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A Guide to Advertising & Production Costs

COW Blogs : Chris Blair's Blog : A Guide to Advertising & Production Costs
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How much will that cost? That’s a question I’m sure every business gets almost daily. With some products, like a television or computer, the answer is relatively easy. Go online, find the model you want, compare specs and prices, and choose your retailer.


But for most things, figuring out the cost is much more difficult. From buying a car to getting a fence installed, the price can vary wildly based on factors too numerous to even think about.


So what does advertising cost? How about getting a video produced? What about having a website designed…or an interactive kiosk created…or…well you get the idea. There are no quick and easy answers, but there are some guidelines you can use for many types of projects.


Let’s look at websites. If you’ve ever gotten estimates for having one designed, the differences in price can be cavernous. I’ve seen website estimates vary by tens of thousands of dollars based on the same specs. How can this be possible? Some of the disparity can be attributed to differences in turnaround time, differences in how the site is programmed and built, the experience level of the designer etc. But more often than not, if there’s a huge difference between the lowest bid and the highest bid, it’s a good bet you’re looking at one severely underbid estimate and another severely overbid one.


Certainly there are many types of websites with varying levels of complexity, not to mention the growing need to build separate mobile versions. But for most sites, you could use the following guidelines to figure a range of what it should cost.


Good designers have hard drives filled with previous design templates along with pre-built code that doesn’t have to be programmed from scratch for every project.  So they can typically create several spec layouts in a couple of days, create a web template or develop style sheets in a few more, then build each page in about an hour or two each. 


So if you have a 50 page website you can estimate that most designers will spend two days creating spec layouts, four or five more building the web template or style sheet, then no more than two hours per page after that. Of course there would be pre-production time added in the form of meetings, along with some revision time, but it should take no more than 150-175 hours to build a fairly typical 50 page website. 


Most designers and programmers are going to charge you anywhere from $100 to $125 an hour, so using those figures, you could expect to pay in the $15,000 to $20,000 range for a 50 page website. Can you get a website that size done for less? Certainly, but if somebody tells you they can do a 50 page website for $1000, run away…..fast. Likewise, if you get a bid of $50,000 or more for a fairly standard 50 page website, that’s $1000 for each page! That would mean the designer is spending 8-10 per page, which in most cases is ridiculous.


Of course if a site has a lot of video on it or uses a lot forms or interactive elements, then certainly the cost can be higher, but just breaking down the amount of time that someone might reasonably spend on a project can help determine what something should cost.


A similar formula can be used for video. Based on the type and length of video, you can often use broad estimates to determine cost. For television commercials, we can typically get a good quality spot shot and edited in about 2-3 days of actual production. But there are always pre-production costs, including concepting, scripting, client meetings, talent searches, location searches and scouts, and prop or wardrobe shopping to name a few.


So add about 2 days of work for pre-production, and a good-quality television commercial comes in at about 5 days, or 40 hours of work. Using an average hourly cost of about $150, you could expect to pay $6000 for production, plus any talent fees, location costs (like renting space, feeding crew etc.), make-up artists, props and supplies etc. Add another $1500-$3000 for that and a nice-looking television spot comes in at $7500-$9000. Of course there are all kinds of things that can raise or lower the cost, such as needing lots of extras in scenes, needing experienced on-camera talent etc. The cost can go to $20,000 or higher very quickly when well-credited talent is needed. And network quality commercials can cost 10-20 times that, especially if you use union crews and talent.


Can you do commercials for less? Certainly! We’ve produced very nice commerials for around $3500 using volunteer talent, donated locations etc. But when you get below $3000, it becomes difficult to produce a television commercial that rises above the clutter of screaming pitchmen.


So how does that cost compare to a network quality commercial? A McDonald’s commercial was shot in our area a few years ago for a test launch. This particular spot aired in just three markets, yet they closed a local restaurant for three days, spent a full day lighting and  gelling windows, hired over 50 extras for two full days of production, and had a star of a CBS sitcom as the spokesperson. The extras alone cost over $50,000, and just feeding the cast and crew (probably more than 100 people) cost thousands more. They had to have spent over $250,000, likely more, for one test commercial!


Want further evidence of what network quality commercials cost? The Directors Guild of America considers a low-budget commercial to be: ”commercials whose total costs do not exceed $75,000 for a one-day shoot, or $150,000 for a two-day shoot or $225,000 for a three-day shoot.  No single day’s costs may exceed $75,000.”


So when people think spending even $20,000 for a television commercial is a lot of money, comparatively, it’s peanuts.


Of course commercials aren’ t the only video projects companies use. What about a corporate marketing video? You can typically get about 2-3 minutes of finished video shot in one day of well-planned shooting, and you can typically edit 2-3 minutes per day. So if you have an 8 minute video, you can reasonably plan on a total of 6-8 days of shooting and editing. Add in pre-production time, propping, location fees, talent costs, travel etc. and you could figure 80-100 hours of production time plus expenses and fees.


So using those numbers, a good starting point for a corporate video is about $2500 per finished minute. That rate can usually produce a simple but well-shot and edited piece. So a simple 8 minute video would likely cost between $20,000 and $25,000. Start adding in other things like big camera moves or animated graphics and naturally the cost goes up. Add in extensive travel or multiple locations and it can go much higher. Want experienced on-camera talent? Open up that wallet! Want custom or copyrighted music, get out that checkbook. The total cost all depends on what you think it takes to communicate your message. But bottom line, an 8 minute corporate video could cost anywhere from $20,000 to $200,000 depending on the factors above. But by knowing a starting point for what it takes to produce one, you’ll at least have a way to start figuring your budget.


On the flip-side of this issue is media buying. A common misconception in advertising is that it costs money to hire an agency to buy and place your media for you. I’m amazed at how many marketing directors and directors of communications are unaware that when we buy ad time, be it on television, radio, in the newspaper and often online, we get paid a commission discount from the media outlet. So if we place a $1000 radio buy, we get a percentage of that $1000 placement as our agency fee. The buy costs the client exactly $1000 and we don’t charge the client a penny for the work done in placing that media. Of course if an agency is handling a large ad budget, they’ll typically charge a monthly agency fee to cover research, client meetings etc. But it’s usually a small percentage of the total ad buy. The bulk of revenue comes from the agency discount, which costs the client absolutely nothing. What is it worth to a busy marketing manager or advertising director to take all that work off their plate when it costs them virtually nothing? Yet many small to medium sized companies continue to buy and place their own media because they’re either unaware of this, or unwilling to give up control over placement.


We have media buyers with years of experience placing media in all types of outlets, yet we’ve worked with companies who have recent college graduates making their ad buys! Does this make sense?


You can use basic forumlas like the ones above for just about any type of advertising related production work. It’s also easy to search union and trade group websites to find standard advertising industry rates for various work. I found the Directors Guild of America rates quoted above in about 5 seconds. Of course most companies aren’t willing to spend that kind of money producing their television ads, and for many that kind of cost doesn’t make financial sense.


But once you sit down and reasonably consider the time a project will take, coupled with project related costs for materials, talent etc. Figuring out what advertising costs becomes more manageable. But if you want your advertising to look and sound like McDonald’s, you obviously can’t expect to spend a tenth of what they spend on production and get the same quality product.




Posted by: Chris Blair on Nov 17, 2010 at 10:22:39 am MarketingProduction TechniquesThoughts & Musings
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