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/// How Much Does It Cost To Make a Commercial?
Commercial advertising is an essential part of any business's marketing strategy. A well-produced commercial can help to drive sales, generate interest in the advertiser’s products or services, and increase brand awareness. However, producing a high-quality commercial can be a costly endeavor, and businesses should understand the various factors that can impact the total cost.
As an agency, we are often asked: “How much does it cost to make a commercial?” The short answer is that production costs can range anywhere from $1,000 to $1,000,000, or more. The considered answer is that, unfortunately, as with most things, the average cost depends on multiple variables. Nevertheless, whether your company has $5K, $50K, or $500K or more to spend on commercial video production, the good news is we can work within your price range to develop a premium commercial for your brand.
In this article, we'll take a closer look at the different factors that influence the cost of producing a commercial, including crew size, length of the ad, location, and more. We'll also discuss some of the primary factors that impact the cost of commercial distribution (i.e., media buying).
/// Factors That Impact the Cost of Commercial Production
The more creative and elaborate the creative concept, the more likely it will result in higher production costs. For example, if the ad requires animation, visual effects, special equipment, multiple locations, or celebrity endorsements, it will be necessary to hire more crew members and pay for additional equipment and services. On the other hand, if the commercial only requires stock footage and voiceover narration, the production costs will be significantly lower.
Although the average TV commercial is 30 seconds, commercial lengths vary widely. TV commercials have strict length requirements and are usually sold in 15-, 30-, 60-, and 120-second increments. Normally referred to as “short form”, these are commercials that are 2 minutes or under in length. Although no longer as common, “long-form” TV commercials (also known as “infomercials”) can also be purchased in increments of 5 or 30 minutes in length.
In short, the reason the length of the ad will impact the cost is simple: longer commercials will not only require more production time and additional crew members, equipment, and locations, they may also require more time spent in pre-production during the concept and scripting phases. A simple, 30-second spot may only call for a single-day production, whereas a 2-minute spot can span multiple days.
However, if budget permits, it is always recommended to create a longer asset that can be edited down to shorter versions. The reason, per Thinkbox’s “The Importance of Time Length in TV Advertising" study, is that longer television ads, although more expensive to produce and distribute, are better at building narratives. Accordingly, viewers should be exposed to shorter ads after longer executions.
Without a doubt, a commercial set within the confines of a studio or an ad shot in front of a green screen is going to be much more cost-efficient than one filmed on busy city streets. In addition, filming in a specific city or region may require additional permits, transportation costs, and accommodations for crew members.
In the United States, Los Angeles and New York are often considered the best places to produce commercials due to the abundance of production companies and talent. That said, those locations can often be prohibitively expensive due to the higher cost of living and talent fees. For a small business, filming in a small market may be a better solution to keep expenses down.
If multiple locations are required, it’s safe to expect production cost to increase as well. The greater the number of locations, the more people will need to be involved in the actual production (including actors/models/extras and crew). This means additional transportation costs and more equipment needed for lighting, sound mixing, etc.
Commercial Crew and Talent
The number of crew members involved in the production will also affect how much it costs. Whether in front or behind the camera, the larger the crew size, the more people need to be paid for their work. A commercial concept that calls for professional actors and/or additional production staff like an assistant director or makeup artist, for example, can quickly see expenses compound. In addition, a larger crew may also require more equipment, more locations, and more time to set up and break down.
The logistics of a multi-actor production will also have ramifications on cost. For example, a production with a single actor looking directly at the camera will only require one camera, whereas a production with two actors speaking to each other will require at least three shots, one of each actor alone and another where the actors are in the same frame. This will also result in additional editing costs, as editors must now cut between multiple shots to ensure a natural flow of conversation.
Another factor that affects production cost is the talent fee for hiring professional actors or voiceover artists. Depending on their experience level, popularity, and availability, talent fees can range from hundreds to thousands of dollars per day. Production may also be responsible for their travel expenses, accommodation, wardrobe, etc. Alternatively, advertisers looking to minimize cost can use non-professional actors such as employees or customers within the ad, but they may not have the skills or charisma needed to deliver a convincing performance.
Commercial Production Quality
A commercial’s production quality is crucial to persuading consumers that the advertiser is a legitimate brand and can be trusted. In the consumer’s mind, a subpar commercial is likely to equate to a subpar product or service.
The type of equipment used plays a significant role in the final output. However possible it may be to shoot a commercial with an iPhone, depending on where the ad will be delivered, this may not be the best approach. Although more than sufficient for consumer use, professional commercials require cameras capable of capturing high-resolution video.
Similarly, the type of audio equipment used will have implications on the end product. Having a professional microphone, audio recorder, and audio editing software will be the difference between having a clear and crisp-sounding commercial or a muddled and distorted mess.
The costs of a complete HD camera package, lighting equipment, and sound equipment can add up quickly, especially when additional crew members are required to operate the equipment. Despite that, investing in high-quality equipment and elevating production value can also increase the effectiveness of the commercial.
Once the commercial is shot, it’s time for post-production. Post-production often includes activities like editing, sound mixing, and visual effects. Not surprisingly, the length of the commercial (discussed previously) will dictate the level of effort during the editing and sound mixing process.
Visual effects will also affect commercial production costs. These effects can range from more standard motion graphics, animations, and title overlays to more complex (and more expensive) special effects like optical illusions, motion graphics, stop-motion animation, or computer-generated imagery (CGI).
Commercial Delivery Platform
Whether the commercial is meant to be distributed on a broadcast TV network or used for social media marketing may also impact the cost of production. Consumers have different expectations of the production quality of a commercial viewed on a large-screen television versus on a mobile device or computer. This is partly due to size of the screen on which it’s consumed but also due the caliber of the surrounding content.
A consumer on a social media platform will likely have a different perception of an “influencer” commercial shot on an iPhone than a consumer watching a prime-time network program on a 55-inch television. Advertisers looking to air their commercials adjacent to professionally produced content (such as cable or network programming) are advised to take a closer look into a professional video production company with the appropriate production equipment.
Smaller advertisers who use Facebook, Instagram, or TikTok as their primary media channels can avoid hiring expensive production companies. For these advertisers, an iPhone, an adequate microphone and lighting, and an appealing employee spokesperson may be the best solution.
/// Factors That Impact the Cost of Commercial Distribution (i.e., Media Buying)
Although not necessarily within the scope of commercial production, what good would developing commercial spots be if they weren’t seen by their target audience? That said, commercial distribution (more commonly known as “media buying”) can be the costliest aspect of the entire process. As a result, advertisers usually segment their production budget from their advertising budget.
Like the varying costs of commercial production, the following factors influence the cost of distribution.
- Media channel
- Media vehicle
- Target audience
- Geographic targeting
- Commercial length
The cost of delivering video commercials depends highly on the media channel (whether on Linear TV, Connected TV, Social Media, Website, etc.) in which it’s delivered. A 30-second cable television commercial purchased for a performance marketing campaign meant to drive traffic to the advertiser’s website can range from as low as $20 per spot to $3,000 or more per spot. A branding spot meant to drive brand awareness on a highly rated network program can be upwards of 20x that cost.
Nevertheless, for certain advertisers looking for a higher degree of targeting, Linear TV may not be the best place to feature their ads. A highly targetable CTV ad on a platform like Hulu can range anywhere from $20 to $40 CPM (cost per mille, or cost per thousand impressions). Similarly, an online video ad on a premium website can range from $12-20 on the low end and upwards of $40 on select inventory.
The vehicle (the specific TV station, website, or delivery platform) on which the video advertisement is delivered also has a substantial impact on the cost. Cable television advertising can cost as low as $20 per spot on a low-reach cable TV network like the Smithsonian Channel or upwards of $2,000 per spot on the HGTV network. By comparison, a video advertisement on Facebook or Instagram can range from $20 to a $40 CPM.
Part of the holy trinity of media planning (right message, right place, right time), identifying the appropriate TV show or programming to reach the advertiser’s target audience is one of the most important roles of a media planner. That said, the programming on which the commercial airs will determine how much the advertiser will pay for the commercial slots. A prominent example of this is the cost of Super Bowl commercials. In 2023, the average cost of a 30-second commercial during Super Bowl LVII between the Kansas City Chiefs and the Philadelphia Eagles was $7 million, an increase of more than 7% over last year’s Super Bowl LVI in 2022.
But it’s not only ads during the big game that charge a premium. Whether in the actual game or one of the many regular season or playoff games, according to Variety, NFL airings accounted for 40 of the top 100 telecasts in 2022. Although the most-watched prime-time telecast in 2022 was Super Bowl LVI (Los Angeles Rams vs. Cincinnati Bengals), NFL football games dominate the top 10 spots, ranking 1-8. Only two non-football telecasts crack the top 25: the Winter Olympic Games at #10 and the Oscars at #23.
How can these television programs charge such a premium for their commercial slots? TV advertising costs vary significantly based on the number of people the program reaches. For example, Super Bowl ads can cost upwards of $7 million for a 30-second time slot because the telecast reaches a very large audience, more than 100 million viewers. That said, it’s not just the reach that allows stations to charge such exorbitant fees for the Super Bowl. The program’s prominence and advertiser competition will result in higher prices as well.
The frequency of commercial airings will also have implications on airtime costs. Generally, the more times a commercial is aired, the higher the exposure and recall among viewers. However, high frequency will also result in additional media costs and potential ad saturation, whereby the effectiveness of the commercial will decrease due to overexposure. For this reason, advertisers need to find the right balance between frequency and budget to ensure new consumers are continuously exposed to the messaging.
Within offline media like television, targeting usually involves utilizing research tools to identify the programming that is most likely to be watched by the target audience. For example, if an advertiser wants to reach men 45 years or older, using cable news stations is an effective way to reach that specific audience.
Within digital media channels like programmatic or paid social, targeting is done at a user level, meaning that users in any demographic can be reached regardless of the content they are consuming.
Moreover, consumers across the digital ecosystem can be targeted based on various criteria: In addition to demographic attributes like age and gender, users can be identified based on shopping behaviors, interests, personality traits, and other behavioral attributes, such as websites visited or content consumed. Although hyper-targeting may be appealing, overlaying multiple targeting attributes can quickly inflate media costs.
Whether the commercial advertising airs on national networks or in individual local markets also impacts the cost of ad prices. Whereas one might imagine the pricing of a commercial on national television might be higher than on a local station due to the higher reach of the former, the inverse is sometimes true.
That’s the result of the limited ad inventory available to local television stations. Local TV network affiliates have access to a limited amount of commercial time during each program. These ad breaks are usually reserved for local advertisers (e.g., lawyers, car dealerships, small businesses, etc.) who are willing to pay a premium to reach consumers in their vicinity.
Nevertheless, the size of the market is the most important variable in determining cost. However, although the total costs of an ad targeting the entire United States will be higher than one targeting a small or medium-sized market (due the size of the audience), the CPM (cost per mille, or thousand viewers) of an ad reaching the entire country will likely be much lower.
TV ad cost will also vary significantly based on the time of day, or daypart, in which the spot airs. Typically, buys within more popular dayparts will incur higher costs.
When advertisers purchase TV commercials, they typically pay for the number of viewers who are expected to see the ad. Along those same lines, because different dayparts have different viewership numbers, pricing varies significantly.
For example, prime time (typically 8-11 P.M.) is the most expensive daypart because it has the highest number of viewers and the highest competition from advertisers. Despite that, prime time might not be the right time to reach the target consumer. Off-peak dayparts (late night, early morning, or daytime) command lower rates due to lower viewership. That said, if the advertiser is targeting homemakers, for example, daytime might be the most cost-effective and best time to communicate the brand message.
Not surprisingly, commercial cost will vary based on length. If a station can sell a 30-second ad for $1000, they may choose to sell two 15-second spots for $500 each. Although it is typical for longer commercials to cost more than shorter ones, it is not always the case that the cost-per-second is the same. Some stations may choose to charge a higher cost-per-second because, as mentioned previously, a longer commercial may be more effective in communicating its message to the audience and, therefore, is of higher value to the advertiser.
In addition, longer commercial lengths, like 60- or 90-second spots, are less common. This results in increased competition for those ad units, allowing the stations to charge a premium to advertisers who might need those longer lengths to fully explain their offering.
Seasonality (time of year) can also have a significant impact on the cost of a commercial. TV spot costs can increase substantially not just during the holiday season when advertisers are competing for airtime to push their best promotions, but also as the result of peak viewership periods such as during series premieres in the Fall, or Election season, as political advertising takes over the airwaves.
The inverse is also true, as ad rates during the summer are much lower due to decreased viewership, as people spend more time outdoors and away from their televisions.
Creating a quality video commercial that is reflective of the brand’s products or services is one of the most important undertakings of any advertiser. In this article, we’ve outlined the different factors that can affect the cost of commercial production and highlighted the key considerations that advertisers must keep in mind when determining how best to allocate their media budgets.
As a full-service creative and strategy, media planning and buying, and measurement agency, Media Culture can work within any budget to produce an effective commercial, distribute the spot to the media channels most likely to generate the highest return on investment, and optimize campaign performance to ensure target KPIs are met. If your business is interested in developing a video commercial and driving response from your target consumers, please contact us to discuss your needs.
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