Radio Advertising " What is a fair price for radio commercials or a radio "spot"?

The most common question we get about TV advertising and radio advertising is "What is a fair price for a 'spot'?" It's a good question; hard to give a good answer to it, though. But here's an idea:

A fair price might be $2.00 in Great Falls, MO...

...or $300.00 in Houston, TX...

...or $2000.00 in New York City...

...or $1.5 million during the Super Bowl.

The problem with understanding "spot pricing" is that many people don't understand what a spot is in the first place. A spot is a slot of airtime for a commercial " 15, 30, or 60 seconds worth. That's all it is: it's time on the air. What's air worth? Nothing. We'd all be in trouble if someone had the bright idea to charge for the stuff we breathe. So what's a spot worth? Let me answer that question again: NOTHING.

Let's take another stab at answering that question. Take a bag of potato chips, for instance " maybe some Ruffles' Cheddar and Sour Cream, just for illustration. How much is a bag of chips? About $3.50, for a big bag. How many chips do you get in one? About a hundred, which means each chip is worth about 3 cents. Now, is that a fair price to pay for chips? Based on what other people are willing to pay and what you yourself have paid in the past, it's safe to say the answer is "yes."

But let's say you opened your $3.50 bag of chips and got only three chips (and maybe a handful or two of crumbs). At around $1.17 per chip, you would've gotten ripped off pretty badly. On the flip side, what if you opened the bag and it was full to the brim with around three hundred chips? At less than a penny per chip, that would be an incredible deal.

And there we find our problem: small businesses keep on buying advertising based solely on the "spot price." They don't bother to feel the bag before they buy it to make sure there are chips instead of crumbs in there. The only thing that's important when buying TV and radio advertising is the number of people who will see or hear your spot each time it runs. In advertising parlance, what you want is "average impressions" (aka "ears" or "eyeballs").

By this point, you're probably asking: how do you check the bag? What do you have to do to find out how many ears or eyeballs you're getting when you buy advertising? Our next article will answer that for you. We also have a page on our main site, "What is CPM," where you can find out about Nielsen and Arbitron ratings and what they mean for radio advertising.

Feel free to call our office with any questions you might have about TV or radio advertising. Whether or not you're a client, we'll be glad to answer.

In this tough economy you have to take the punches, keep your chin up and keep fighting. A politician is certainly not going to do it for you; no matter how many times they lie and tell you they will!