4As: Costs Rose For Spots; Agency Markup Came Down

Watching-TVThe average cost to an ad agency to produce a TV commercial (before any commissions or other markups) in 2010 increased by 1% to $278,000 compared to the prior year, reports the American Association of Advertising Agencies.

The agency trade group said this year’s Television Production Cost Survey was based on cost data supplied by 13 agencies for 849 commercials of varying length.

Of the 849 spots analyzed, 57% were 30-second commercials. The cost of producing 30s last year averaged $324,000, which was just a fraction more than the $323,000 average cost in 2009, per the analysis.

Two-thirds of the 30s analyzed for the 2010 period were shot on location, about the same percentage as 2009. The rest were either shot in studio or some combination of in studio and on location.



While year-to-year agency costs for commercial production remained close to flat, cost increases for the production houses doing the work were a bit higher, while their markup came down slightly. 

The 4A’s analysis reported that the average production company net cost to produce a 30-second commercial went up 11% to $215,000 in 2010. But their average markup was down 2% last year to an average 21%.

The average director’s fee for a 30-second unit was $20,000 last year, up 5% from the previous year, while talent costs shot up 23% to an average $16,000. The average cost to edit and complete an original 30-second commercial in 2010 was $57,000, 14% greater than 2009.

The cost of video finishing increased 26%, while sound recording and mixing costs increased 6%. Music costs were up (by an undisclosed percentage) and averaged $37,000 per spot.

By category, the cost of producing household product commercials increased the most -- more than 50% -- to an average $408,000 per 30. On the flip side, the two categories showing the steepest declines in production costs were soft drinks/snacks and auto accessories and supplies. The cost of producing commercials in both categories dropped by more than 50% to $200,000 and $186,000, respectively.

The 4A’s 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 2010 data is posted on the organization’s Web site. 

Next story loading loading..