How Much Does a TV Ad Cost?

“How much does a TV ad cost?”  “How much does a radio ad cost?” “What’s it cost to run an ad in the newspaper?” These are common questions we get when marketing discussions with our clients turn to the topic of advertising. The answer is (of course) “It depends.”  

Even in this digital age, traditional advertising is still a viable option and when used correctly, can be quite effective. But on to the question at hand, “What does an ad cost?”

TV - For Example

Let’s use television as an example since the same principles apply to most traditional mediums. The cost of a :30 or :60 second ad depends on a few things.

How many people are tuning in at that time

The A.C. Nielsen Company has the ratings reporting market cornered when it comes to TV. (Unfortunately, in my opinion, as competition is good.) In years past, television stations could use another company; Arbitron Inc. But alas, Arbitron stopped collecting television ratings in 1993. And as often happens in the corporate world, Nielsen ultimately acquired Arbitron, in September of 2013.

TV stations subscribe (and it’s not cheap folks; big stations pay upwards of 1 million dollars a year) to Nielsen Rating Service. Nielsen monitors viewership in that station's local market and voila! the station receives periodic rating numbers that they live or die by to price their :30 second commercial slots. This gets a bit complicated, so let’s look at an example. Ready to don your math hat?

The CPP Math Sets Your Rate
Let’s say a local newscast gets an 8.0 rating in the demographic adults 25-54.
An 8.0 rating means that 8% of all viewers in that demo are watching.
If a market has a CCP (cost per rating point) of $50, the cost for a :30 is $400.

Small Market:  8.0 rtg X $50 cpp = $400 cost of ad
*1 rating point = 8,000 sets of eyeballs

CPP’s vary by market size so you’ll have to find out what the going CPP is for the market you are buying. An 8 rating in a smaller market might equal 8,000 people. In a large market an 8 rating may be 80,000 people. In the large market your CPP may be $500, not $50. Therefore you may pay $4,000 for a :30 spot in the large market.

Large Market:  8.0 rtg  X $500 cpp  = $4000 cost of ad
*1 rating point = 80,000 sets of eyeballs

That’s why stations fight for every rating point possible. If 1 rating point in a large market = $500, gaining one more rating point means the station can charge $500 more for every :30 spot. Multiply that by all the :30’s they have in a newscast and that’s a lot of dough!

16 spots per cast X $500 extra dollars = $8,000 more per newscast!

Whew! That’s a lot of math! Brain hurts. On to the easier points...

Supply and Demand

Less math required here. If the program is hot and the demand is high the cost goes up. Instead of paying $500 per rating point you may pay $1000. Think “Walking Dead” vs “The Vampire Diaries.”

Local or Network Program

If you are buying a local program vs a network program, you will probably pay less. This ties back to supply and demand. A local program, like a local newscast, can typically be purchased for less, because a station gets all the :30 second spots to sell. If you want to buy a primetime spot like “Modern Family” it will cost more. The network (ABC) keeps most of the spots so they can sell them. They only give a few to the local station.

Other Factors

Here’s the list of “other factors” that can affect how much your television ad costs:

Time of Year - Holidays, back-to-school, etc., tend to have higher demand; aka-higher costs.

Market Strength - You may be in a high demand market which affect supply & demand.

Political Year - Political years wreak havoc on supply & demand. It’s gonna cost you more in a political year if you can get in at all.

Your Rep - Your TV rep makes a difference. Some tend to hold rates high, others negotiate.

Did we just say NEGOTIATE? Yes, you can and should negotiate your rates. Sometimes there’s a great deal of wiggle room, other times, not so much. Here’s a quick list of ways to “negotiate” more value into your TV campaigns:

Ask for:

1. Better rates, please. Don’t demand a 50% cut in rates but see if you can shave a few dollars off.
2. Free spots on the station’s sister station that runs old movies all day(for example.
3. Billboard or sponsorship mentions coming out of sports or weather.
4. Any promotions you can be tagged on for added exposure, like community calendars, public service messages, etc.

Pro Tip: When negotiating - Be nice. Reps want you to get good results. They will typically work hard and get creative for you...unless you’re mean.

Conclusion

If you are in charge of placing the ad budget for your company, don’t take this task lightly. You can waste buckets of money if done incorrectly. The topic takes a bit of study and practice. Google it. Ask other business owners what they do, and your rep can help educate you if you take the time to learn. Ask questions, be brave and negotiate. Remember, “Ask and you get, don’t and you won’t.”