Production costs for TV ads jumped sharply in 2011 after being nearly flat in 2010, according to a new survey from the American Association of Advertising Agencies.
The average cost to an ad agency to produce a TV commercial (before any commissions or other markups) in 2011 rose 7% to $298,000 compared to the prior year, per the 4As 2011 Television Product Cost Survey. Cost increases for the production houses doing the work were up even higher -- with an average hike of 13% to $242,000, while their markup inched up just 1%.
The agency trade group said this year’s survey was based on cost data supplied by 10 agencies for 506 national commercials of varying length.
Looking at just the 30-second spots -- about 60% of the ads analyzed -- the cost bump was 9%, to an average cost of $354,000.
On-location shoots appear to be the dominant approach, per the survey. Some 82% of the 30-second spots analyzed for the 2011 period were shot on location. By comparison, about two-thirds of them for both the 2010 and 2009 periods were shot on location. The rest were either shot in the studio or some combination of studio and location.
According to the survey, ads are also taking longer to shoot. On average, location spots took 11 hours to shoot -- up 5% from 2010 -- while studio commercials took 24% longer to shoot at more than 13 hours. Combination shoots took 12% longer, or more than 14 hours.
The average director’s fee for a 30-second unit was $21,000, or 5% higher than in 2010, while talent costs shot up 19% to an average $19,000.
It became a lot pricier to produce ads in a handful of categories, including apparel, financial, retail, soft drinks, snacks, office equipment and computers -- all of which showed 50%-plus year-to-year spikes in production costs. The beauty, fashion and cosmetics categories showed the biggest drops -- about half as much to produce ads in 2011 as the year before.
The 4As has analyzed commercial production cost data for more than two decades. It packages most of the data in annual reports that are for sale. An executive summary of the 2011 data is posted on the organization’s Web site.