Art & Commerce




Price Fixing Consider the $1.3 million for Super Bowl avails, the $2 million asking price for a Seinfeld finale 30-second commercial and the 8,000-plus Dow Jones Industrial Average. We are confronting the question: How up is up? Despite mountains of data and years of study, there’s no “scientific” explanation for the pricing mechanism in advertising or stock investing. Prices are based on whatever the traffic will bear, and there’s no reliable way to predict that. A lot of the heavy number crunching is just something to do while you’re building up the courage to explain to a boss, a client, a portfolio management committee or a spouse why a particular spot or stock cost so much. The laws of supply and demand work in their own mysterious ways. With advertisers and investors so eager to pay premiums for some things, it’s hard to make a case that $2 million for 30 seconds of airtime or a stock price at 25 times earnings is “too high.” Follow the traffic. The bigger question is: Why are prices for more ordinary fare so disproportionately low? -Alan Gottesman (westendal pobox.com) is principal of West End Consulting.

THE GOTTESMAN FILE
The cost per thousand impressions for what may well be the same audience varies widely. When it comes to setting ad prices, no real science exists.
Medium ……………………………………………. CPM*
Major network, prime time, households ……………. 10.83
New York City, prime-time spot, households ……… 21.34
Cable TV network, prime time, households …………. 8.89
Reader’s Digest, four-color, full page, copy ……….. 12.87
The New York Times, full page, copy ……………. 101.44
Time magazine, four-color, full page, copy ………… 40.55
Source: Marketer’s Guide to Media, Volume 20. *CPM=cost per thousand, in dollars; data cover second quarter of 1997.