Many business owners, both large and small, are unfamiliar with buying television airtime to run commercials on local television. Most don’t know that :30 second commercials can be as inexpensive at $5 each. The price of television airtime is directly related to the size of audience watching a particular program on a television station or cable channel.
Most traditional advertising agencies will tell you that television is the most powerful marketing vehicle for reaching large numbers of people. Most online advertising agencies will tell you that some form of online advertising is the most powerful way to reach your target audience.
Unfortunately, most traditional ad agencies know little about online advertising, and most online advertising agencies know little or nothing about television.
Regardless, understanding the process of buying television airtime can be a very effective tool in helping your business succeed. One of the new, powerful effects offered by television is that it triggers searches on the internet. You run a commercial on TV and many of the people watching will search your business or product on the laptop, iPad or smartphone they have on their lap.
Although buying television airtime can be complex, here are some things to consider:
There are two types of stations that will sell you airtime:
- There are two types of stations that will sell you airtime: Broadcast stations (local ABC, NBC, CBS, Fox, CW stations) and Cable channels (Bravo, USA, Discovery, A&E, etc.) Both broadcast stations and cable channels appear on your local cable system, but you have to buy airtime on the broadcast stations from that station’s local rep. You buy cable channel airtime from the local cable system’s rep. In general, the broadcast stations programs have larger audiences, but the cable channels will sell you airtime for the entire market or for individual cable systems (just one area of the market).
- Television rate cards are set up with pricing for buying a :30 second commercial in a particular television program. They will also sell you “rotators”. These are commercials that will fall somewhere in a specified period of time (like 6am to 9am) on a particular day.
- Although commercials within programs are generally priced based on the size of the audience for the program, there are other factors that can influence the rate. The primary reason a rate will change is the amount of inventory the station has left in the program. If they have a lot of inventory left, the price can go down. If they have very little inventory left in the program the price goes up. Remember that TV airtime is “perishable”. Once the program airs, the inventory is gone and cannot be sold. It’s sort of like trying to sell concert tickets after the concert is over.
- The size of a program’s audience is surveyed by companies like Nielsen. They give the program a rating. The rating is based on their estimates of the size of the audience from their survey. A “1” rating equals one percent of the population in the demo you are seeking. For example, if you are looking at how many Adults 25 to 54 are watching a particular show, a one rating means that the show has one percent of the total population of Adults 25 to 54. (Important: it’s one percent of the TOTAL population of Adults 25 to 54, NOT one percent of the people watching television. The percentage of people watching this show versus all of the people watching television is called “share”. Share is not used much in pricing airtime.
- Negotiation of airtime rates with television stations is pretty straightforward. You want to buy as many rating points as you can for the least amount of money. The stations are competing with other stations to sell you airtime and want to sell it at the highest rate they can. Your job is to look at the ratings and see which stations will give you the best price on buying rating points in your target demo ( your target might be Women 25 to 54.) One station might say, “Our 5 o’clock News does a one rating with Women 25 to 54 for $200.” That means they want to sell you a :30 second spot in the News for $200. (A show that does a “1” rating for $200 is $200 per point.) The next station might say, “Our 5 o’clock News does a two rating and I will sell you a spot for $200.” (A show that does a “2” rating for $200 is $100 per point.) Obviously, the second station is offering you twice the audience for the same price. At that point you might call the first station back and say, “The other station has twice your audience for $200, you are going to need to sell me a spot in your News for $100 to be competitive with them.” You can see that the ratings are used to compare stations and their rates. Your goal is to buy the rating points as low as you can and still be in programs you want.
- Although many business owners learn about television and ratings and buy their own airtime, most businesses hire an ad agency that is skilled in airtime negotiation and buying to do it for them. Since ad agencies and media buying services get an “agency discount” from stations, the media buying services of the agency are free to the business (you) and cost the stations a reduction in income due to the discount. For example if a commercial costs $100 when you buy it yourself, if you hire an ad agency to buy it, you will still pay $100, but the agency will only pay the station $85. The agency will keep the $15 (15%). In effect, the TV station or cable company will pay the agency for you.
Buying television airtime for your business is not out of reach. Although there are many factors to consider, the results of television advertising can be powerful and profitable. Whether you choose to dive into buying airtime yourself, or hiring a professional to do it for you, it helps to understand the airtime business so you can understand what is happening. Despite the complexities of buying airtime and producing a commercial, they can be done quickly. The time necessary to produce a commercial and buy the airtime can be shorter than you would imagine. Television still offers the biggest “bang for your buck” and should be part of any marketing plan that aims for consumers.