Saturday, October 31, 2009

What it costs to reach a TV audience

Advertising Age recently reported costs for 30-second network television commercials (see chart). As consumers of advertising we rarely think about what it costs to advertise. This TV season, Sunday Night Football leads the way at almost $400 thousand per thirty-second spot. And, as we have learned, you can’t just run a commercial one time; it has to be shown a minimum of three times in order for it to register with the consumer. The figures displayed above are based on audience size, after all media exists to sell an audience to an advertiser. A program like American Idol, that may have an audience of 30 million viewers (their numbers have been going down in the past couple of years from a peak of around 34 million viewers), can charge upwards of $700 thousand per 30-second spot. And, don’t get me started on Super Bowl advertising, which is likely to come in this year around $2.3 million per 30-second spot. We’re talking about the cost of time alone, not production costs. Production costs for a network spot would be in the area of $350,000. When you add the cost of production with the cost of the television time to run the advertisement and multiple the per spot cost by at least three, you can perhaps see why advertisers seek alternative ways in which to reach consumers. This high costs associated with network advertising have to be considered within an audience that is distracted, often multitasking perhaps even with multiple media as we shift from the TV screen to the computer screen.


Matthew Schillings said...

It is pretty unbelievable how much advertising actually costs. Obviously ads at certain times, on certain channels, or certain programs cost a lot more. It was very neat actually getting a first hand view at what the ads cost to be put on television.

The Super Bowl always has the best commercials. This is because this event holds the most viewers consistently. It may seem crazy to the average person, to spend this much money for a commercial, however it is necessary for us to realize that the companies are trying to target the greatest amount of people at all times. Advertisements and advertisers do a great job targeting specific audiences at the right time.

They have the opportunity to do this because they research the best times to put their ads out. I have a new found respect for all the workers in advertising, because I now understand how much work goes into a simple commercial.

Sean said...

I really do agree with Matt here, it did shock me when I first learned how much advertising actually costs. I was looking at the prices and it is truly staggering how much a 30 second commercial can cost during the Superbowl. But then again, if you look on the other side there is going to be the most watched sports television event int he world and is going to reach millions and millions of people. The other day in class we talked about the Christopher Reeves ad that appeared in a very old Superbowl commercial. But I feel that the effectiveness of the ad really did come from when it was placed. Superman was a man of glory and the Superbowl is the most glorious stage any football team could reach so the commercial also fits into that category. This shows me how much thought also goes into where you much place a commercial to intensify the message and make the ad even more powerful.

JeffFro said...

This blog also makes me feel good about the advertising and marketing field in which I hope to pursue in the future. I have come across many student friends who have said that accounting majors or even math majors will be more successful then advertising majors in the future. Marketing and advertising are clearly a big part of business and this blog made me feel good to find statistical information that proved my point. I was also unbelievable to see how much money advertising truly costs. This has to be because it is one of the most important factors in selling a product. Companies devote an insane amount of money toward their adverting campaigns for their products and I hope to be apart of this process in years to come. I have many ideas as to reach target audiences- especially college kids- and hope to utilize my skills in the workplace to truly make a difference in the success of a company/product/brand when I graduate. What also surprises me is that companies are still spending so much money for advertising space on television. I know it was the super bowl- holding the most viewers than any event on television, but in this day in age I feel as if the web could be a better place to utilize advertisements. When you are on the computer sometimes you are forced to watch an advertisement, where as on television you have the option of simply changing the channel. I am someone who would like to expand advertisements to more than just television to reach a larger audience. Perhaps commercials on social websites like Facebook, where millions of people meet everyday, could be a great way to spread awareness about a product- maybe even a cheaper alternative. Don't get me wrong, I will have no problem developing television commercials if I so do work for an advertising company, but I have so many ideas as to expand the advertising world. All I need is a chance and hopefully one day I will get my chance to make a difference in the advertising world.

mmbyrne said...

A few months ago, I would have been like Matt and been absolutely floored at the amount of money companies will spend on their TV advertising alone. However, since my internship, I have had the pleasure (or should I say torture) of working on the marketing budget for a major client. What absolutely shocked me even more that production costs were talent and holding fees. As the ad agency only hire actors from the Screen Actors' Guild (SAG), on top of paying the wages for the time the actor puts into shooting the commercial. They also have to pay 13-week flights of holding fees which basically reserves the right to hold the commercial and the actor during the time periods they want to run a commercial. So say a marketing plan calls for running a TV campaign for a year or two, even after those hefty production costs are done and paid for, companies pay thousands and thousands of dollars to hold their talent throughout that time period. Now that floored me (along with the math that part of the budget entails)!