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TV Advertising Costs: A Complete Guide

TV advertising costs

Since the big switchover from terrestrial to digital television, the media buying game has changed quite dramatically. Obviously, costs have fallen with the dramatic increase in supply – but the potential for bargain hunting goes deeper than that. There are numerous factors affecting cost, so to find the best value spots requires a sharp eye (and/or well-tested machine learned algorithms) and savvy planning.

We asked our media buying team and data scientists to offer their insight on TV advertising costs; getting an overwhelmingly detailed and accurate assessment in response. But after indulging in a spot of casual afternoon SEO research (as you do), we also realised that there are an awful lot of people out there asking questions like ‘what is TV advertising?’ and ‘how much does a TV advert cost?’. So we thought that before we start talking about the complexities of how to maximise your ROI, it might be worth clearing up some of the basics.

 

Contents

Chapter 1: What Size Budget Do I Need?
Chapter 2: How Much Does TV Advertising Cost?
Chapter 3: How Most Successful TV Advertising Campaigns Are Optimised
Chapter 4: TV Advertising Costs: Pricing Structure
Chapter 5: TV Advertising Opportunities To Look For

 

 

Budget size for tv adverts

What Size Budget Do I Need?

 

Well, how long is a piece of string? It varies. It can be very long, it can be very short, it can be anywhere in between. But let’s face it, there’s not much point in having a single 1cm piece of string.  To serve any useful purpose, you need something longer… or you need to tie those smaller bits together. And the same can be said of TV advertising. You can take advantage of cheap TV spots, but these need to be part of a larger, sustained campaign if they’re to be genuinely effective.

There are various factors that determine the cost of space on TV, here are a few of the basic considerations:

 

Channel

 

Mainstream channels with the broadest reach inevitably have higher rates than the niche channels hidden at the back of the TV guide. But if you’re targeting a specific audience, then that needn’t be an issue. Spots on the Horror Channel, for instance, may just cost a few hundred… and if you’re selling a game about vampires, zombies or Donald Trump, you’re reaching the right audience without bleeding your budget dry.

 

Region

 

Different channels will offer space broken down into their own regional structures, but the principle remains the same. You can go with blanket national coverage, or target specific regions or micro-regions for more localised reach. If you only need to target a small area, or if you’re able to move  between the best value regions (even internationally) at any given time, TV can be highly cost-effective.

 

Time of day

 

Evenings tend to be more expensive, given larger viewing figures during those times. But if you don’t need that broader reach, it can be a sensible tactic to exploit those spots during cheaper daytime hours.

 

Time of year

 

TV consumption, and demand for advertising, have their own seasonal patterns. So again, a solid media plan should take into account subsequent fluctuations in cost. That’s not to suggest you should advertise your Christmas Card company in January just because rates are lower – but if you don’t need to advertise at the most expensive time of year, and need to keep costs down, plan accordingly.

 

Length of ad

 

It goes without saying that a longer advertisement will cost more, but it’s a point that can be a little more nuanced than that. If you can deliver an effective advertising message in a matter of seconds, then you’re going to keep your costs down – but it could be that a longer ad will perform better for your campaign. Continuous testing and optimisation will ensure you get the right mix of different length advertisements into your campaign.

 

Type/size of audience

 

As media agencies gather ever more insightful audience data, we know more and more about the specifics of each TV spot’s audience. Combined with proper market research from the advertiser, it’s  possible to minimize any wastage of your advertising budget.

 

Surrounding Programs

 

The actual programming that your advertisements will appear alongside also affects cost: as it effectively determines the type and size of audience. Obviously the biggest shows will sandwich the most expensive space. But understanding the programming environment also allows strategic media buying that ensure you’re hitting the right people at the right time.

So in short: TV advertising, in itself, needn’t cost a lot. Theoretically you could run a TV campaign on a very lean budget. But to be cost effective, you ideally need sustained activity. This is the best way to allow rigorous testing and subsequent optimisation – which is how you’ll achieve optimal performance and maximum returns. Conversely, to be effective, you don’t need to dominate prime time real-estate for months on end. The key is understanding how to assess the real value of each spot that makes up your overall campaign…

 

How much does TV advertising cost?

How Much Does TV Advertising Cost?

 

‘How much does TV advertising cost?’ is a big question and there are many other factors that can bear influence on the cost equation.

 

Ultimately, the cost of a single TV spot is largely academic – as that doesn’t constitute an effective campaign in itself. And the cost of an effective campaign (which, frankly, is the only sort of campaign we’re interested in) can vary significantly, depending on the nature of the advertised product or service, and the media plan it requires. We sat down with Pace’s Media Director – Ben Wilcockson, and Media Manager – David Perrett, to find out more.

 

Wilcockson immediately cites e-commerce and gambling clients as an example of how costs change over time. Here we’ve seen certain patterns emerge, where costs per lead keep falling the longer the campaign runs. Perrett points to a current Pace client for which “CPLs keep getting lower month-on-month, this is the 10th consecutive month of falling costs”.

 

successful tv campaigns

How Successful TV Advertising Campaigns Are Optimised

 

Whilst the first few weeks of such a campaign may not prove particularly fruitful, “we always manage expectations and ask that clients keep their patience in that first month” Wilcockson warns, continued activity will get the momentum going; and past that initial inertia, costs will go down the longer the campaign is sustained.

 

This is partly through optimisation, which becomes increasingly effective as more data is collated over time. The more chance to test and experiment, the more likely it is the advertiser (and its agency) can identify what works best and subsequently increase investment in that area; or conversely, reduce activity on channels that are performing less well.

 

Perrett also points out that campaign longevity is crucial in driving the brand-building process. As a brand or product establishes itself and gains consumer trust, its advertising will grow more effective and find traction with broader audiences. This, in turn, brings the costs per lead down, as performance improves across the board.

 

What’s more, this trend of falling costs in sustained campaigns will continue regardless of any market fluctuations in the background. The actual costs of TV spots goes up and down throughout the year (as a rule of thumb, January, July and August tend to be the cheapest; April, September and October the most expensive) but costs per lead can keep falling regardless.

 

Contrary to this, there are certain products and services aiming for a direct response: as we’ve previously noted as the case with mobile apps/games, where this pattern is the other way around entirely. In some instances, continued exposure to the same channels will lead to higher costs over time. Instead, the way to improve performance and keep costs down here is to increase reach, rather than frequency.

 

pricing structure tv advertising

TV Advertising Costs: Pricing Structure

 

So, in essence, the cost of TV advertising needs to be evaluated carefully, based on ongoing performance – it’s not a simple case of looking at a rate card and thinking that’s that. But you know this, of course… you’re reading the blog on a media agency site, not a network sales platform.

 

Indeed, the buying power of an agency also has an impact on costs. “Of course, if you want to go out with a prime time X Factor spot, those bigger agencies will probably get it for a better price… but capacity to buy is not the be all and end all” notes Wilcockson. Buying power doesn’t necessarily equate to better overall performance and lower costs per lead.

 

In practise, smaller more dynamic agencies are more capable of exploiting last minute tactical opportunities that may have a more significant impact on ROI. Being able to quickly adapt to changing market conditions, with effective and tactical targeting based on relatively last minute media buys can achieve great results. Smaller agencies are also at an advantage in terms of communication, “we’re constantly in direct contact with clients ourselves, which cuts out any unnecessary delays” adds Perrett.

 

tv advertising opportunities

TV Advertising Opportunities To Look For

 

There are some formal opportunities to pick up reduced rate inventory – in the UK there are occasionally auctions for unsold inventory which, if it suits your target audience, can be extremely good value (with costs slashed up to about 50%). In the US, remnant advertising buys are largely the norm – which incentivises last-minute buys, as advertisers may be inclined to hold the budget right up until the moment that the bargains spring up. Inevitably, if pursuing such spots for your campaign, there can be significant variations in cost – and plenty of opportunities for increased value.

 

The bottom line is, to take advantage of the lowest cost – or rather, best value – TV spots, requires more than just a bargaining process. Whilst we can give you a ballpark figure for a TV advertising campaign, there’s a whole host of factors to consider beyond the cost of the spots themselves.

 

Take all this on board, and you’ll realise why we have to pause for a moment before answering the question ‘how much will it cost to sort a TV ad campaign’. There is no single figure that would give sensible insight across the whole spectrum. But what we can say it that, when rigorously researched and planned, a TV campaign will make profits for the advertiser. Yes, it will cost a certain amount upfront (though credit may be available under certain circumstances) but it’s an investment, not a consumable expense.

 

So perhaps the question advertisers should lead with is not ‘how much does advertising on TV cost?’, but rather ‘what kind of returns will my TV advertising get me?’.

 


Image credit: Sven Scheuermeier