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What Are the Different Methods of Selling TV Advertising?

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  • Written By: Alex Newth
  • Edited By: Angela B.
  • Last Modified Date: 02 November 2016
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TV networks thrive and survive on advertising, so selling TV advertising spots is a prime concern for TV executives. There are three major techniques networks use for selling TV advertising, regardless of whether the network is small or large. One of the most common forms of selling advertising is bulk selling, in which the network will sell many different spots for one commercial. In an advertising auction, the network will have an auction during which people or businesses bid for certain time slots. Another method networks use if no one is buying advertising time is to reduce the cost until someone decides to buy some time.

The most common method for selling TV advertising is selling bulk packages in which a business buys many different time slots at once. TV executives like this method, because they are getting paid for showing the commercial several times and they can fill up a lot of slots at once; businesses like this because it is cheaper per commercial than buying a single advertising slot. Depending on what the business is willing to spend, the bulk package will have different time slots. Most bulk packages give the business a mix of prime advertising times and weaker times, like in the morning or late at night; businesses on a budget can buy packages containing only weaker times, while more powerful business can secure multiple prime spots by buying them as a package.

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Selling TV advertising at auction is another method TV executives use to fill up advertising time slots. As with any other auction, the network lists a time slot and businesses bid until a winner is declared. This method can yield a high profit or a low one. If businesses compete, then the network can get more money from the time slot; if they do not compete, then a time slot can be sold at a drastically reduced rate, which happens most often with non-peak times.

If no one is buying time slots, then TV networks begin to lower the price of each time slot. This method of selling TV advertising is normally done in desperation when no one is buying advertising time and the network requires revenue. The network will continue lowering the prices until a business decides to buy advertising time. Unless the TV network is failing or has few viewers, this selling method is generally temporary and prices return to normal once the selling slump ceases.

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StarJo
Post 4

My friend and I opened up an arts and crafts store in town last year, but we didn't have enough money to buy a television ad. We always thought it would be so cool to shoot our own commercial and be shown on TV, but we knew that it would cost way too much.

After six months of being in business, we had saved up a little money. A friend of ours told us that the local TV station was having trouble selling ads and was offering certain time slots at a really low rate.

We were able to purchase the slot with only half of the money we had saved up. I decided to keep an eye out for cheap slots like that from then on, and we have been able to promote ourselves with this method.

cloudel
Post 3

@seag47 – I can just picture those dealership owners in a panic because another business outbid them on the spot they wanted. This probably drives them to spend even more money on advertising than they had planned!

I kept the fact that redundant commercials are very annoying in mind when deciding what type of package to purchase for my business. I decided to buy one slot during a show with high ratings, one during a soap opera, and one around 7:00 in the morning.

I have seen my business increase since I started advertising on TV. I think that not hammering my potential customers over the head with my ad, I was able to catch their interest.

seag47
Post 2

I don't see how local car dealerships keep from going bankrupt with all the advertising they do! They must be paying high prices for competitive time slots, because I see these ads over and over during my favorite shows that run from 7:00 to 9:00 p.m.

Some of the dealerships run the same ad late at night and in the morning. I get really tired of seeing them so frequently, but I can't deny that I am familiar with their company after all this exposure! I even have the phone number of one dealership memorized, and I never intend to use it!

OeKc05
Post 1

That is a pretty cool method of selling ads. I work at a newspaper, and we would never be able to generate a profit by auctioning off ad space! We have trouble selling them even at a reduced rate sometimes.

I have never had a reason to advertise on a TV station, but I have always wondered what their prices were like. This article clears up a lot of questions I have had.

One thing I was curious about was how sales reps for TV stations were able to make so much more money than I can. If they are receiving commission off of auctioned ad space, then I see how this is possible. I would imagine that primetime ad spots can sell for a pretty high price.

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