Project your audience. The cost of TV advertising is determined by the size of your audience. However, for a new show, no such data are available. Instead, broadcasters rely on sophisticated research that is based on prior viewership of similar shows, such as a police drama or situation comedy. Accurately forecasting the audience upon which your advertising rates will be based is crucial, because if you fail to deliver the audience numbers, you will have to provide rebates to advertisers based on your original assurances.
Select your day part. TV programming is broken down into nine day parts, explains Los Angeles City College. They are early morning (6-10 a.m.), morning (9 a.m. to noon), afternoon (noon to 4 p.m.), early fringe (4-6 p.m.), news block (6-7 p.m.), access (7-8 p.m.), prime time (8-11 p.m.), late fringe (11 p.m. to midnight) and overnight (midnight to 6 a.m.). Prime time, morning and early fringe command the highest advertising rates.
Select your audience based on age and sex. For the creation of advertising rates, TV viewership is broken down into basic demographic categories. They include adults 25-54, men 25-54, women 25-54, adults 18-49, men 18-49, women 18-49, adults 18-34, men 18-34 and women 18-34. The younger your audience skews, the more your advertising is worth. For major national marketers such as beer, sports or entertainment, the holy grail is men 18-34, because as a group, they spend the most on discretionary expenditures such as beer, movies or travel.
Create your rates. There are two basic measurements of advertising rates, explains The Museum of Broadcast Communications. One is cost-per-thousand, known as CPM. This refers to the cost to reach 1,000 viewers. The other method is cost-per-point, known as CPP, which means the cost per ratings point. A ratings point is defined as one percent of the 94 million U.S. homes that have TV sets. If your program achieves an average prime-time rating of 11, that means it has reached 11 percent of homes with TV or 10,340,000 homes. However, major advertising agencies and marketers prefer the cost-per-thousand metrics because it allows for apples-to-apples comparisons across media platforms, such as TV, radio, magazines and newspapers. If your show draws 10 million viewers and your CPM is $10, that means your standard 30-second commercials will sell for $100,000.
Exploit each of the two fundamental market channels or selling periods. Advertisers buy TV time according to two models. Each spring, explains The Museum of Broadcast Communications, TV networks and other media outlets, such as cable channels, offer advertisers the right to buy bulk commercials at reduced rates -- before the shows begin to air in the fall. That is known as the "upfront" market. In return for committing to a full season, in advance, your advertisers receive a lower rate. As a result, many hot new shows sell out their entire inventory of available commercials during the upfront season. Any commercials not sold during the upfront period are then sold in what's called the "scatter" or "spot" market. Those transactions begin just before the new shows start to air and the commercials are sold at a higher rate. By either measure, once the entire inventory of a show's commercials are sold, no additional advertising is available.