Advertising Costs

Advertising can be a crucial element to a business’s success.  While it may be easy to tell which forms of advertising are more expensive comparatively, the overall total costs are not common knowledge.  Business owners need to understand the costs and benefits of the different mediums of advertising and decide which ones are the best fit for the business.  Four common forms of advertising used by small businesses are magazine, newspaper, radio and television.  Each will be discussed more thoroughly in order to give a better understanding of which form of advertising can be more advantageous to your small business.

Magazines are a very popular form of advertising and Businesses can advertise in any and all magazines. The ones we will focus today are: Small Biz Weekly an edition of Business Weekly, Brazos Family and Health, and 12th Man on Campus.  The cost of advertising varies depending on the coverage of the magazine so these 3 magazines were chosen to portray a concentrated market, a medium sized market, and a national market.

The national market magazine that is for entrepreneurs and small business owners is called Small Biz and it is an edition of the nationally known magazine, Business Week. The Small Biz magazine for entrepreneurs has a circulation of 675,000 subscribers and is distributed in every state in the U.S. The smallest spread in the magazine, being 1/3 of a page, prices for $26,200 and if you want all color it is about $29,700. The average spread that most companies purchase is the ½ a page spread and it is priced at $31,400 and if you would like all color, it would be all the way up to $46,400. The most expensive page is the full page spread and can cost a pretty penny. The price range, depending on the color, is from about $50,200 to $74,300. The biggest method to get your company noticed is to place it on the cover. The two cover spread is a 20% premium and goes for $178,320. While it is the most expensive, it can bring name recognition and a familiar face to go along with it. The Small Biz magazine also has banner ads for the internet where you can place your ad on the Business Week website.  The average size for the internet ads is the 120 x 60 and it is priced at a whopping $130. The subscription is not free and can vary depending on how long you would like the subscription, to a discount with a one month free subscription. Business Week magazine is great for all even if you’re just thinking of beginning your own business.

The medium market to advertise your company would be the Brazos Family and Health magazine. It is a free subscription magazine for all to enjoy and learn from. It has articles about health and fitness, parenting, safety, education, social events, and even family life.  The smallest sized ad would be a business card size ad and would go for $250. The quarter page is the most commonly purchased and it is $450.  The ½ a page is $750 and the entire page spread can range anywhere from $1,100 to $2,000. The Brazos Family magazine distributes 2,500 copies by direct mail and retails the rest to many surrounding towns outside the College Station/ Bryan area. It is sent to Hearne, Huntsville, Caldwell, College Station, Bryan, as well as, Navasota, Madisonville, Brenham. This magazine is great for business owners with a family and who would like to be involved in their community.

The 12th Man on Campus magazine is within a concentrated market and is located only in Bryan/ College Station area, specifically on the Texas A&M University campus. Along with the Brazos Family magazine, it is also a free magazine and distributes anywhere from 8,000 to 9,000 copies per issue. They have 70-75 stands located anywhere from the Texas A&M Campus to Double Dave’s, and even some apartments like the Cambridge. For a quarter of the page for your ad would be around $300 and would increase with the size of the spread. The average spread is the ½ of page and is $750. The full page for advertisements is $1,150 and is also the cost for one of the three covers per issue. This magazine is good for students to educate themselves on companies and what is going on within their school and their community.

Another form of advertising that almost everyone has seen is newspaper advertising.  Newspaper advertising is very common and is usually the cheapest form of advertising.  There are both strengths and weaknesses to newspaper advertising.  Some of the strengths include reaching a large audience and being very successful in local markets.   While some of the weaknesses include high competition of other advertisements, the probability of only the headline being read, and poor reproduction of images.  As far as costs are concerned, it varies depending on the size of the advertisement, the market the advertisement will reach, and the contents of the advertisement.  To give a good idea of the different costs of advertising in different sized markets, three different newspapers that target three different markets will be discussed in detail.

The first newspaper we will focus on is Texas A&M’s own Battalion.  This newspaper targets the students of Texas A&M University.  There are approximately 22,000 copies of the battalion printed each day Monday through Friday.  The Battalion also estimates that its repeat reader rate stands at about 3 reads per paper.  For example, when someone reads a paper in class and leaves it on the desk and then the next person that comes in early they will pick it up and read it as well.  The cost of The Battalion is free and is distributed throughout the Texas A&M campus via newsstands.  Advertising in the Battalion can cost anywhere from $12.50/a day for a small 1×1 advertisement to $1,686/a day for a full page color advertisement.  The average advertisement purchased in The Battalion is 2×3 and is $75/a day.  Customers who purchase this advertisement can also repeat the advertisement within 5 business days for a discounted rate of $58.50.  Two other very common sized advertisements are a business card sized ad which is a 2×2 and is $50/a day and a 3×5 advertisement which is $187.50.  One component that also changes the price is whether you want a color advertisement.  To print with one color the cost is $125, for two colors the cost is $200, and for three the cost is $300.  The Battalion also offers a Tuesday Super Saver deal where businesses can advertise coupons for their businesses up to four times for $220.  One other form of advertising the Battalion offers is insert advertising.  This means businesses can print up their own advertisements and then pay to have them placed in each Battalion.  The Battalion charges $75/per 1,000 single sheets, $95/per 1,000 sheets of four pages or more, and the minimum number of inserts is 5,000 and the maximum is 22,000.  The Battalion and campus newspapers like it are good places to advertise if you are targeting the 18-24 year old population.

The next newspaper is the Bryan-College Station Eagle.  This newspaper targets the population outside of Texas A&M students and is distributed through subscription, corner stores, and grocery stores.  The Eagle has 22,000 subscribers and also prints an additional 2,000-3,000 copies Monday through Friday and an extra 6,000 on Sundays to be placed in stores.  The Eagle estimates its repeat reader rate at 2.5.  Unlike the Battalion, the Eagle is not a free paper.  A year subscription cost to the Eagle is $120 and a single issue is 50 cents Monday through Friday and $1.25 on Sundays.  Advertising in the Eagle Monday through Friday can range from $16.80 to $30, and on Sundays or Holidays the range is from $17.98 to $31.95 per column per inch.  The rate you pay depends on how much money you are going to spend on advertising which can be anywhere from $0 to $400,000.  The Eagle offers a discount program where the more you spend on your advertisement, the less your daily rate is.   For example, if you spend $10,000 on advertising your rate is lowered from $30 to $23.40 and you can also get a 5% discount on color in your advertisement.  Color in your advertisement Monday through Friday will cost $300 for one color, $375 for two colors and $450 for full print color.  Sunday and Holiday color are around $25 to $50 higher.  The Eagle offers frequency discount rates to encourage repeat advertising.  You receive a 25% discount on your second ad placed, a 50% on the third, and a 75% discount on the fourth.  They also offer a special rate for advertising only on Monday and Tuesdays which is $17.00 per column inch.  Like the Battalion you can also use preprint advertising and this will range anywhere from $40 per one thousand for single sheet advertising to $78 per one thousand for thirty-four pages of advertising.  The Eagle is a great place to advertise if you want to target the population outside of Texas A&M University in the Bryan-College Station area.

The final newspaper we will concentrate on is the Houston Chronicle.  The Chronicle’s market is much larger than either two of the other papers reaches and therefore will be much more expensive to advertise in.  The chronicle is the 7th largest newspaper in the country and the largest in Texas and is also the second most read newspaper among top markets in the country.  The Chronicle currently has 633,800 subscribers and prints additional copies to be placed in convenience and grocery stores.  The Chronicle estimates that its reader rate is 2.2 million weekly and 1.2 million on Sunday alone.  Like the Eagle the Chronicle is not free.  The costs for a subscription to the Chronicle are $18/month or $216/year.  A single issue of the Chronicle costs 75 cents Monday through Friday and $1.75 on Sunday.  Advertising in the Houston Chronicle is more expensive because of the mass market it targets.   The minimum cost of advertising in the Chronicle is 75 cents whereas the maximum can extend to thousands of dollars.  The Chronicle also has different prices for different days, different sections and the amount of frequency (4 times repeated to 72 times).   We will take a medium sized retail advertisement that uses a combination of color and black and white to get an idea of the price of an average advertisement that most businesses would use.  On Monday and Tuesday the price of the advertisement could range from $101-$189 to place the ad and then you multiply that rate by the size of the ad you want.  For instance, if you want to place a 3 column by 10’’ advertisement that repeats 4 Mondays you would pay $189 times 30 total inches which would make your total $5,670.   The Chronicle has different rates for different days such as Wednesdays and Fridays ranging from $101-$207 and Thursday’s tending to be cheaper ranging from $95-$207.  The Saturday rate ranges from $101-$254 and the Sunday rates are the most expensive ranging from $202-$316.  Since the Houston Chronicle has so many different options and rates for advertising a helpful tip could be to advertise in the section that corresponds with your advertisement.  Along with advertising in Main news and Sports the Chronicle offers specific sections such as: Star-fashion and social section, Flavor-food and cooking section, Preview-entertainment, Dining Guide-Restaurants and  night clubs, Neighborhood News-community specific news, and Zest-which targets the cultural and artistic community.  Some of these sections are only offered on certain days, for instance Preview, Dining Guide and Neighborhood News are published only on Thursday, Zest is only on Sunday, and Flavor is only on Wednesday.  By placing your advertisement in the related section on the publishing day you can maximize the number of people that will be interested in your business.

As we can see, newspaper advertising is a good way to be able to customize the message you want to send to potential customers.  Whether you can only afford a small business card sized advertisement or a full page color spread an important thing to remember is to focus on your target market to be able to place a successful advertisement.

Another major form of advertising utilized by small businesses is television advertising.   In general, the costs for television advertising varies depending on whether the ad is local or national, the time slot the ad is aired, and the program the ad is aired on. A Houston television station and a Brazos county television station were used to derive a cost comparison.

A major television station in the Brazos Valley area is KBTX.  KBTX reaches out to 210,980 residents over 17 counties.  The costs vary depending on the part of the hour the ad is run.  For instance, at the top of the hour the minimum cost for a 30 second spot is $105. At the bottom of the hour, the minimum cost is $120. Another factor in costs is which program the commercial airs on. For example, to run an ad during the Oprah Winfrey show from 4-5pm, it would cost $950-$1300. A commercial shown during primetime would run anywhere from as low as $200 to as high as $1400.  Typical evening shows average range from $400-$500.
The Houston station used for comparison was KTRX, which is affiliated with ABC.  KTRX services the Houston metro area, which include about 2 million households.  KTRX averages 100,000 households who watch Good Morning America. The 5 o’clock news generally averages 120,000 households and the 6 o’clock news averages 130,000 households each day.  These numbers are more than half of the total population that the Brazos Valley KBTX reaches.  At KTRX, the costs are broken down differently.  There are three kinds of ads: network, local, and national. He explained that they have no control over network advertisements, such as an ad promoting ABC World News Tonight. They only have control over local and national ads.

An overnight spot on KTRX between the hours of 1-5am could start as little as $100. However, a primetime slot, such as Grey’s Anatomy, could start at $20,000.  For a cost conscious small business owner who would still like to utilize television advertising, a run of schedule (ROS) might be a more financially viable option. This is where the ad could run at any time of the day; although more than likely it will be at night. These spots can be sold for about $250.
For a more straight forward cost comparison the costs of a commercial running at the same time on the same show aired in College Station can be done.  For example, a commercial that runs during Good Morning America in College Station, TX would cost around $150-$200. In Houston, TX, the same ad would cost approximately $1000. And in New York, it would average around $3000.

Another common form of small business advertising is radio advertising.  Small business owners may be drawn to these forms of advertisements for various reasons, but, some of the more obvious include cost efficiency of mass media, the ability to fit in more information with words in 30 seconds than one typically can on in print media with an advertisement of similar cost and the situations in which people listen to the radio, which differs from television, because people are less prone to change the radio station while driving as they are of watching TV. in their living room.  Another reason small business owners may be drawn to radio advertising is the ease of the process.  A small business owner has to write or draw up any print media ad he intends to print or create and produce a commercial for the television.  With radio, however, this is not the case.  The owner simply has to communicate with the radio station his intended message and the radio station will produce the commercial for you, typically for free, or have one of their own DJs record the commercial for you, so that you get not only a commercial but an endorsement from a radio personality.  As an example, Sigma Pi Fraternity placed a radio advertisement in August of 2008.  The ad was for 30 seconds and the intended message was to promote the rush schedule for the fraternity in an attempt to draw larger numbers that week.  After the payment was made, Sigma Pi gave the radio station the schedule for the week and the station took over and created an elaborate ad filled with music, sound effects, and a DJs voice.

Once the decision to place a radio ad has been made, there are several things one must consider: What is the intended market, which radio station to use, what is the scope of your business, what time of day do your intended listeners have the radio on?  Some of these answers are easier than others and for the really tough ones that you can’t find the answer to you can call the radio stations, all of which have an advertising department and some have special sales representatives that they will assign to you and your business.  To get an idea of the different advertising variables and rates I have contacted four different radio stations to get quotes on 30 and 60 second radio advertisements.  One AM and one top 40 FM from College Station, TX and one of each from Houston, TX.  As one might expect, the rates contrast each other quite a bit and there are several reasons for this.

In College Station, TX the only top 40 radio station is KNDE 95.1 FM.  The rates it charges are nearly identical to the rates charges at WTAW 1620 AM.  For the typical 30 second ad the rate is about $25 per play and the typical 60 second ad goes for about $35 per play.  The rates vary with different time of the day at which the ad will be played, which you determine ahead of time with the radio station, but the difference is very low.

In Houston, TX the main top 40 radio station is 104.1 FM KRBE.  KRBE has a rate scale depending on the different times of the day.  For instance between 6 a.m. and 10 a.m. a 30 second ad costs $500 and a 60 second ad costs $600.  Between 10 a.m. to 3 p.m. the costs drop to $325 and $400 for the 30 or 60 second ad, respectively.  Prices jump back up for the late afternoon from 3 to 7 p.m.  $450 for the 30 second and $575 for the 60 second.  From 7p.m. to midnight the rates drop to $75 and $100 for the 30 and 60 second ads.  A big talk-radio station in Houston is AM 740 KTRH.  There rates are similar to 104.1 KRBE’s.  They do not have a scale and instead provide a price range with 30 second ads ranging from $300-500 and 60 second ads from $500-700.  Most likely it follows a similar pattern to 104.1’s rate scale.

The reason the pricing is so much more expensive in Houston is due to the bigger market in Houston as compared to College Station.  According to the 2000 census, Houston’s population was nearing 2 million.  With that in mind, the radio stations from Houston also reach surrounding cities, bringing the potential listenership much higher.  College Station, in contrast has about 68,000 residents and Bryan nearing 66,000.  While the Houston area radio ads cost more, the cost per potential listener is much cheaper.  A potential down side of this is that because Houston is so spread out, having an advertisement on Houston radio may stretch beyond the geographic scope of your business which could drive up the per person costs per ad

Another important note, while the numbers shown do not emphasize this point, typically AM radio stations are a bit more expensive to advertise on than are FM stations.  This isn’t show as well here because 104.1 KRBE and KNDE 95.1 are the biggest FM stations in Houston and College Station so they can keep their rates higher because, if you’re not listening to talk radio, there is a good chance your car is tuned to one of these stations.  The reason AM stations can charge more is due to the demographics.  It is typically middle aged people who listen to the AM stations, specifically talk radio, while the younger people, teens to mid-twenties, that stay tuned to FM music stations.  There is much more purchasing power in the middle aged population than there is in the younger populations.  AM listeners tend to have secure jobs, be home owners, have money invested in markets, and have more money saved away.  This is also why you may hear an ad for an investment firm on an AM station but not an FM station.  This information, however, goes both ways.  An advertisement for a new McDonald’s or Haunted House for Halloween would be much better served being played on the FM stations than AM stations.

Finally, the time of day significantly drives the price rates, especially in bigger cities.  It is clear, by looking at the scale provided by 104.1 KRBE that the peak prices are at peak drive times.  Morning rush hour demands the highest costs for ads and post-work rush hour is close by.  While at one time in our Nation’s history, families used to gather around the radio to listen to it in the evenings, this has been replaced by television and radio rates are much lower in the evening hours.  While this is somewhat reflected in College Station the rates do not vary nearly as much.  This is due to the lack of big city rush hour traffic and short drive times.  The time of day insignificantly effects the amount of time on is in the car and listening to the radio.  This double bell curve trend in big cities can be mitigated by the popularity of radio shows.  During midday AM 740 airs Sean Hannity and Rush Limbaugh.   While they may be somewhat controversial shows, they tend to draw a large dedicated listenership which allows AM 740 to keeps the rates a little bit higher while either of these shows is on.

Overall, radio advertisement can be relatively inexpensive and efficient.  Because people are more unlikely to ignore a radio ad than most other forms of advertisement, radio ads bring with them a high exposure rate.  Radio ads also bring a form of endorsement through DJs.  If the message can be communicated well without a visual then a radio ad may be the way to go.

There are several routes small business owners can take to small business advertising.  Budget, target audience, scope, and best means of transmitting information are all factors that taken into consideration when placing an advertisement.  Advertising is a great way to spread the word of your business; the option is up to you.

 

Works Cited

http://www.businesstown.com/marketing/strategy-medium.asp

http://webadv.chron.com/house/house_m/mediakit/index.html

http://www.chron.com/banners/r/rates08/hc_retail_rates_p2.html

http://www.thebatt.com/media/paper657/documents/t545ltx5.pdf

http://www.powerhomebiz.com/vol118/admediums.htm

http://www.businessweek.com/

http://www.businessweek.com/smallbiz/

http://www.businessweek.com/magazine/news/articles/business_news.htm

 

 

 

 

 

 

 

 

 

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