Edit: Mind Blown. Seems like Television is just a series of advertising with shows and events sprinkled in between. I see it now but it never occurred to me to see it that way before
In: Other
There’s not a direct cause/effect here. Rather a network can charge advertising companies more to advertise during more popular shows. It’s why Super Bowl Ads cost millions of dollars.
So more people watching a show drives up ad prices which increases revenue.
Through advertisement sales during the airing time as well as service subscriptions. The more people watching during a block of time/show the more the station (ABC, CBS, etc.) charges for advertisement slots.
The show production makes money based on contracts signed with the stations to have them air on that station or the station is a producer for the program.
The sales rates for ads are a function of the number of viewers. More viewers leads (through a lot of circuitous Hollywood accounting) to higher revenue for the people who make the show.
It used to be that companies like the Nielsen Rating Company would collect information from some households on what they would watch. They would do this by having a cable box that is used as the channel changer to collect the data. People would get incentives to sign up for this program, such as discounts on some TVs. A sufficiently large sample of people was enough to infer for the large population.
The process is largely similar today, although enhanced with modern technologies. Some TV stations that use their own cable boxes actually collect the data on their own, but then a company like Nielsen still has to aggregate the data from the various providers so that they can put everything together.
This rating information affects how much ad space sells for. The more viewers, the more expensive the ad is.
[removed]
* Production company makes a show.
* Sells episodes of it to a network.
* The network sells time to air commercials during that show.
* The advertisers who buy that time are willing to pay more if they know more people are watching.
* Network goes back to production company and asks for more episodes.
* If the show is watched by lots of people, the production company charges the studio a higher price for new episodes.
* In reality it’s more complicated because for many shows, they are created and “owned” by the network and the production company is really just hired to do the work of making the show.
>Seems like Television is just a series of advertising with shows and events sprinkled in between.
Yup. I have a friend that works in advertising and he often jokes that TV shows are just the things that fill dead air in-between the commercials.
Content exists to get you to watch ads – not the other way around.
Products and Customers
Television / cable / content producers offer a service for a fee. Their customers are advertisers – anybody who wants to promote a brand / product / whatever. The thing of value that content producers sell to their customers is the attention of their viewers.
The more successful a piece of media content, the more attention it gets. That means there’s more viewer attention for the producer of that content to rent out to advertisers, who want to put their product / brand / idea in front of those viewers.
Supply and Demand
The more successful a piece of content, the more attention it gets. This attention is not “supply,” however – it’s “demand.” More popular pieces of content command higher prices for their limited advertising slots, because there are more eyeballs pointed at that content. Each 30-second slot can reach that many more viewers, so it’s worth that much more money to advertisers. In the old broadcast days, you could think of this as ‘how many ads can we sell, and how many people will be looking at them?’ (The current approach in the internet era is based on the same principals, just way more capitalistically sophisticated.)
A 30-minute TV sitcom would typically have 22 minutes of content, leaving 8 minutes for commercials, frequently sold in sixteen units, each :30-seconds long. A certain number of those 30-second units would be allocated to the station (to advertise their other content), a certain number would go to the network (same reason), and the rest would be sold, either by the network or the individual broadcast station, or both.
Each 30-second ad slot for a show that’s very popular would be very expensive, while the 30-second slots on an unpopular show – or a show that’s on during a time when very few people are watching TV – would be very cheap.
This is why late-night shows always had cheap-ass ads. It’s also why you started to see infomercials crop up in the 80s and 90s, as station owners realized that they didn’t have to bother selling 8 minutes of ad time in half an hour when they could sell 30 minutes of ad time in half an hour.
This is also why Super Bowl ads are such blowouts. The Super Bowl only happens once a year, and it’s got a colossal, nation-wide market with massive built-in appeal / fervor. Those 30-second slots of time sell for 6 figures. That’s a massive investment for an advertising firm, so they need an even larger payoff to justify it, which is why they pull out all the stops to make those mini-features.
It also determines the narrative structure of ad-supported television. 60-minute dramas all follow the same 5-Act structure, and every single narrative beat in every single episode is timed around the ad breaks. Periodically breaking up a story for commercial sponsor messages gives writers a natural way to work in cliffhangers and shocking twists on a regular, repeatable basis. It’s honestly stunning how similar most narrative television is on a structural level (John Rogers’ old blog Kung-Fu Monkey broke this down astutely).
Most shows make money by selling of ads that run during the shows. The more viewers tuning in, the higher the network can charge for those ad spots. Also, factors like real-time vs pre-recorded (allowing people to fast forward) watching stats can affect rates. This is a big reason why sports advertising is so expensive — people wanting a game live have to wait through commercials, while somebody who recorded last nights sit-com can zoom past commercials.
Advertisers: Buy ad space during shows that are heavily viewed by their target audience.
The TV shows themselves are either bought or produced by a television network. The shows don’t really collect ad revenue unless its built into their contract.
Latest Answers