Pay TV and Cable Lost 5.8M Subscribers in 2022
by Frankie Karrer
3 Min Read
Speak to a CTV Expert
7 Min Read
TV advertising has typically been associated as expensive and cumbersome. However, times have since changed, with technology and solutions helping advertisers overcome these common challenges. This article will explore TV advertising costs, the difference between national and local TV commercials, and how these costs are determined.
We hate to answer a question with another question, but how long is a piece of string? The costs vary greatly depending on the type of ad you’re producing, and the type of creative that you intend to use. For example, utilizing existing stop-motion graphics from your existing pool of assets would be more cost-effective than creating a moodboard, casting actors, hiring a producer, finding a location shoot, and so on. We break this down in the sections below.
You could spend as little as $1,000 if you’re using stock imagery and a simple voiceover, to as much as millions of dollars to produce a TV commercial. TV advertising production costs consist of three phases:
Pre-production: The creative and administrative work before filming even begins, such as developing the script and moodboard, scouting locations, to hiring actors and talent. Expect the majority of your budget to be spent here. Hiring talent (including writers, actors/actresses/ directors, cinematographers, editors, camera operators, mic operators, crane operators, etc.) doesn’t come cheap. Depending on the state in which production occurs, TV commercial shoots might require a union cast and crew—and are usually more expensive.
Production: The shoot itself, runs as short or as long as needed to get the required footage.
Post-production: Once the filming is over, there’s still a lot of work to do. Think picture and sound editing to fit the time length, voice-over, special effects, motion graphics, music, and so on. If you’ve done your pre-production research right, then you can potentially squeeze more commercials from one shoot, using the same production team and crew.
TV advertising costs not only include the production itself, but also navigating the media minefield to make sure that your dollars spent are getting your commercials on air on the right network at the right time. Overall, your broadcast costs vary depending on the following factors:
Region: The more localized the region, the lower the TV ad cost (because the number of impressions aired is lower than if you were to air on national television). While national ad spots tend to be more expensive, they generally yield a better return on investment. Advertisers have a more comprehensive pick of ad lengths to choose from (15 seconds, 30 seconds, and 60 seconds), while local spots come with more restrictions (limited to 30-second ad spots, for example).
Network: One notable prime-time event that empties advertisers’ pockets real quick is the Super Bowl. This year, a 30-second commercial costs on average $6.5 million. A clear rule of thumb is the higher the viewership, the higher the price.
Time of day: Advertisers can place their ads in different time slots throughout the day, including breakfast, daytime, early peak, late peak, and nighttime. However, some times are pricier than others based on TV viewership statistics. If we were to re-rank these time slots, starting from the most expensive—it would follow this order: late peak (8 pm – 10:30 pm), early peak (5:30 pm – 8 pm), daytime (9:30 am – 5:30 pm), night time (11 pm onwards) and breakfast (6 am – 9:30 am). Late peak TV advertising costs can be more than eight times as expensive as advertising in a daytime slot.
Day of week: Weekend spots are usually on the higher end of the pricing spectrum, as higher-income viewers are likelier to tune in. However, advertisers shouldn’t discount the weekdays, as CPPs (Cost Per Rating Point) can vary as much as 16 percent from one weekday to another.
Quantity of expected viewers: This can be a contentious one, as it’s more important to target the right audience that is aligned with your brand, instead of the biggest audience. However, a general rule is that the larger the audience, the higher the cost. We also recommend approaching TV advertising through an audience-first, not a network-first approach, to make the most of your investment. Also, keep in mind that not all demographics watch television (or the types of television) in the same way—linear and cable TV has taken a backseat as viewers have been cutting the cord in record numbers (especially during pandemic times) in favor of Connected TV.
Commercial length: Most advertisers have their pick of 15-second, 30-second or 60-second ad spots—the longer the commercial means there’s more airtime (and higher TV ad costs). A study by the World Advertising Research center revealed that 30-seconds is the sweet spot to drive an emotional and intellectual connection with the viewer.
Frequency: This refers to how often the same commercial would be shown to a viewer. Of course, the more your ad is shown, the more expensive—but this could be counterproductive due to ad fatigue. It’s a savvier investment to favor reach over frequency, since reaching a new viewer (instead of serving the same viewer one ad multiple times) is more valuable, and another chance to connect with a potential customer.
We explored this in the section above, but ultimately advertisers need to consider whether it makes sense to advertise locally or nationally. For example, if you’re a small business whose products aren’t readily available nationwide, then a local TV ad buy would be the best option.
Instead of worrying about local versus national TV ad buys, it’s better to partner with a tech stack that finds the audiences that are in-market for your brand, no matter where they may be located. In this case, Connected TV advertising platforms like MNTN serve ads to viewers on whatever program they might be tuning into—irrespective of time, location or any of the other factors outlined in the section above. Advertisers simply need to focus on determining who their target audience is, and the platform does the rest.
The other big differentiator influencing TV advertising costs is the type of television format: linear TV, cable or streaming/Connected TV. Linear or broadcast TV has only gotten pricier, where 75% of the top network shows either rose in price or stayed the same for the 2020-2021 season. Meanwhile, advertising on cable TV comes in lower, usually 10 to 20% of the cost of regular broadcast time. Newer entrants to the space, like Connected TV, work with advertisers of all budgets to deliver optimized, targetable ads to in-market audiences.
Unfortunately, not only is TV advertising expensive—it’s not entirely measurable (especially on linear TV and cable). However, Connected TV is about to change all of that, and make the TV advertising more accessible to all.
MNTN Performance TV was engineered to make advertising on TV as turnkey as possible on Connected TV. The platform pairs your brand’s CTV ad creative with any combination of over 80,000+ third-party audiences (or your own first-party data if you prefer) and a select number of top-tier, blue-chip networks known to drive performance.
Advertisers can run retargeting or prospecting ads on television the way they would do on any other digital advertising platform, like search or social. Unlike competing CTV platforms, MNTN makes TV advertising measurable from start to finish, via a customizable, real-time reporting dashboard, which reports on bottom-line metrics like revenue, ROAS and conversions.
The measurement (and cost) aspect is one part of the challenge facing marketers who want to advertise on TV. Producing a regular cadence of TV ad creative is another big hindrance. MNTN’s Creative-as-a-Subscription™ service solves this problem, by removing traditional barriers to TV creative and giving marketers access to quarterly, customized TV creative without investing in anything but their media goals.
There are many factors that go into TV advertising costs, like timing, frequency, audience, networks and more. However, not all TV formats are built the same, nor do they have the same ability to truly measure an ad’s impact.
hankfully, advances in the TV advertising space have welcomed new entrants like Connected TV / OTT advertising into the mix, which employs an audience-first approach to deliver targeted ads that can be tied back to an advertisers’ goals and provide a solid return on investment.
Subscribe to the report Apple, Amazon, NBC and more use to get their CTV news.