TV is a versatile medium that accommodates all budget sizes. For example, in 2022, over 200 UK advertisers spent less than GBP 5K, and
over 750 spent less than GBP 50K out of a total of 959 advertisers (source: Thinkbox).
The cost of a TV spot is determined by where and when you advertise. Larger channels with higher reach generally command a premium over niche channels. However, some networks allow spots to be broadcast regionally or locally, reducing the cost approximately in proportion to the size of the potential audience.
Another factor is the time of day and day of the week. At the most basic level, there are peak and off-peak times, with peak spot costs being more than ten times more expensive than off-peak. For example, peak spots might cost GBP 10K, while off-peak might be GBP 1K. Peak time is generally around dinner time but varies between countries. Off-peak includes all other times and is further subdivided into dayparts like morning, daytime, fringe (just before peak), late night, and midnight-to-dawn, with spot costs varying significantly.
For instance, in NZ, the cheapest spots can be bought during the day for about NZD 100 (source: Fullscreen NZ Ratecard).
The reason for this cost variation is simple: different audiences are available at different times of the day, days of the week, and seasons. The larger the audience watching the channel, the more it costs to advertise.
Other common factors affecting advertising costs are ad duration and position in the break. Costs are generally quoted for a 30-second commercial, and longer commercials are charged proportionately higher prices. Ads that are shorter or have odd durations are usually priced higher than pro-rata durations.
Ad placements at the beginning or end of a commercial break are usually charged at a premium compared to those in the middle. The rationale is consumer behavior during breaks, known as “zapping,” where viewers switch channels or engage in other activities
(source: Sharethrough).
Overall, spot costs are determined by the size and engagement of the audience that will likely see the ad, which is why the main cost metric for TV advertising is CPM – cost-per-mille (thousand impressions, equalized to a standard 30-second commercial).
When evaluating a TV advertising proposal (“media plan”), always look at the estimated CPM for each segment of the plan. After the campaign is finished, compare it with the actual CPM. If the difference is significant, you may be able to demand compensation in the form of free spots, depending on your agreement with the media partner.
Placements in high-ratings programs are more expensive not only on a “per spot” basis but also generally more expensive on a CPM basis. This is because a sizeable proportion of the audience, usually working people, only watches these programs and cannot be targeted any other way.
