Why Ads Cost What They Cost

I know, looking at the statement, Why Ads Cost What They Cost, is a bit confusing.

Today I’m going to give you some insight on the pricing of advertising and I’m going to start with the next Republican Presidential debate.  CNN is hosting this event on September 16th.

According to an article from AdAge:

CNN is asking 40 times its normal rate for commercial time in the next Republican debate.

The cable news network is charging as much as $200,000 for a 30-second spot in the prime-time brawl taking place on Sept. 16, according to a media buyer. This is on par with the cost of buying commercial time in some broadcast prime-time series.

Typically, an average prime-time spot on CNN costs about $5,000, buyers said.

and

Much of the buzz can be attributed to GOP frontrunner Donald Trump, whose polarizing viewpoints, crass comments and unpredictability have made for compelling TV.

Fox News set a record earlier in the month with 24 million people tuning in to the first Republican primary debate of the 2016 election cycle, making it the most-watched cable telecast of all time, excluding sports programming.

In anticipation of a big audience, CNN is charging big bucks.

My wife and I are planning a trip to Michigan and we were looking at booking a room in Ann Arbor or Lansing.  But the weekend we selected are also weekends that the University of Michigan (Ann Arbor) and Michigan State (East Lansing) have home football games.  Most rooms were sold out.  The only ones I saw available were charging triple the usual rate.

Both of these are examples of the law of supply and demand.  Sometimes it is anticipated demand, but the supply of rooms, or of slots for commercials is a fixed commodity. 

I receive weekly updates on the inventory that we have available on my radio station, WOWO and it has been a pretty remarkable year.

For example, Fort Wayne’s Morning News with Charly Butcher has 150 minutes of advertising available each week during the 3 hours it airs Monday through Friday.  At the end of August, we were starting the month of September with 145 of the 150 available spots sold each week. And the same for October.

The rest of our daily primetime line up from 9am to 6pm weekdays is in demand too. 90%+ of all of the available slots for advertising in September and October was already sold out before the month began.

At WOWO we adjust our prices accordingly.  We don’t gouge people and charge 40 times our usual rates like the CNN example.  Not even 3x the rate like the hotel example.

Now, let me tell you why we are nearly sold out.  It is because of the results our advertising partners are getting.

Think about it.  If you give me $10,000 to advertise and you receive $12,000 in business back that month, that’s a better deal than the stock market. Especially since we have more control over risk and reward than you have in the stock market.

Next Tuesday I will share some of the results our advertising partners have received by using WOWO as an advertising partner.

And just because we are short on inventory, I have several additional ways to help you invite people to become your customer.  Contact me.