While the cost of television commercial production is widely known to advertising agencies and production companies, most outside marketing professionals especially for small to mid-sized businesses have very little idea about the costs involved. As with any advertising, the range is enormous between the lowest budget and highest budget examples. At the lower end, many or even most cable networks will offer “free” commercial production if a business purchases a certain volume of TV advertising. They build the costs of producing the commercial into the overall package pricing, which also results in almost always laughably amateur hour productions. The difference between typical local TV ads and national ones is like watching an NBA player take on a grade school kid. Examining the true costs involved in different types and levels of production is a great place to start when looking at how to budget properly, though.
For a local commercial, the business is often of local interest only, like an HVAC company, a dental office, a furniture store, or a restaurant. The biggest difference viewers will notice is the focus of local commercials on offering “deals” or mentioning pricing, specific services, and information. Put simply, local commercials create awareness, whereas national commercials reinforce brand power. Viewers probably don’t know about John’s HVAC, so the local commercial focuses on their commitment to service, quality, and affordability. Everyone knows Coca Cola, so the national commercial is just a reminder to “open happiness.” The biggest difference is creativity, which also impacts cost.
For a company to record an interview with the owner or a spokesperson, film some B-roll around the place of business, and edit a basic commercial together is a quick and dirty process. It can be streamlined and made in a cookie cutter fashion to convey the basic message without incurring many production costs. The crew needs are minimal, possibly involving as few as one or two people, but the resulting commercial is usually at best solid and professional work, at worst cheesy and amateur. The creativity involved is necessarily minimal because the budgets are generally tiny. For such a simple commercial spot, expect to spend anywhere from $1,500 to $10,000 depending on production value and professionalism.
For more creative commercial work, the focus will be on storytelling, branding, and making sure every shot is perfect. The DGA (Director’s Guild of America), of which I am a member, considers low budget commercial work to be $75,000 per day, up to $225,000 for a three-day production. Most national commercials are several hundred thousand dollars up to a few million dollars. Directors are typically paid anywhere from $10,000 to $50,000 per day of shooting, but many times that means $25,000 for a one-day shoot that also involves two weeks of prep and another week bidding on the job against other directors. Suddenly, $25,000 for a day becomes more like $25,000 for a month of work. One leading commercial producer says that the average budget of projects on which she works is $300,000, not including post-production or talent costs (both of which can be substantial).
In the end, you have costs between “free” from your local cable company and a few million dollars, but the main factor is the talent involved in creating the spot and the production elements required. For any budget under $10,000, frankly you should not expect any great level of creativity from the production company. At that rate, you are paying for a skilled videographer who brings his own creativity to the project in shot selection and framing, a professional editor who will choose the best possible takes from the videographer and arrange them in a great way, and whatever other professionals are needed for a straight-forward production (such as a hair and makeup artist, a lightning assistant, professional spokesperson, etc.). The final result should look wholly professional, of course, but you cannot expect a company to write a creative script for you, hire a creative director, find exotic locations, hire actors, a production design department, and complete post special effects.
The good news for most companies is they don’t really need a fully creative, high end commercial to advertise their product or service or location. They really need a polished, professional piece that gives viewers an idea who they are and what they do and does so in a way that doesn’t embarrass the business. Allowing a cable company to produce a “free video” for a business is frankly a large risk because you’re trusting them with your image and your company’s brand, so at least make sure to take a look at their sample work and demand a certain level of quality. Nothing could be worse than a business that looks like a fly-by-night operation because of poor advertising. We have cut local commercials for numerous clients of ours and done so inexpensively with solid results.