Disadvantages in Television Advertising Media

Because TV has such a larger A.D.I., the stations can charge more for commercials based on the larger number of viewers reached.

The cost of television commercial time is based on two variables:

1. The number of viewers who watch the program.

2. The time during the day the program airs.

One 30 second television commercial during prime time viewing (8 p.m. to 11 p.m.) can cost 10 to 30 times more than one radio spot during drive time (which is considered prime listening time).

While the newspaper may cover the city's general metropolitan area, TV may cover a good portion of the state where you live. If such a coverage blankets most of your sales territory, TV advertising may be the best advertising alternative for your business.

Producing a commercial is also an important variable to consider. On the whole, television audiences have become more sophisticated and have come to expect quality commercials. A poorly produced commercial could severely limit the effectiveness of your message, and may even create a bad image in your customer's mind.

Advertising agencies or TV commercial production facilities are the best organizations for creating a commercial that will be effective for the goods or service you are offering. But the cost of a well-produced commercial is often more expensive than people think. Some TV stations will claim they can put together commercials for "almost nothing." Before agreeing to this, find out what "almost nothing" means. Then, determine if the commercial quality and content they are proposing will represent your firm's image.

Many companies use the station's commercial production facilities for creating "tag lines" on pre-produced commercials. Often, the station will help you personalize the spot for little or no cost...if you advertise with them. Remember, more than anything else, when it comes to making a TV commercial, you get what you pay for. And when you're buying commercial time, it makes sense to have the best sales presentation possible.

Remember, like radio, the message comes and goes...and that's it. The viewer doesn't see your commercial again unless you buy more placements.

Creativity: A Vital Element

When you advertise on TV, your commercial is not only competing with other commercials, it's also competing with the other elements in the viewer's environment as well.

The viewer may choose to get a snack during the commercial break, go to the bathroom or have a conversation about what they just saw on the show they were viewing. Even if your commercial is being aired, viewers may never see it unless it is creative enough to capture their attention. That's why it's so important to consider the kind of commercial you are going to create...and how you want your audience to be affected. Spending money on a good commercial in the beginning will pay dividends in the end.

Don't Use TV Unless Your Budget Allows

Attempting to use TV advertising by using a poorly-produced commercial; buying inexpensive late night commercial time that few people watch; or just placing your commercial a couple times on the air will guarantee disappointing results. To obtain positive results from TV advertising you must have enough money in your budget to:

1. Pay for the cost of producing a good TV commercial.

2. Pay for effective commercial time that will reach your viewer at least 5-7 times.

Properly done, television advertising is the most effective medium there is. But it is big league advertising...and you shouldn't attempt it unless you have enough money in your budget to do it right.

If you're still attracted to TV, it's a good idea to call in an advertising agency for production and media buying estimates. Then, figure out what sales results you can expect. With such data, you should be able to reach a logical advertising decision.

Buying Television Advertising Media Time

There are many things to know and consider before buying a TV programming schedule. That's why, in most cases, using an advertising agency or a media buying service is recommended when advertising on TV. If these services are unavailable, find a TV representative that you can trust. Your agency or representative can help you select the programs you should advertise on in order to reach your market. Also, ask about "fringe" time, adjacencies and package plans.

When you are engineering your schedule, remember that repetition (or frequency) is a very important ingredient to use. Make sure your audience sees your commercial with the context of the programs you're buying. Ask for a commercial affidavit. Normally, it doesn't cost anymore and the station will provide you with a list of the exact times your commercial was run.

Other Considerations

For an effective and inexpensive way to get your message on the TV screen, consider using pre-prepared TV commercials that may be available to you through a manufacture or distributor you deal with. You can add your name and logo to the end of the commercial

for little or no cost. Look at cooperative advertising too. Many companies offer prepared advertising materials you can use and at the same time may pay for a portion of the advertising schedule.

CABLE ADVERTISING

Cable advertising is a lower cost alternative to advertising on broadcast television. It has many of the same qualities as broadcast television, and in fact, since it offers more programming, it's even easier to reach a designated audience.

The trouble with cable is it doesn't reach everyone in the market area, since the signal has to be wired instead of broadcast, and also because not everyone subscribes to cable.

If cable does reach a large part of your market, have an advertising agency investigate its cost or call the cable company's advertising sales department. Chances are the commercial time will be 10 to 20 percent of the costs of regular broadcast time.

Prior to opening your business you must decide upon the general price Level you expect to maintain. Are you going to appeal to
individuals buying in the high, medium, or low budget? Your choice of location, appearance of your institution, quality of goods
handled, and services to be offered will all depend on the customers you hope to attract, and so will your costs.

After establishing this general price level, you are ready to cost Individual items. Generally, the price of an item has to cover
the cost of the product, the other expenses, and a profit. Therefore, you will need to markup the thing by a certain amount to
cover costs and earn a profit. In a business that sells few items, total prices can easily be allocated to each item and a markup
immediately determined. With a variety of items, allocating costs and determining markup might require an accountant. In retail
operations, goods tend to be marked up by 50 to 100 percent or more simply to earn a 5% to 10% profit!

Let us work through a markup example. Suppose your company sells One product, Product A. The provider sells Product A for you for
$5.00 each. You and your accountant determine the costs entailed in selling Merchandise A are $4.00 each item, and you desire a $1
per item profit. What's your markup? The sale price is: $5 plus $4 and $1 or $10; the markup therefore is 5. As a percentage, it's
100%. So you need to markup Product A by 100% to produce a 10% profit!

Many small business managers are interested in knowing what Industry markup standards are for various products. Wholesalers,
distributors, trade associations and business research firms publish a massive variety of these ratios and business statistics.
They are useful as recommendations. Another ratio (in addition to the markup percentage) important to small businesses is your
Gross Margin Percentage.

The GMP is comparable to your markup percent but whereas markup Identifies the percent over the price to you of every product you
have to set the selling cost so as to cover the other expenses and earn profits, the GMP indicates the relationship between sales
revenues minus the cost of the item, which is your gross profit margin, and your earnings earnings. What the GMP is telling you is
that your markup bears a certain relationship to your sales revenues. The markup percentage and the GMP are basically the same
formula, together with the markup speaking to individual product pricing and GMP referring to this item prices times the amount of
items sold (volume).

Maybe an illustration will clarify the point. Your company sells Product Z. It costs you $.70 each and you decide to sell it for
$1 per cent to cover costs and gain. Your markup is 43%. Let up state you sold 10,000 Merchandise Z's Last month thus producing
$10,000 in revenues. Your cost to purchase Product Z was $7000; your gross profit margin was $3,000 (revenues minus cost of
products sold). Additionally, this is your gross markup for the month's volume. Your GMP will be 30 percent. Both of these
percentages use the same primary numbers, differing just in branch. Both are used to establish a pricing system. And both are
published and can be used as guidelines for small businesses beginning out. Often supervisors decide what Gross Margin Percentage
they'll need to earn a profit and just go to some published Markup Table to discover the percentage markup that correlates with
that margin requirement.

While this discussion of pricing might appear, in some respects, to Be directed just to the pricing of retail product it could be
applied to other kinds of companies too. For solutions the markup must cover selling and administrative costs as well as the
direct cost of doing a specific service. If you're producing a product, the costs of direct labor, supplies and materials, parts
purchased from different issues, special tools and equipment, plant overhead, administrative and selling expenditures must be
carefully estimated. To compute a price per unit needs an estimate of the number of units you plan to produce. Before your mill
gets too large it would be smart to consult an accountant in a cost accounting system.

Not all items are marked up by the average markup. Luxury articles Will require more, staples . For example, increased sales
volume from a lower-than-average markup on a certain thing - a"loss leader" - may bring a greater gross profit unless the price is
reduced too much. Then the resulting increase in earnings won't increase the entire gross profit enough to compensate for the
minimal price.

Sometimes you Might Wish to market a certain item or service in a lower Markup in order to increase store traffic with the hope of
increasing sales of Regularly priced product or generating a high number of new support contracts. Competitors' costs will also
govern your costs. You cannot market a Product if your competitor is greatly underselling you. These and other Factors Can cause
you to change your markup one of items and solutions. There is no magic Formula that will work on each item or each service all of
the time. However, You should remember the general average markup that you want to make a Gain.

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