Media: Double Standards - Sales review is as crucial as goal-line technology

campaignlive.co.uk, Friday, 16 July 2010 12:00AM

Consolidation of sales points, new minutage rules and cheaper advertising all affect the TV market. Two trading chiefs consider the bigger picture.

CHRIS LOCKE - UK trading director, Starcom MediaVest Group

- How urgent is the need for a full review of the TV airtime market?

A bit like asking if you need goal-line technology in football. Given the TV market will consolidate again this year with Viacom already gone to Sky, GMTV to ITV, Virgin to Sky, UKTV to Channel 4, then I'd argue there is too much change happening to ignore and carry on ostrich-like. We have market change on a grand scale, and the market and its various metrics need to be overhauled. This, as with the football analogy, is about making the "game" better.

- How true is it that media agency consolidation has been negative for advertisers in terms of the TV schedules they are now getting?

The reality is most TV schedules have around 4,000 spots on them, and buyers literally buy most of the spots. Media agency consolidation has got nothing to do with quality of schedules, it may have a lot to do with channel investment (or not) nuances rather than schedules themselves.

Buyers have real pride in their work, their knowledge, and will push, argue and cajole to get the right programmes for the brands they work on.

- How would relaxation of the rules requiring broadcasters to sell all their minutage benefit advertisers?

If you believe putting prices up is good, then that's the benefit, otherwise none. If you allowed a yield model, the TV companies would struggle to get annual commitments, the market would move more short term, a la press. TV companies would try to charge more per 30 seconds as they would argue there was less availability. However, if like print, they could "up-page" to allow for demand, then all you'd do is create a short-term world of distrust. Other media would be fast to try to dance on TV's bones if they believed that TV would take less, not more, money through this approach. TV isn't set up for monthly negotiations across most advertised business.

- How likely is greater consolidation of sales points in TV?

As night follows day. In 2011, we will have ITV/GMTV, Sky/Virgin, C4/UKTV, and Five. There are two arguments regarding Five. One says it will get marginalised as the other three leverage more share out, so Five loses 3 per cent and closes. The other says Five is still pretty cheap so possibly Five does OK, ITV does OK, and agencies/advertisers look to reduce investment, or only maintain investment, in these other two. If ITV bought Five, it would, I believe, have to actually set up two sales teams, and be truly separate.

- How good have the major PSBs (ITV, Channel 4, Five) been at modernising their sales operations to embrace new channels?

All have been smart to recognise that platform neutrality was key. All realised they had to undercut Sky. All realised that content is king, and all realised, with differing success, that you can migrate an audience from terrestrial. They have been very focused about the audiences they sell by channel (ITV2, E4, ITV3, More 4, ITV4, Five USA). And they have all been at least as good as Sky/ids at selling their "family" to the market.

- TV advertising is cheaper than it has been in real terms for years. Are there any negatives to this?

Yes,all these TV businesses (apart from Sky) need advertiser cash to create the content. We represent advertisers, we have to deliver set solutions for a given budget. If anything, this price reduction has created funds to look at extended communications. So for advertisers - no negatives. For media agencies, it has created the opportunity to push innovation to our clients. For TV companies, obviously yes, hence calls for reduced minutage, removal of Contract Rights Renewal etc.

KELLY WILLIAMS - sales director, Five

- How urgent is the need for a full review of the TV airtime market?

Over the past few years, we've had several reviews of aspects of the advertising market. But all these reviews have been piecemeal - looking at individual pieces of a bigger puzzle. Sooner or later, someone is going to have to stand back and look at the overall picture. To see the whole wood rather than just individual trees.

- How true is it that media agency consolidation has been negative for advertisers in terms of the TV schedules they are now getting?

Consolidation may have contributed to the problem, but what's really damaging advertiser effectiveness is the "one size fits all" agency arrangement which can, and often does, inhibit full and free channel choice. And procurement-led pitches are only making the problem worse. What really frustrates me, though, are some of the ludicrous "justifications" given to advertisers by their agencies, to rationalise using what are not necessarily the most suitable channels to deliver their objectives.

- How would relaxation of the rules requiring broadcasters to sell all their minutage benefit advertisers?

With Contract Rights Renewal remaining in place, it wouldn't make any difference. Any intelligent broadcaster needs to ensure impact delivery is maximised and, with CRR as a market control, that's not going to change. Only if the way we trade airtime was radically altered and CRR abolished would broadcasters have any incentive to withhold airtime.

- How likely is greater consolidation of sales points in TV?

Inevitable, assuming the terms negotiated can make it mutually beneficial, but that's not really the question. I suspect in future we may well be looking at more radical consolidation across media. Might News Corp's attempt to gain outright ownership of Sky lead to the creation of the first significant, cross-media sales house?

- How good have the major PSBs (ITV, Channel 4, Five) been at modernising their sales operations to embrace new channels?

I can't speak for ITV or Channel 4, but Five continues to take massive strides in delivering additional value to advertisers. Our commercial and programming departments have been working together, developing advertiser-funded programmes for the likes of Unilever, Nintendo, P&G, Premier Foods and Panasonic. We're also working with companies, developing bespoke advertising and we've branched out significantly into off-air activities.

- TV advertising is cheaper than it has been in real terms for years. Are there any negatives to this?

For an advertiser, none whatsoever. Television remains the most effective mass medium with people watching more commercial TV than at any time in history. Why wouldn't you want to take advantage of TV's proven ability to build brands and deliver profit to the bottom line? Fill yer boots!

This article was first published on campaignlive.co.uk

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