Friday, 28 May 2010

How much should a radio advert cost ?

I was having a bit of a nostalgic trip looking through some memorabilia from the days when I worked at Essex FM in the late 1980’s. I was a part of the original ‘Creative Team’, a department set up to help the station’s advertisers adopt great radio commercials for it’s advertisers. At the time Metro FM’s commercial production department was very well-known for it’s quality, award winning output and the management of Essex FM wanted The Creative Team to be just as successful.

It was an extremely exciting time. Essex FM invested in some superb studio facilities and staff and it wasn’t long until the revenues rocketed and the walls became adorned with award certificates.

My nostalgic trip included finding an old production rate card from October 1988. I thought I would share some of the charges with you.

For a basic one-voice radio commercial with or without library music: £85.00

Each extra commercial made in the same session as above: £65.00

Sound effects each: £10.00

Each additional voice: £20.00.

Naturally, voice over fees were considerably lower in those days. But strangely enough, 22 years later there are some individuals now charging less than £85 to make a radio ad. OK, the kit needed to create a radio ad has changed massively over the years, but how on earth does a business/individual survive charging these kinds of fees ? AND what kind of commercial are you going to get for this kind of money ?

In addition to these low costs, I know for a fact that some radio stations are massively subsidising their client’s commercial production costs just to get them signed up on air. On one occasion, I was in a meeting with a prospective client who told me he was paying a tads under £200 for a 2 voice commercial that was running on about 8 radio stations. If you know the minimum Equity ISDN rate for a standard sized radio station, do the maths now. On another occasion, I heard a radio station offering a client as many commercials as he wanted for less than £300.

It may feel a good incentive to dangle a carrot or two in front of a prospective client, but this kind of practice will inevitably cause problems in the future. A radio station simply cannot sustain charging these prices for ever. In the future, when the station wants to start charging ‘proper’ money for commercial production, the client, who is used to paying low costs is going to get mightily pissed off and dig his heels in.

Not only that, the whole value and quality of commercial production will go down the plug hole. The Radio Commercial is the jewel in the crown of radio advertising. It is the most vital component the whole process, yet it’s importance is being diminished for the sake of undercutting someone else. I’ve been in this business for coming up to 30 years and believe me, on so many levels, cut-price commercial production never ever works.

But undercharging is just one part of the story. In recent weeks, my company Airforce has picked up a number of briefs because the client has been presented creative that’s way too expensive.

Sure, I accept initial ‘set up’ prices like music composition will involve sending out a higher-than-normal invoice and most clients accept that. But when you go in with something that goes beyond that, the shine on the presented concept starts to fade. In a recent meeting a client said to me words to the effect of: “I loved the idea the station presented, it was terrific. But the margin on the products I sell are very low. I would have to sell hundreds of XXXXX’s to recoup the investment I had made in production and airtime. And even if radio was successful, I would never recoup my money”

I had a look at the concept that was presented and yes it was a good idea. But obviously no thought or research had been put into the market sector the client was in. My company subsequently won the production gig because I was asking for nearly half the price for a creative strategy that was more appropriate to the scale of the client’s business and objectives.

Last week, the same thing happened again. Twice. But in all cases, there was no undercutting, it was just a matter of being realistic.

I think most clients understand the value of commercial production and are willing to pay for something good. Many brands and commercial producers people have been very successful by adopting this model. But selling production for little-to-no profit, below cost price or presenting something that’s way too big ? How does that help everyone involved ? And what’s the point of doing it ?

John Calvert.

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