Have you ever wondered why most prime-time television ads seem to advertise cars and mobile phones? The market for these products is nearly universal, and the profit margin is high enough to justify the expense.
Almost everyone needs a vehicle. And, these days, everyone 12 and older seems to need a mobile phone as well. These are product categories that almost everyone watching television in the United States is going to buy. In a report compiled by mobile agency mobiThinking, authors state that by the end of 2011, “Mobile subscribers in the developed world has reached [the] saturation point with at least one cell phone subscription per person.”
Having a nearly universal market isn’t enough to justify television advertising, though. Since advertising on television is expensive, low-margin businesses like produce growers or gas station retailers rarely get a good ROI on this advertising medium. Costs include both airtime and production of the commercial.
To answer the title question, TV advertising only makes sense when your market includes all consumers who watch TV and when your margins are high enough to support the cost of the advertising. All of the niche small businesses out there can scratch TV advertising from their marketing plans (and lots of large businesses should, too).
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