HOW MUCH DOES TV ADVERTISING COST?
Great news! TV audiences are up. TV costs are down. In terms of cost-per-lead and driving traffic to your website, TV is cheaper than ever.
Recently, we’ve delivered 2.5 million TV views for $6,000, and produced TV ads for <$2,000 (and video ads for $2-300).
But there’s a better answer to the question ‘How much does TV advertising cost?’
And it’s ‘Nothing.’ That’s right. Zip. Zero. Zilch.
There are two main kinds of TV ads: brand and response.
Brand ads promote the brand by reminding people of the brand’s values. With repetition, this encourages consumers to keep buying, or buy more.
Response ads are different. They do a sales pitch based on a product’s features and benefits. And they persuade viewers to take action: visit a retailer or jump onto your website to check out the product and buy it.
Every response ad you run should generate enough sales to pay for its TV spot and deliver a profit, while its ‘brand impressions’ travel for free.
HERE’S HOW IT WORKS:
Say the margin in your product, after all costs, is $50.
And you buy a $25 TV spot to advertise your product.
Say that spot delivers 4,000 views by people in your selected target audience.
That means the cost per ‘000 views (CPM) for that spot is $6.25.
If the response rate to your ad from your target audience is, say, 0.4%, then that spot will send 16 warm leads to your website.
If your website’s close-rate for warm leads is one in eight, (12.5%) you’ll sell two products, and your profit will be $100, less the cost of the TV spot ($25).
Effectively, you’ve made $75 clear, and the spot cost you nothing, (plus you made 4,000 brand impressions on your target market).
Now what would you do if you had a machine which you put $25 into and $100 came out?
SCALE IT UP!
Correct! So you commit to spend $5,000 on TV, spread over a number of weeks.
And for your commitment, we are able to negotiate discounts and bonuses that lower your CPM to, say, $4 per ‘000.
With the same response and close rates as the first example, the result is 625 sales with a profit of $31,250, less the spot costs ($5,000).
That’s a net profit of $26,250. And you also made 1.25 million brand impressions on your target market.
OR LOOK AT A REVENUE STREAM …
We could plan a campaign where you spend $100 per day on TV ads. Same product, same margin, same response rates. And we’ve negotiated a CPM of $5.
That calculates out to 80 warm leads and ten purchases each day, plus 20,000 brand impressions, and a net profit of $400, or $2,800 per week, or $19,600 per month.
The above numbers are chosen to demonstrate the principle. Maybe there isn’t $50 margin in your product, but $150, or $25. Maybe your target market is smaller and more exclusive, so your CPM is higher.
Every product is different and will produce a different set of numbers.
But whatever the case, the principle is the same: we work out an allowable cost per sale for your product, then set up a TV-driven sales channel where every time you put a dollar in, you get two, three or several dollars out.
Also, note the impact the target audience cost per ‘000 (CPM) has on a campaign’s profitability.
CPM IS THE KEY
You have to run ads that reach your target consumers where and when they cost the least. If you pay too much (say, $60+ per ‘000 viewers during a prime-time spot on a Sunday night) you’re not making a media investment, you’re making a media donation.
You also need a product with benefits, an ad with a sales pitch and a response strategy, and a media schedule that lets you move your ads around to home-in on the channels, time-zones and programmes that deliver the best results.
Contact us to discuss TV advertising and your product.
And see how we created a TV ad-driven sales channel for a $500 product and sold 42,000 units.
“WEB TRAFFIC INCREASED 300%.” CCA
“BEST ROI EVER!” PENRITH WHITEWATER
“SALES UP 58%” THOMSON EDUCATION
“RESPONSE 6 X HIGHER THAN ANTICIPATED.”
“Response to the national TV campaign is over six times higher than we anticipated. We are experiencing a massive number of hits and our website is going into meltdown.” Steve Delnawaz, CEO, Stubby Strip Australia
“STUNNING RESULTS!” HARPER COLLINS
“TV: LOWER COST PER SALE THAN EBAY!
“VISITOR NIGHTS UP 28%.” BMT LTD
A 12 week non-prime-time TV campaign increased domestic visitors by 22.1% and nights stayed by 28.4%, while competitor regions experienced significant downturns. Rita Fisher, President, Blue Mountains Tourism Limited
FOUR CRITICAL QUESTIONS:
1. What action do you want your market to take?
2. What do they need to believe, to take that action?
3. What do you need to tell them to make them believe?
4. What evidence do you have that will convince them?
For a low-cost introduction to TV advertising that will grow your business, call Billy on 0412 777 175 or drop us a line via our contact page.
Because our experience is measured in hundreds of TV campaigns, we know which buttons to press to make people respond. Because we analyse the results of what we do, and have worked with hundreds of different kinds of businesses, we know what works and what doesn’t.
- Aussie BronzeSacha Roberts,CEO, Aussie Bronze
The video looks and sounds fabulous! Thanks again to you and Shaun for all your hard work. Can't wait to share it ...
- Possibilities Management GroupJonathan Oastler,Managing Director, Possibilities Management Group
The TV commercial looks absolutely fantastic, couldn’t be happier. The Instructional video also looks fantastic. The voice was spot on. Thanks so much for all your effort.
- Community Colleges AustraliaDavid Hurley,Manager - Business Development, SG&S Community College
Wow! I found the video to be inspiring, the stories just blending so well together and picking up so many key decision-making triggers. Well done to you and your team.
- Stubby Strip AustraliaSteve Delnawaz,CEO, Stubby Strip Australia
Response to the national TV campaign is over 6 times higher than we anticipated. We are experiencing a massive number of hits and our website is going into meltdown. Thanks guys!
- Sterling Mining Co.Monique Hayes,Marketing Manager, Sterling Mining Co.
Love, love, love the film! I passed copies out generously when I was in Toronto last week for broker meetings and at the Chicago conference the week before and I've been getting a lot of very favorable feedback.
- YPB SystemsJohn Houston,Executive Chairman, YPB Systems
We are delighted with the product and your service, and your co-ordination of the Chinese translation for us. We've had a tremendously positive response to the video in London, Beijing and Australia.
- DematicPeter Trotter,General Manager Marketing, Dematic
Billy and the team have an amazing way of exceeding my expectations. They really understand consumer, direct, industrial and B2B marketing. It’s what I need in an agency.
- Goldsearch AustraliaJohn Percival,Chief Executive Officer, Goldsearch Australia
On the day Billy & Shaun's corporate film for Sterling Mining Co. was premiered at this year’s Silver Summit, the share price jumped from a previous base of $3.35 to over $4.20.
- Harper CollinsJim Demetriou,Chief Operating Officer, Harper Collins
Their creative ideas matched our brief beautifully and the results were stunning. Our author experienced a threefold sales increase and is now one of the top ten Australian fiction authors.