The Ultimate Small Business Guide to TV Advertising Basics
According to Cengage Learning, television advertising still rules when advertisers make media purchases. Approximately 40 cents of each dollar spent on advertising derives from TV advertising. Television advertising enables marketers to reach local and national viewing markets. The largest share of TV advertising revenue is generated by businesses or organizations with nationwide advertising budgets.
Digital advertising research tends to overstate the case about how and when television will die. After all, national and cable networks are populated by many of the same young, brilliant online marketers seeking to delight their customers. As digital and video marketing take on some of the characteristics TV ads, television networks are also converting ideas used by digital marketers.
TV Advertising Advantages
According to advertising researchers, the average consumer is exposed to three hundred to three thousand advertising messages each day. Newspapers, direct mail, branded clothing and shirt-slogans, flyers, and more may consciously or unconsciously increase the prospective buyer’s awareness of needed or desired products and services.
The best TV ads have many advantages, including viewers’ improved market awareness, intrusive–not obnoxious–messaging, and positive engagement. Here are some of the advantages of TV advertising:
Consumer competition is fierce. TV advertising is one of the best ways to get the attention of potential buyers. Afterward, the advertiser may seek to foster awareness, the first step necessary to encourage prospective buyer action.
Without TV advertising, the only medium with sight, motion, and sound properties, the advertiser is limited to “flat” media. Radio ads have only sound and print ads have only sight to engage the viewer. Television is considered the dominant “mass medium”. TV advertising continues to offer the greatest potential to reach the largest number of prospective retail customers.
Much like Google’s reach within the local SEO and digital space, national broadcasters FOX, CBS, ABC, and NBC reach over 120 million viewing households and almost 300 million individual viewers. TV succeeds at reaching almost everyone. Advertising Age says it reaches an astounding 95 percent of U.S. consumers.
Those businesses who can afford the cost of 30-second spots during the Super Bowl enjoyed increased brand attention at a time viewers are feeling good. When viewers like the advertiser’s commercial, they are statistically more likely to buy the advertiser’s product or service.
Of course, not all advertisers want to reach every man, woman, and child in America. By segmenting potential viewers by age, race, and gender groups, advertisers select specific programs, channels, and networks for the best potential results.
The true impact of TV advertising depends on upon the product advertised and the advertising continuity of the business. Some categories are more interesting, exciting, or entertaining than others. The advertiser’s creativity—the art of TV advertising—is also a key determinant in the message success. TV advertising and brand development have resulted in Tony the Tiger, now 65; Mr. Clean, almost 60 years old; The Pillsbury Dough Boy, also a senior citizen, has even transcended the small screen to star in movies.
TV advertising is also used to influence viewers’ perceptions and emotions. After a negative or harmful event, the advertiser may decide to tell the business’ side of the story with TV advertising. Examples over the years show that positive corporate advertising campaigns can help viewers feel more positively about the firm once more.
Cable TV’s share of advertising spend and revenues has continued to grow over the past decade. Satellite TV has also contributed to cable penetration growth. About 75% of American households have cable. Cable audiences have actually grown as media researchers predicted their demise. Cable programming—or the focus on content, content, content—is a natural fit for marketers in search of the narrowest target audiences. Narrowcasting on special interest cable channels, including cooking, fitness, health, history, shopping, or home and garden, allows marketers to successfully niche market to an almost unlimited array of specialized audiences.
TV advertising continues to evolve, grow, and thrive. Some recent trends in TV advertising include super-abbreviated spots of 15 seconds. The spots are cheaper to make and easier for small businesses to purchase. Like a video ad that bursts onto a web page unannounced, the ultra-brief TV ad spot is so quick that viewers lack remote control reaction time. These TV ads are so brief, most viewers choose to watch and wait.
TV programming is actually more robust than ever, too. The popularity of websites that offer complete, high-res episodes of everyone’s favorite TV shows reflects their importance to viewers. Many cable providers offer subscriber access to a wide array of TV programs to stream on smartphones, computers, and other devices. These TV shows frequently come with advertising. Free TV streaming sites also trade viewer ad views for access.
Banner logo ads and flickering or scrolling superimposed ads may appear during a national sporting event. Streaming headlines on some TV stations may seem like they’re from the newsroom, but corporate advertisers and their logos are often present in these news streams.
TV Advertising Disadvantages
There is a short list of TV advertising disadvantages. The most frequently cited disadvantage of TV advertising by small businesses is its cost. TV campaigns are expensive. Additional disadvantages include ineffective market research and targeting, negative audience perceptions, and fleeting and difficult to recall advertising messages.
Costs of TV advertising, including commercial production and spot purchases, are substantial. According to small business author Marc Prosser, it costs between $5,000 to $20,000 to make a commercial in a major U.S. city. Large cities like New York and Los Angeles bear higher commercial production costs.
Some TV advertising, like a $3.5 million Super Bowl commercial in 2012, is pedigreed and pricey. Small businesses benefit by working with a local TV station invested in their success. If a TV station has the necessary equipment and studio space, it may produce the advertiser’s TV commercial at no cost if the business agrees to spot purchases over several months.
Viewers Skip Commercials
TV advertising may contain a fleeting or ephemeral message. Some messages are simply lost when viewers lose interest, get a snack, or change channels. To create greater viewer focus, some businesses decide on longer infomercials. Although some perennially successful infomercials like the Bowflex Gym or ProActiv Solution Acne Treatment manage to stimulate customer awareness and sell products, others somehow cross the information line and turn viewers off.
Some TV ads are inefficient at reaching a target audience. If the advertiser wants to reach 100,000 homeowners in a city with an offer, it’s wasteful to purchase spots on network news. Research, including ideal customer interviews and surveys, helps the advertiser make efficient media buys.
TV Advertising Best Practices
TV advertising best practices involve top-down and bottom-up media planning. Businesses must know their goals at the outset and continuously tailor and adjust the campaign to meet these goals. Media planners, as well as advertisers, must stay transparent, including remaining compliant with Quality Assurance Guidelines (QAG) 2.0.
- The advertiser should focus on improving general advertiser recall, brand recall, message recall and overall likability.
- According to Nielsen and the Interactive Advertising Bureau (IAB), combined TV commercials and digital video advertising is a powerful combination when advertisers want to achieve high levels of prospective buyer awareness, recall, and likeability.
- The advertiser should avoid the temptation to create many TV commercials at the beginning of a TV advertising campaign. Producing many commercials is expensive and can dilute the advertiser’s viewer recall goals.
- The advertiser must fix the media budget and agree to payment terms. The TV advertiser should make timely payments Small businesses should not expect a short-term increase in sales.
- Building good will with the firm’s media agent, network sales reps, videographers, and others involved in the media campaign’s development, are as important as customers and vendors.
- The development of a successful TV advertising campaign takes time. The business should use buyer personas created from interviews with ideal customers to create TV commercials.
- True creativity, not parroting another successful TV ad in one’s industry, can separate your business from others. Find creativity after performing the hard research work. Know your customer first.
- Remember that creative and content is “king,” but the best creative work can’t make up for focused research. Interactive TV advertising is impossible if the advertiser doesn’t know the audience.
How Much Does TV Advertising Cost
The cost of TV advertising varies greatly. There are a few primary factors that play into the cost of a TV spot, such as channel, daypart, the cost of producing the TV commercial and length of the TV spot. Each of these will also vary by whether you want to advertise on Cable, Network TV, or run a National Spot.
According to the American Association of Advertising Agencies, national 30-second commercials created by an ad firm cost upwards $342,000 in 2008 and more than $354,000 in 2011.
Local TV Station Affiliate
For small businesses targeting a local market through a local TV, the affiliate can be much more cost-effective for a small business. Ad spots vary by market size but typically range from $20 to $1000.
For local businesses, buying cable TV can be cost effective – but may not reach the critical mass to drive ROI. Local Cable spots can run from $5 to $100.
How to Measure TV Advertising
The real measure of TV advertising’s cost or effectiveness is complex. Small businesses with a desire to create successful TV ad campaigns should focus on long-term effectiveness while measuring short-term results. Interest, or buzz, on social media or increased customer inquiries, are some of the best ways to gauge the effectiveness of a TV commercial.
Analyzing and measuring TV advertising may benefit from the engagement of an experienced consultant who knows how to identify Internet buzz from chatter. Creating focus groups and research tools can also help the advertiser measure TV advertising.
TV Advertising Terms 101
When embarking on a TV advertising campaign you might hear your sales person talk about things like reach, frequency, ratings, or network penetration. Below you will find some of the more common terms to help you understand what they are talking about when referencing your campaign.
Reach is defined as the number of unduplicated people who watch a program or group of programs during a specific time period.
The frequency is defined by the number of spots you’re placing within a measured period of time that viewers will be exposed to.
There is a rule that states that a customer will need to see your advertisement 3 times before they remember it. So make sure you’re running enough ads to get your customers to remember you when they are ready to buy the products or services you offer.
Share is defined as the percent of the total households or people who are tuned into a specific program, network, or station at a specific time. Each program and TV station will command a different share of a person’s attention at different times.
TV sweeps is a defined time period that rating surveys are sent to local markets to measure program viewership. Sweeps happen 4 times a year (February, May, July, and November) and last 4 weeks each.
A few things to note:
- The ratings and thus the cost of TV spots are based on these ratings – not only for the time of sweeps but for the time period between sweeps as well, when programming might not be as great.
- Most TV stations run their best programming episodes during these few weeks each quarter to inflate their ratings and command higher rates during off-sweep periods.
- TV viewership drops in the summer months, so most stations don’t use the numbers from their Summer Sweeps period to sell Fall TV. They will usually take an average of past Fall Program ratings combined with first quarter ratings to build their Fall rate card.
One aspect of buying TV ads is knowing your businesses demographic. The demographic is defined as the audience composition based on things such as age, sex, income, education, household size, occupation, etc.
There’s always a confusion when it comes to cable advertising. Most businesses think they will get on the major stations such as ABC, NBC, CBS, or FOX – and that’s just not true. Cable television includes all the other channels. These channels usually get fewer views per channel and thus it takes buying more time slots to get the same reach as you would with a Primary Network Ad.
There are a couple benefits to buying cable advertising, they include:
- The cost is usually much less per spot – although you’re not reaching as many people.
- Cable TV has the ability to target user interest better due to the number of niche channels that may align with what your customers like.
Primary Network Advertising
The primary networks include ABC, NBC, CBS, and FOX. There are benefits and drawbacks to buying Primary Network Ads as well.
- These channels and their programming usually have a much larger reach, but usually cost more to advertise on.
- The shows on these stations usually command more attention on other marketing channels such as social media.
- Anyone with a TV can usually get these stations for free since they are considered OTA (over the air) stations.
- Unlike buying multiple cable networks, you’ll need to contact each Primary Network separately to purchase ad spots.
In many cases if you are a reseller of a major product line, the manufacturer will provide you with a small budget – usually based on how much product you buy. This budget can be used to subsidize the cost of your adverting campaigns.
There are rules and regulations that you’ll need to follow when using Co-op money. These are set by the manufacturer and usually include rules that include topics such as:
- How much time their product or brand needs to be in the TV spot
- Their logo size in the advertisement
- What products can be included in the commercial
- Dayparts or TV shows that can be advertised within
Cost Per Thousand (CPM)
The cost per thousand (CPM) is the cost to reach 1000 people with your ad. It is widely used to compare the relative cost efficiency of different programs, stations, or media.
The coverage map, (or just TV station coverage) is the percentage of homes or people receiving a particular broadcast signal within a specific geographic area.
Most TV stations sell their spots utilizing two metrics; rating and daypart. The daypart is a set time period that all TV stations use to help segment and give value to their time slots.
The default dayparts are defined below (all times are eastern time):
- Early Morning 5:00am-9:00am
- Daytime 9:00am-3:00pm
- Early Fringe 3:00pm-5:00pm
- Early News 5:00pm-7:00pm
- Prime Access 7:00pm-8:00pm
- Prime 8:00pm-11:00pm (M-Sat) 7:00pm-11:00pm (Sunday)
- Late News 11:00pm-11:30pm
- Late Fringe 11:30pm-2:00am
- Overnight 2:00am-5:00am
Gross Rating Points (GRP)
Many ad agencies that buy tv spots will ask for a schedule that satisfies a defined number of Gross Rating Points (GRPs). GRPs are defined as the sum of individual TV show ratings on an advertiser’s commercial schedule, without regard to duplication.
Gross Rating Points = Rating x Frequency
For example, 5 commercials on a show with a 10 rating would produce a total of 50 GRPs.
A number of homes or individuals who will potentially see your advertisement. This may also be referred to as “total universe”.
Nielsen Media Research
Nielson is a third party firm that is involved in local and national TV audience measurement. TV station uses these ratings to help define how much TV spots will cost.
A proportion of households owning televisions or subscribing to cable.
Penetration will be consistent across Primary Network Stations within a certain market, but Network compared to Cable penetration will not be the same within a market.
A percentage of total households owning TVs who are tuned to a particular program or station at a specific time. Each rating point is equal to 1 percent of the population within the coverage area.
To help keep costs down many advertisers and traditional ad agencies will take a portion of their ad spend and do a Run-Of Schedule campaign.
An ROS campaign simply means that the ads can fall in any daypart and on any show. It gives the TV station the flexibility to run your ads when there are open time slots that haven’t been sold – most ROS campaigns fall into overnight TV spots that cost next-to-nothing.
TV Advertising Rules
There are a few rules that are associated with putting your small business advertisement on your local station – but in most cases, you won’t need to worry about them. This gives your business creative flexibility to try and entice viewers to buy your products or visit your local brick and mortar store.
Volume in Ads
Due to the declining viewership for both cable and network TV, the advertising community thought it would be a good idea to try and force users to pay attention to the ads. One tactic they tried was to raise the volume of TV commercials to a level much louder than the program that was being watched. This tactic actually backfired, causing viewers to mute their TV or change the channel during commercial breaks.
This tactic was made illegal in 2010 when Congress passed the Commercial Advertisement Loudness Mitigation Act (CALM).
The CALM act states that the average volume of commercials during a program must be the same as the average volume of the program itself.
The Federal Communications Commission has established numerous rules for televised advertisements featuring political candidates. This rule had two parts:
- First, all candidates for political office need to receive equal time, cost, and treatment as their opponents and other businesses purchasing advertising time.
- This meant that TV stations needed to keep rates consistent, and could not offer deals, free spots, or lower prices to small businesses during political races. If they did offer any discounts, they must also give the candidates these prices as well.
- The second part of this rule is more for the voting community and states that all ads must:
- Clarify for viewers what group purchased the commercial time
- Clarify whether the advertisement is part of the candidate’s campaign efforts
- Clarify if another political action group paid for the TV spot
The FCC recognized that children are especially susceptible to advertisers’ messages, so it developed several rules and regulations on how marketers can sell their products during children’s programming. Three of the primary rules are below.
- The advertiser must not use a program’s characters to advertise a product during the show.
- The commercial time for children’s programming is limited to 10.5 minutes per hour on weekends and 12 minutes per hour on weekdays.
- Strict limitations of what types of products can occupy time within programs created for children.
While the FCC does not have any specific rules in place for alcoholic beverage commercials, each network uses its own standards and best practices for placing alcohol ads. Many have time-slot, daypart, and programming restrictions, as well as commercial content restrictions.