While some people may watch TV without paying extra to watch their favorite shows, they are not “free” in the technical sense. The TV station has to pay to air every program, while they also obtain revenue from advertising. TV advertising is primarily commercials, generally 30 seconds or less, while some commercials, known as infomercials, can run over 30 minutes in length. Commercials are made to resemble actual programming and some current infomercials are even 60 minutes long. The TV ad cost depends on a number of factors, mainly the level of production values in the ads themselves.
The average 30-second national brand commercial costs around $350,000 to produce, while an infomercial can cost anywhere from $50,000 to $500,000 to produce. Most commercials take three to four weeks from concept to delivery and longer length infomercials can take six to 12 weeks to produce. More elaborate sets or location shoots, fashionable clothing and recognizable talent can drive up the production costs, as can a longer production schedule. However, a great commercial can provide a brand with a whole new image. On a sound stage shoot, the bulk of the budget goes toward the equipment and property rental and maintenance costs. A location shoot eliminates the cost of property rental but adds the expenses of insurance fees, permits and remote production facilities.
Actually paying to air a commercial on TV is another matter that depends directly on a program’s Nielsen ratings. The law of supply and demand applies here. The higher a show’s ratings, the more desirable the show becomes to advertisers, allowing a TV station to charge a greater fee for each 30 second spot. Basic cable and syndicated programs have fewer viewers than network shows, while a growing amount of viewers are now watching shows online instead of on TV. Most small and medium-size businesses can only afford to buy ads during local programs.
As the explosion of online advertising has led businesses to spend more money on it at the expense of TV advertising, a good TV ad campaign is still a crucial part of any business’s arsenal. Infomercials and other forms of Direct Response TV are still responsible for $144.8 billion in sales, and can be used in tandem with an online ad campaign.