How much does it cost to create the commercials we watch on television or online?
The answer depends on several factors; including the overall quality of the commercial, its length, any celebrity appearances, and where you plan to air the commercial. Estimating your TV commercial cost before you even start designing the ad is vital, so you know how to allocate your budget.
In this article
- TV Commercial Production Budget
- Celebrity Appearances
- Deciding on Length
- Minimum Standards
- Airing Your Ad on TV
- CPM
- Network
- TV Show Content
- Broadcast or Cable
- Season
- Time
- Ad Length
- Audience Size
- Competition
- FAQs
- How much should my company invest in advertising?
- Who spends the most on TV ads?
- What makes TV ads most effective?
- Are there any downsides to TV ads?
- Final Thoughts
Here’s a closer look at the cost of TV advertising.
TV Commercial Production Budget
The typical TV advertising budget for the production side of things is $1,000 to $50,000 USD. The costs here depend on what sort of commercial you want to make.
You can keep costs on the low end by filming in-house and only spending on whatever clothes and props you need. Video quality matters, though, as low-quality ads will get less engagement from viewers.
Many companies contract some or all of their production to a professional team. Some budget-oriented teams can do impressive work, but for good commercials, expect to spend at least $10,000.
One way to keep costs down is to limit human appearances in the commercial. If you go this route, consider hiring voice talent to keep the audience engaged. Professional voice actors are generally affordable and capable of performing in various roles.
This is usually the cheaper part of your TV commercial cost. Most companies can reuse commercials for weeks or even months, so it’s a one-time creation cost compared to the regular expense of buying more time slots to air the ad.
Celebrity Appearances
Celebrities may be available to star in your ad, but expect to pay a lot for them. Prices can vary wildly here. Lesser-known celebrities may guest-star for as little as $5,000 USD, especially if they’re already in the area, but famous celebrities can charge upward of $10 million USD.
There’s no easy way to predict this cost because its range is huge. However, most celebrities have agencies that handle arranging things like this. If you have a specific person in mind, talking to their agency is the best way to get information on their costs.
Another modifier is that celebrities may reduce or even waive their fees for some ads. If they’re particularly outspoken about a social cause, they may show up for free to promote it. Don’t assume you can take advantage of this, but know it’s possible for some businesses and charities.
Deciding on Length
Most commercials range from two to 60 seconds, depending on where you want to air them. Naturally, the shorter the commercial, the less it costs to create.
However, some companies want to have an ad available in several lengths. In these cases, it usually makes more sense to create a 30 or 60-second commercial that you can break down into shorter parts, like 10-second and 15-second clips.
Online ads can be more flexible than TV costs, and some companies use the same content for both, and this is becoming more popular. Naturally, your TV commercial budget can be significantly lower if you can make several different ads simultaneously.
Minimum Standards
The minimum equipment for filming a TV commercial is a camera that can record high-definition video, a microphone to pick up audio, and a computer with video-editing software to adjust and complete the ad.
You can cut costs significantly if you’re able to use existing material. For example, most movies can use existing video footage, so they must pick the best clips, add some voice-over, and do some graphical design for the title, release date, and other standard information.
Airing Your Ad on TV
The other major component of your TV advertising budget is the cost to air it on television. Like production, this can vary significantly depending on how and where you want to show your ad. If a show is popular, as measured during sweeps week, then airing the ad will certainly cost more.
CPM
Most television stations price their advertising costs in CPM, or cost per thousand views. The more people watch a show at a specific time, the higher the cost to air an ad in that time slot.
Urban areas tend to have much higher CPMs than rural zones. For example, advertising in Los Angeles may have a CPM of more than $34, whereas, in Detroit, it’s closer to $18.
The average cost for airing an ad on network television during a decent time slot is a little over $100,000.
Factors that can affect the CPM include:
- Network
- TV show content
- Broadcast or Cable
- Season
- Time
- Ad length
- Audience size
- Competition
The thing to remember about CPM is that it represents views for your ad but not engagement. If your commercial is bad, more people will ignore it, so you could take a loss. This is why it’s essential to produce the highest-quality TV ad your budget allows.
Let’s look at the cost variables in more detail.
Network
Networks with higher viewership charge more for advertising. Sports networks like ESPN have consistently high viewership and a relatively narrow and predictable audience.
Stations like CBS also tend to have high viewership, particularly when airing drama series like NCIS. Many networks also have a slate of daytime television with a viewer base similar to sports networks, which makes them easier to profit from.
TV Show Content
Specific TV shows can also adjust the CPM. The more popular a series or event is, the more you have to pay to advertise on it.
Special events like the Super Bowl are infamously expensive, with costs in 2022 going to more than $6.5 million for 30 seconds. Super Bowl ads are so expensive that some people watch specifically to see the ads, as companies frequently spare no expense to make the ads as engaging as possible.
TV shows don’t have to be once-a-year things to command a higher price. Any content that’s consistently engaging and draws a high viewership will cost more, regardless of what it is or when a company airs it.
Broadcast or Cable
Local broadcast stations are much more affordable than any cable network, with a CPM as low as $5. These networks tend to work best for advertising local content and events. They also tend to have lower-quality ads, which fits in if you’re pricing your TV commercial cost on a tight budget.
As a general rule, cable stations tend to have a wealthier viewer demographic than broadcast stations. They can also have more targeted audiences, with more shows of the same style.
Recently, people have turned to online services like Netflix and Hulu for ads. Like networks, prices can vary, but it’s not rare to see a CPM between $20 and $40 for an online service.
Notably, online services can have impressively precise targeting, so it’s usually cheaper to advertise there even if the cost looks higher because you won’t be advertising to as many people.
Season
The time of year also affects the CPM for a show. This ties into the competition, and it can be hard to separate the two, but certain times of the year tend to have higher viewership and higher costs.
For example, during competitive political races, candidates are often willing to spend more to “blanket the airwaves” and get as many ads as possible. However, they may not spend anything on TV ads for the rest of the year.
Similarly, cruises are more prevalent in summer, while Christmas often sees a deluge of new product ads. Quieter times of the year have much lower costs for ads.
Time
CPM is highest during prime-time viewing hours when most people are watching TV. The exact times can vary by network, but it’s somewhere between 7 and 11 PM in most areas. Viewership falls off sharply after 11, so some networks air infomercials instead of standard content.
Daytime television usually pulls in solid and predictable numbers but with a much different viewer demographic than prime-time slots. For example, more stay-at-home parents watch during daytime hours when most people are at work, and many will have more disposable income to spend on ads.
Ad Length
Shorter ads cost less to air on television. Most commercials are 15 or 30 seconds exactly, although stations may occasionally air 10-second ads. TV Stations don’t like ads that deviate from these numbers because it’s harder to fill the airtime correctly.
Most TV stations have 22 minutes of programming in each half-hour segment, with 8 minutes of commercial time divided into two-minute segments. Divided up, that’s sixteen 30-second slots for ads each half hour. A few stations have 18 minutes of content instead and may have three-minute ad breaks instead of two minutes.
For ease of managing things, networks strongly prefer ads that are standard length, with some allowances for half-length (15-second) or double-length (60-second) ads if there’s enough interest.
Audience Size
This ultimately ties into everything else. Audience size is the most significant influence on costs. Statistically, for every thousand viewers, you will get a small percent converting into customers.
As Chron notes, a well-run TV advertisement will have a return on investment of between 300% and 500% or three to five times what you spent on making and airing the ad. Making an ad for a bigger network increases costs and how much you’ll earn.
However, some companies use loss leaders on ads instead. These are lower-priced items, sometimes even sold for a loss, that helps bring customers into their store. For example, companies may sell printers at a loss, then make up the difference with expensive ink.
Competition
Finally, there’s the competition. Networks want to air as many ads as possible, so they constantly adjust the pricing to find the highest price they can get without putting it in their filler.
Two main ways of selling content affect the TV ad cost.
First, there’s bulk selling. This is when a network sells multiple slots for a single commercial simultaneously, often at a discount, depending on how many slots a company buys. For example, a company may want to run its ad every half-hour during prime time, which may be eight 30-second slots per night.
Second, there’s auction selling. In this format, companies have advertisers bid for specific slots. If there are multiple bidders, the price goes up until one is left. If there are no bidders, the price decreases until someone shows interest. The more competitive a slot is, the higher its price becomes.
However, having no bidders is rare unless a network is failing badly, so this doesn’t happen too often outside the early hours when almost nobody is watching television.
FAQs
Here are some common questions people have about their TV ad cost.
How much should my company invest in advertising?
Most companies spend about 12% of their revenue on marketing. Bigger companies spend a bit more, smaller companies a little less. If you don’t have the revenue for TV ads, consider growing your business in other ways first.
Who spends the most on TV ads?
Lifestyle and entertainment spending is the highest, followed by medical advertisements. Food and drink companies also spend a lot, especially near the hours when most people are hungry.
What makes TV ads most effective?
Good TV ads try to tell a story instead of directly selling. Comedy, satire, and other emotions can be much more engaging than raw numbers. Memorable jingles are also effective at getting people to remember products.
Are there any downsides to TV ads?
While well-made television ads are consistently effective, they do have some downsides. Notably, they may have difficulty fully explaining the product or its uses in short airtime. They also face tight regulations on content.
Final Thoughts
TV commercials are one of the most expensive forms of advertising businesses consider doing. However, despite their cost, they have a proven return on investment in many industries. This means they’re ultimately less risky than they may seem at first.
If a TV commercial cost seems too steep, consider hiring a reputable production team to create the ad and a well-qualified manager to get time slots for you. You can do this yourself after getting some experience, but learning from someone who knows how to place TV ads correctly can help you get the best return quickly.
Have you ever wondered why TV commercials are so loud? Read our blog to find out why.
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