Radio Advertising -What is fair pricing for radio spots?
When it comes to TV advertising and radio advertising, the most common question we hear is: “What is a fair price for ‘radio spots’?” It is a great question, and one that rarely gets answered. The answer is:
A fair price could be $ 2.00 in Great Falls, Montana;
It could be $ 300.00 in Houston, TX;
It could be $ 2000.00 in New York City; and
It could be $ 1.5 million for the Super Bowl.
In order to understand “spot pricing,” you have to know what a spot is first. When a commercial hits the airwaves, it becomes a spot. A spot is 15, 30 or 60 seconds worth of airtime. Airtime is just that, time on the air. Air is worth nothing. We all breathe it for free. You should pay nothing for air. So what is a spot worth? ZERO, ZILCH, NOTHING.
In order to answer the question fully, I will use an analogy involving a bag of Doritos. What does a bag of Doritos typically cost? A large bag is around $ 3.50. Normally a bag of Doritos has around 100 chips in it, meaning a cost of around .03 cents per chip. Is that a fair price for a bag of Doritos? Based on public perception and what you paid for Doritos in the past, the answer would be yes.
What if you opened the bag of Doritos and it had 3 chips in it? Would $ 3.50 be a fair price for the bag then? Of course not, it would be a rip-off. What if you opened the bag and it was full to the top and had 300 chips in it? Would $ 3.50 be a fair price then? Absolutely, you got a fantastic deal.
So there lies the problem: small companies continue to purchase advertising based on the price of a “Spot”. They do not bother asking “how many chips are there inside the bag?” When purchasing TV and radio advertising, the only thing that matters is how many people are going to hear or see your spot each time it runs. In the advertising world, we call that “average impressions”(eyeballs, or ears).
The next logical question would be: How do we find out how many people will see or hear our spots before we purchase advertising from someone? The next article posting will cover this question. You can also go to a page at the resource below titled “What is CPM,” to learn more about how Nielsen and Arbitron ratings work.