Question

Topic: Advertising/PR

Cost Of Embedded Video Commercials

Posted by Anonymous on 4/29/2008 at 9:43 AM ET 50 Points
My company has recently started a network of sites that provide full length online video programming. We then sale advertising to organizations and agencies just as it is done on TV. We place the advertisers commercial into our program at specific break points

Can anyone help me with determining my pricing structure?

Our overhead is extreamly low as compared to traditional TV. Thus we want to be competitive but remain profitable. Thank in advance for your input.
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  • Posted by adammjw on 4/29/2008 at 10:55 AM Member
    You got 3 options :
    a/ cost + pricing
    b/ market pricing
    c/value pricing

    The first one is based on your costs + some margin.
    With market pricing you have to look at competitive pricing and set your price accordingly.
    The third one is hardest to implement as it needs proper evaluation of value you offer to your clients.
  • Posted on 4/30/2008 at 9:58 AM Member
    What do you mean when you say "full length"? :30? :60 or an hour infomercial?

    You've got stiff competition from sites like YouTube, where anyone can post video for free for a global audience. YouTube already has established traffic, although it's random. So to compete, you're going to have to prove you deliver a solid, targeted audience that fits the advertisers' demographic.

    Taking a cue from companies like Circle of Seven Productions in the book marketing realm (the inventor of the book trailer concept, essentially a book commercial), a graduated pricing model could be very attractive. The first tier should be extremely affordable and offer basic production and scripting plus a limited distribution/schedule. The next tiers could offer successive levels of enhanced production plus more distribution and/or a longer schedule.

    Low costs and low overhead don't really matter if no one's watching. The key to attracting advertisers is to be able to show that you have a solid audience of people likely to buy the advertisers' products. You haven't said anything about who your target viewer is, so it's hard to go deeper into who your best advertisers are or how to appeal to them.

  • Posted on 4/30/2008 at 12:09 PM Author
    GailMartin,
    Thanks! We in fact do have a captive target audience. We feature programs that target local school districts. Our programs feature events that are centered around sports, and the district at large. Thus we have the community that is served by the district and the students as well. In our case this means 200K+ community and 19K+ students. I welcome you feedback.

  • Posted on 4/30/2008 at 4:25 PM Accepted
    Media is one of those strange birds where the pricing is more dictated by the market and not your cost structure. The only way to be profitable is to sell as much of it as you can.

    Since you sound like a local-ish channel, you've got to be competitive with where the advertisers can also be. Why be on your site if i can get a better deal in the local paper, local radio, ad banner on local community site? So you have to stay within the normal bounds, and typically this is at a cost-per (CPM) benchmark.

    The CPMs can range from just a few dollars up to $40 for something like an ad that runs during an online TV program. You are going to be at the low end i'm afraid.

    If and when you start building metrics that show your audience is more engaged, better click-thrus, etc. THEN you can start commanding higher CPMs.
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