more sales.
One answer to the first question is that TV advertising costs are whatever can be negotiated. Like many other services or commodities, advertising prices for television ads fluctuate with competition and demand. As competition increases, prices may very well decrease. As demand increases, prices are almost guaranteed to rise.
TV Advertising Costs Vary Primarily with Inventory
What many prospective advertisers don’t realize – and what really drives the market – is that advertising businesses view their ad time or space as inventory. When inventory is high, usually because demand is low, prices tend to be much more flexible and negotiable than when circumstances are reversed.
Prices also fluctuate between different types of media and between different properties in the same media. Advertisers can generally expect to pay more for a TV ad than a radio spot, usually because the TV market is often geographically larger than the radio market, because some TV stations can deliver larger audiences than radio and because TV is intrinsically valued more highly due to its compelling visuals.
Inventory and demand play a role here, too. Another factor is the inherent difference in the physical components of various media. Production and distribution costs are as diverse between print, Internet and broadcast as are the physical differences between them.
Within the same media prices may be wildly diverse, for example, between the top-rated TV station in the market and the station with the lowest ratings. That typically is a result of quality, generally reflected by the production values employed. As in other fields, some companies set high standards and excel in producing high-quality output while others try to maximize profits by reducing their costs of production.
Ratings Also Drive TV Advertising Prices
Understanding TV ratings is crucial to an advertiser's ability to evaluate TV advertising costs. Ratings in any medium reflect the specific company’s success in penetrating its target market segment. Highly successful media companies excel at marketing their product to their target demographic, attracting larger audiences through carefully shaped content and promotions that resonate with their target segment’s needs and desires for information and entertainment. The larger the audience, the higher the price the company can command for its advertising time or space.
Get the Best TV Advertising Costs with a Media Buyer
Another answer to the basic issue of prices for television advertising can be provided by any media buyer. Buying TV advertising can be a struggle even the most successful business owners, who suddenly find themselves immersed in a whole new world of complex terms and numbers as ad sales reps gush through their latest spiel. Media buyers are typically employed by ad agencies, but freelance buyers operate in most large and medium markets, and even some smaller markets. They generally have direct and easy access to media rates.
Because they are so familiar with rates and market conditions, media buyers can readily pinpoint the best values for any advertising campaign in any medium. Freelance buyers typically charge by the hour. In many cases they can pay for their services by saving advertisers the sales commission that many media charge their direct customers or pay out to ad agencies to send business their way.
Are TV Advertising Rates Affordable?
The second question – whether TV advertising is affordable – can really be answered only by a specific business. One general rule of thumb is to spend a specific percentage of gross sales. Though there is little theory to support this method, it is perhaps one of the most widely used. Two percent is not uncommon, though large businesses typically spend more. Television advertising for small business may be difficult to fund because many of these advertisers have such small margins that even this amount is unrealistically high. Another rule of thumb is to spend no more than a business can afford to lose without realizing any benefit, because the ads simply may not work for a variety of reasons.
Unfortunately, there is no known central repository of advertising prices compiled neatly for quick reference. There are just too many variables to even consider such an undertaking. That’s why working with a freelance buyer is typically the prospective advertiser’s best bet for getting the best prices for television advertising.
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