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The Cost of Producing TV Ads vs. Digital Video Ads

Your brand should be engaged in an ongoing conversation with your marketing team or agency about the advantages and disadvantages of traditional television advertising vs. digital advertising.

Cost, which is the focus of this article, is only one factor to consider when developing a marketing strategy. Brands with the resources may pursue a marketing mix that includes TV ads and digital video ads. Whatever the circumstances, the cost differential between TV and digital is easy to calculate.

Television Commercial Advertising

The cost of advertising on television is immense. Traditional television commercials cost much more to produce and air than digital video. TV’s three main expenses are 1) scriptwriting and development – hiring a screenwriter to write the script, 2) production – the making of the ad, and 3) airtime – the distribution of the ad.

Ancillary costs include time and effort developing the brand’s message and other miscellaneous expenses related to commercial advertising before production.

Production Costs

The production cost is flexible. Regardless of the budget, a reputable commercial production company should create dynamic television ads with high production value. “Production value” is the art of making professional-level content with limited resources.

  • A great writer and production team can turn $1,000 into compelling content with a bit of creative brainstorming. However, if your commercial production goes full of “Hollywood magic,” it will run into hundreds of thousands of dollars. Stock footage costs a lot less than special effects. A celebrity spokesperson costs more than the hourly rate for a voice-over actor/actress. Those are just two small creative decisions that impact your budget and production value.
  • Production costs are spent in three stages: pre-production, production, and post-production. Pre-production is the creative and administrative work on a commercial before the first day of principal photography. Production is “the shoot,” which should only be as long as needed to get the footage “in the can.” Post-production is the picture and sound editing, voice-over, special effects, motion graphics, music, and the like.
  • The bulk of your budget is spent during production, and the most expensive part of production is the above-the-line talent. Above-the-line talent includes writers, actors/actresses, directors, cinematographers, and editors. Below-the-line talent is crew and operators (e.g., camera operators, mic operators, crane operators, etc.
  • Depending on the state in which production occurs, TV commercial shoots may require a union cast and crew. If your production is union, your costs are more than if you are in a right-to-work state.
  • Commercials run in 15-second, 30-second, or 1-minute timeframes, which may seem to provide the producer-director-editor with options that may reduce the cost. It seems logical that a 15-second spot costs less than a 1-minute spot. It does not. The shooting ratio, or the ratio of footage shot vs. footage used, should be high enough to edit into a 1-minute spot and subsequently into 15-second and 30-second versions, all of which run at different times on different channels.
  • Your production costs also vary according to a brand’s ad strategy. A single commercial, even three versions, is less expensive than multiple commercials that have different scripts and messages. However, the overall cost of numerous commercials can be mitigated by simultaneously shooting footage for the various commercials using the same production team and crew.

Distribution Costs

TV commercials are distributed on local, national, or cable television stations. The marketing real estate is called “airtime” and can vary in cost. Factors that influence air time prices are:

  • Media market (national vs. local).
  • Size of the audience (broad vs. targeted).
  • Time of day (day time vs. prime time vs. late night).
  • Day (week vs. weekend).
  • Nielsen ratings (popular shows vs. less popular shows).
  • Length (15-second, 30-second, 1 minute).
  • Repetitive broadcasting (length and frequency an ad airs).
  • Availability (In 2019, the average ad time per hour of primetime national TV on five major cable network groups was 14.32 minutes – 17.49 minutes).

For example, a 1-minute national commercial that airs multiple times during “prime time” on a network’s peak day and the most popular show may cost millions of dollars. Still, a 30-second commercial that airs late at night on a local niche cable channel and targets a specific demographic or zip code can be economical.

A savvy ad buyer knows America’s 210 media markets and broadcast stations. He or she buys air time in the right market at the right time to reach the audience with the highest probability to connect with a brand and buy its product.

With the one legendary exception of Apple’s “1984” commercial during the 1984 Super Bowl, commercials are not produced to air once. Advertising packages that may include multiple air times, days, channels, lengths, and duration.

  • The average cost of airing a national TV commercial: $115,000. (Statista)
  • The average cost of airing a local TV commercial: $5-$10 per 1,000 views. (Skyworks Marketing)
  • The average cost of airing 30-second commercials during the 2020 Super Bowl: $5-5.6 million

Digital Video Advertising

In 2016, online advertising outspent traditional television advertising for the first time, a trend that continues to this day. Marketing budgets now favor online digital channels such as YouTube, Facebook, Google, Instagram, and TikTok over TV.

Of that increase, online video advertising is the fastest-growing segment of a brand’s marketing mix. Digital video’s demonstrable ROI far outpaces other forms of digital advertising and traditional media.

Digital video is so effective and competitive that new forms of digital video advertising evolve at a rapid pace to meet demand and buck the competition. For example, “explainer” videos, which a brand can use to introduce a product and guide buyers through its setup and use.

According to Pitchy.com, the average cost for a digital marketing campaign is $4,000 – $8,000, a range which includes the content creators, social media managers, paid advertising costs on various digital platforms (e.g., Facebook Video Ads/Instagram Ads, Google AdWords, YouTube, Twitter), and data analytics.

It does not include video production costs, which can vary depending on the creative concept and budget.

A digital video goes through the same production process as a TV commercial. However, the unique nature of the world wide web has cost advantages and disadvantages. Many factors drive up digital video advertising production and distribution costs:

  • Television has a finite amount of air time. Digital advertising has unlimited time and space, which can be a liability. In a crowded marketplace, it’s more challenging to stand out.
  • New content must be produced and distributed on a more frequent basis.
  • One size does not fit all. Social networks have their language and culture as well as their own online marketing rules and regulations. To be effective, one must develop content customized for each channel.
  • Social media channels operate 24/7, and marketers must be agile and ready to tackle PR issues that may arise and affect a brand’s reputation.

A specific digital video ad campaign may be less expensive to produce and distribute, but digital video content’s life cycle and maintenance go way beyond a TV ad.

Content lives online forever, which is great for SEO but may conflict with a brand’s shifting priorities. Therefore, over time the actual cost of an “inexpensive” digital video ad may be greater than an “expensive” TV ad that runs for a limited time.

Distribution Costs

The cost of digital video ad distribution is much lower than television advertising. While the production and initial distribution costs can be the same as a TV ad, the global, in-depth reach of digital advertising gives a brand way more bang for its buck than TV.

On television, there is only so much information you can deliver in 15-seconds to 1-minute. A brand must stick to a central message and create original, memorable content to impact potential customers in a way that converts to sales or increases brand awareness, ideally both.

The success of TV advertising is beyond question if applied in today’s marketing landscape with informed media acumen. However, it will always have limitations that digital video ads do not have.

Digital video ads are also standard 15-second, 30-second, 1-minute lengths. However, unlike TV ads, they are part of a more extensive advertising web of content that works in harmony to expand reach and micro-target messaging.

A digital video ad may be more effective because it can direct viewers to a website or promote a call to action that increases the probability of a sale. A digital video can reinforce a brand’s message and connect with viewers when it runs alongside a digital still ad promoting the same product or service.

Prices on popular streaming services vary, but the examples below provide a glimpse into the pricing.

  • YouTube: $10-$30 per 1,000 views. Average cost of 100,000 views is $2,000. (YouTube)
  • Hulu: $20-$40 per 1,000 views. (Hulu)

Conclusion

The cost of TV ads vs. online video ads is not competitive. Though ranges vary and low-budget ad campaigns executed by professionals can be very effective regardless of medium, traditional television advertising costs are higher than digital video advertising.

Production and distribution expenses are not the entire story and should not be the sole factor a brand considers when determining what type of marketing mix provides the most significant ROI and achieves its sales goal.

Studies confirm that the most effective advertising is branded content with advanced storytelling, a strategic combination of traditional TV advertising and online digital channels.

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