Advertising rates?

How do they actually calculate advertising rates? I know that on PBS, a few seconds can run you thousands of dollars, and massive billboards can range from $600 to $500, and so on...

Can someone break down how realistic pricing is even determined? For instance, how do they decide that running an ad on a billboard for just one day should cost exactly $200 or $500???

Also, I wanted to ask—what’s the most effective way to advertise? Say, if you were trying to market a subpar product

Pricing is its own discipline, involving a whole toolkit of different techniques and methodologies. Which method works best really just depends on what you're selling. But I don't think that’s actually what you’re asking, so rather than getting bogged down in the weeds, let me just tell you this: market prices exist because the market is willing to pay them.

Once you factor the cost of advertising and promotion into your product calculations, you'll see exactly how much they drive up your price tag—either in the short term or the long term—or how aggressively they eat away at your margins. That's the data you need to make actual business decisions. Whether you double down on the ads or cut them entirely.
In my experience, the products that fly off the shelves are the ones people actually see advertised. Retail customers
go looking for them, and store owners do the same.

Ideally, you don't want to blow a fortune on marketing that fails to pay for itself through profit.

But we're starting from the wrong end here.

The real starting point should be a solid business plan. Something detailed and exhaustive. If you haven't drafted a business plan, conducted a thorough market analysis, and clearly defined your target customer base, you shouldn't even bother venturing out. You could spend two full semesters just working on that.

Regarding advertising costs... Marketing agencies pull in a portion of their revenue by brokering ad space in magazines, newspapers, radio, and television. Usually, anyone can jump into this. You just give the LA Times a call, ask what their rates are versus their agency discounts, and then you flip that space to your own clients with whatever markup you decide. Say you snag a ten percent discount on a slot—you can bake in as much margin as you think is reasonable or have calculated works.

However, the real money for an agency comes from account management. You fight to land a contract with someone like BMW USA, and then you handle all their creative work, producing their radio spots, TV commercials, and so on.

At the end of the day, the actual price of advertising is whatever the market is willing to pay. You might calculate that a product should cost "X" amount, which feels like a fair price to you because you've accounted for all your overhead and profit margins, but if the market isn't ready to bite at that number, you're stuck. That means you need to adjust your pricing, not expect the market to change its mind.

dejoo said:I get it isn't, but there has to be some kind of formula used to calculate the price of a billboard...

It depends heavily on location and slightly less on which agency owns the space. That said, your estimates for both billboards and TV spots are way too high. A two-week run for a billboard—which is usually the minimum booking, not just a single day—averages out to about $667. You might find some subpar spots for 1500, while prime, high-impact locations can hit $1000. Don't forget you still have to factor in the printing costs; if I recall correctly, that’s roughly $167 per board.

Even a one-second spot on PBS during peak hours won't come close to costing several thousand dollars.

Look, you absolutely have to build out an advertising strategy and actually nail down your target market. I mean, sticking to TV commercials isn't always the winning move.
Maybe some web banners?
Local newspapers?
Or even print ads in those papers?

blowUP said:You have to be able to weigh and value the actual ROI of any given media outlet.

Right. Whoever actually cracks the code on a formula for that will be walking away with a Nobel Prize winner trophy.

dejoo said:What’s actually the best way to market something? Say, if you have a subpar product...

TV 👋

We’ve got this local ad running for a shop around here, and honestly, it works—it's driving enough foot traffic that people actually know where to turn. My mom told me we’re looking at pulling in $333 a year, which is just straight-up ridiculous..
What would a realistic monthly rate even look like?

It really depends on how big we're talking and where you're looking, so maybe throw some more specifics my way

but if you're looking outside of a place like Chicago, you're probably looking at roughly $33... monthly for the bigger ad placements, so it’s somewhere in that ballpark