CHANNEL 5 ONE YEAR ON: After all the predictions of doom, Channel 5 ends its first year moderately confident about the future. Still, the critics complain it doesn’t have the clout of a national terrestrial channel. Report by Claire Beale

When the Channel 5 team gathers this week to celebrate an eventful but by no means disastrous year on air, it may well be a sigh of relief that blows out the candle on their first birthday cake.

When the Channel 5 team gathers this week to celebrate an eventful

but by no means disastrous year on air, it may well be a sigh of relief

that blows out the candle on their first birthday cake.



For while the nation’s fifth terrestrial TV channel has certainly not

been an unqualified success, and there’s plenty of hard grind ahead,

this has not been the catastrophe that characterises many media

launches.



Audiences are creeping up, advertising revenue is respectable given the

parameters of the programme budgets, and the Independent Television

Commission has just nodded through plans for increasing investment in

peaktime programming.



Yah boo sucks to the doom merchants, pass the champagne.



Advertisers, too, have breathed something of a tentative sigh of

relief.



Five years in the waiting, the launch of Channel 5 was a hard-fought

battle and one in which the advertising industry had been at the front

line.



A year in and, while Channel 5 has proved no panacea, it has found a

role on advertising schedules.



A year ago, advertisers were hoping the fifth terrestrial TV channel

would apply some ointment to the pain of airtime inflation, bringing

more viewers into the commercial arena by snaffling audiences from the

BBC and opening up a new avenue for mass communication.



Well, you don’t need to be a psychic to know TV inflation remains a

burning issue, but Channel 5 has managed to increase commercial impacts

year on year. And, in tandem with the growth of cable and satellite, the

channel has helped the commercial audience increase from 56.6 per cent

of the total at the beginning of 1997 to 58.4 per cent by the end of the

year.



A new report from Media Audits claims that, in the eyes of advertisers,

Channel 5 is a cost-reducing channel offering a real alternative to the

high costs of its competitors, particularly for young male

audiences.



But the channel must be careful, Media Audits warns, about just being

seen as a cost-reducing alternative to other channels, rather than a

valued service in its own right.



And the Channel 5 audience profile holds up fairly well to scrutiny.



It has a higher proportion of male and 16- to 34-year-old viewers than

ITV or Channel 4 (42 per cent and 31 per cent respectively). At first

glance, its ABC1 profile looks less healthy than its terrestrial

competitors, but Channel 5 performs well among the younger upmarket

groups and draws a lower proportion of over-55 ABC1 adults than the

others.



The channel has also won plaudits from the advertising community for its

flexible approach to delivering these audiences in ways that go beyond

spot advertising. Advertiser-supplied programming such as the Pepsi

Chart Show illustrates the benefits of Channel 5’s sales, marketing and

programming teams working more closely together than many traditional

broadcast/sales structures allow. Expect more of this over the coming

years, Channel 5’s sales director, Nick Milligan, says.



And when it comes to airtime trading, Channel 5 has managed to dig its

heels in and establish a higher benchmark against the average price of

TV than most agencies would have given it credit for before the

launch.



For its first nine months on air, the station was sold at a 22 per cent

discount off the price of ITV, compared to pre-launch predictions of a

50 per cent discount.



According to Milligan: ’We could have caved in and taken an easier

route, but we were determined to hold out and set a high benchmark.’

Which, in the end, meant that Milligan and his team beat their business

plan in 1997 by pounds 3.4 million and, with the programming director,

Dawn Airey, were given permission to spend the excess on acquiring more

sports programming, which paid dividends for viewers and advertisers

alike.



Nonetheless, the sales boys didn’t get an easy ride from media buyers,

and the Network and CIA Medianetwork turned their backs on the channel

early on. Now, though, more than 90 per cent of Channel 4’s national

advertisers also use Channel 5. ’As we’re younger and deliver less

wastage, it’s comforting to be on the majority of media schedules in

’98,’ Milligan admits, ’whereas that was not true at launch because some

people weren’t prepared to take the risk.’



But Channel 5 is not exactly mass-audience territory. Its top-rating

programme was the England v Poland World Cup qualifier, which drew in

nearly four million viewers. In fact, Channel 5 has consistently failed

to meet the targets it set itself before launch and, while expectations

were hardly running riot, many in the advertising community are

disappointed by its performance.



Take its ambitions to achieve a 5 per cent share of viewing by the end

of 1997. Among all individuals, Channel 5’s share of viewing has rarely

topped 3.5 per cent, though in receiving homes the channel does make 5

per cent. Then there were the predictions that the channel would deliver

between 4 per cent and 6 per cent of commercial impacts at launch,

rising to 10 per cent at the end of the year. Failure again. Channel 5

currently accounts for less than 6 per cent of impacts.



Milligan counters that ’had we got the 75 per cent penetration we were

promised at launch, then we’d have got closer to our predictions, which

probably would have meant around 36 per cent more ratings’. And

Milligan, being the honest, decent chap he is, pointed out the shortfall

as soon as it became obvious that the targets wouldn’t be met. ’We put

our hands up and admitted it and told agencies they’d have to

re-plan.’



Part of the problem, as many see it (if they can see it, and picture

quality remains an issue in some areas), is the absence of any

appointment-to-view shows. The 9pm movie has become an established

fixture but, with films of variable quality, it’s not a banker slot.



On the sporting front, Channel 5 has been nimble in its acquisitions but

sport is hardly a schedule backbone. Jack Docherty’s evening chat show

has been cut back to thrice weekly, though 5 News has become something

of a star turn, keeping rivals on their toes.



Paul Longhurst, the media director of Ammirati Puris Lintas, remains

heavily critical of Channel 5’s performance. ’This is not a big, dynamic

channel changing the broadcasting landscape, but it’s got the sort of

franchise most broadcasters would die for - 70 to 80 per cent

penetration of the UK population. Imagine what Rupert Murdoch would do

with that.



’The channel just doesn’t have the investment in programming you’d

expect from the UK’s fifth terrestrial channel. The positive things it

has achieved are just playing at the margins. It’s a tiny channel, and

it shouldn’t be.’



And with digital TV upon us - bringing greater competition for viewers,

advertising revenue and programming -things are set to get tougher.



Ironically, Channel 5’s success in bucking the trend for disastrous

media launches could have a downside. Traditional wisdom goes something

like this: media brand launches, fails, relaunches, turns fortunes

around.



The challenge for 5 now is to ensure that it doesn’t turn this

particular maxim on its head.



CHRONOLOGY



30 March 1997 Launches with five Spice Girls, a few glitches and an

opening night audience of 2.4 million



April 1997 Beats ITV to a pounds 90 million deal with Warner Brothers

for films such as Batman, Lethal Weapon 2 and new releases for 97 and

98



April 1997 Astra satellite deal gives access to 60 per cent of UK

homes



May 1997 Snaps up Chelsea European Cup Winners Cup rights August 1997

Channel 35 frequency goes live to extend coverage by 300,000 homes

September 1997 Controller of planning and acquisitions, David Berg,

quits to join ITV



November 1997 Announces plans to move news from 8.30pm to 7pm,

head-to-head with Channel 4 November 1997 Marketing director, David

Brook, resigns to join Channel 4 November 1997 Hires Sky marketing

director, Jim Hytner, to replace Brook January 1998 Wins rights to

premier Disney films February 1998 Writes again to Independent

Television Commission asking for more advertising minutage



March 1998 Promises more investment in peaktime programming as ITC

allows more repeats



March 1998 Celebrates one year on air with record viewing figures



THE CLIENT: MIKE MORAN - TOYOTA



Mike Moran, the marketing director of Toyota, believes that, in the long

run, Channel 5 will be good news for advertisers, but it will take

time.



’If you asked me to quantify the added value Channel 5 could bring when

targeting an ABC1 audience, as we are, then I’d say that at best it had

a 1 per cent positive impact. Our early experiences of using the channel

for advertising were mixed. We were one of the first advertisers on

Channel 5, but the response from that initial campaign was very low. So

when we launched our next advertising burst, we decided to pull off

Channel 5 because we felt it hadn’t added real value. Next time round,

in June 1997, though, we decided to give the channel another go and I’d

say we are now a committed Channel 5 advertiser.



’I think the way in which they’ve delivered better quality movies and

sporting events, as they had originally promised, says a lot about their

approach. They’ve made some smart moves in the matches they’ve tied up

and these sorts of initiatives will get people into the habit of

watching Channel 5. There still aren’t any staple programmes such as

ITV’s Heartbeat or Poirot, but the recent Swindon Superbabes got the

channel talked about, and that’s really important.



’As an advertiser, the channel has already given us more flexibility in

the TV market and the discount against ITV makes it an attractive

buy.



If you know you can get the quality of programmes then it’s worth using

and, over time, the channel will add diversity to advertisers’

repertoire.



Pound for pound it offers cost-effective delivery, but you don’t get the

scale and audience you’d get from ITV.



’The Channel 5 sales team is a strong operation and is good to deal

with.



They’re prepared to be flexible and we’ve talked to them about the

opportunities for programme sponsorship. Although we haven’t done

anything in this line yet there’s a real willingness on their part to

look at different ideas.



As an advertiser I’m very concerned about inflation and audience access

and so I’ve got to believe in Channel 5’s ability to expand the

commercial audience. It’s incumbent on me as an advertiser to give the

channel all the support I can.’



THE MEDIA BUYER: PAUL TAYLOR - BMP OPTIMUM



’One of the most crucial things about the Channel 5 sales team is that

they have made credibility central to what they do. The sales director,

Nick Milligan, prides himself on his integrity - which has become a

watchword across the company.



’Because of the uncertainty over what the channel would deliver, the

sales team needed to be as flexible as possible and go through rigorous

risk management to ensure that they didn’t over-promise. There needed to

be a degree of caution as they approached the market, and they managed

that very well. It would have been easy for the sales team, and the

channel as a whole, to believe their own hype.



’And when you consider the context of falling ITV audiences and rising

TV costs, advertisers and agencies were looking for the channel to help

alleviate some of the pressure. There was a lot of pre-launch support

from the advertising community and the sales team did well to manage

expectations.



’In terms of the mechanics of trading with Channel 5, the sales team has

been assiduous in ensuring that the administration side is very tight

and, as a smaller channel, they’ve been very conscious of the amount of

agencies’ time they’ve taken up.



’Unlike Channel 4 in 1993, Channel 5 has taken a safer route in its

trading stance, going for the familiarity of an established currency and

trading off ITV’s station average price benchmark. It’s not

mould-breaking, of course, but it’s consistent.



’Overall, Channel 5 has achieved what it set out in its manifesto. There

are still areas which need tightening up, though. The performance of the

9 o’clock movies shows that there needs to be continued investment to

ensure they are of high enough calibre, but their sports coverage has

fulfilled marketing and sales expectations. Whether they can continue to

build on their performance depends on their ability to continue

investing in product.



’To get a major channel off the ground in a multichannel environment was

always going to be tough. But digital TV is way off being an established

medium and Channel 5 is already there with an established brand and

enough of a head start to secure viewer loyalty as more channels come on

air.’





TOP TEN PROGRAMMES

Rank   Programme                                 TVRs

1      World Cup: Poland v England               7.30

2      Speed                                     6.70

3      Real Betis v Chelsea                      5.70

4      Tromso v Chelsea (23 Oct)                 5.50

5      Mrs Doubtfire                             5.20

6      Chelsea v Slovan Bratislava (18 Sep)      5.10

7      Chelsea v Tromso (6 Nov)                  4.80

8      Croatia Zagreb v Newcastle                4.70

9      Slovan Bratislava v Chelsea (2 Oct)       4.70

10     This is Five!                             4.60

TOP TEN ADVERTISERS

Rank   Advertiser                 Spend (pounds 000s)

1      McDonald’s                                1767

2      Lombard Direct - Personal Loans            979

3      Peugeot - 106/106 Range                    968

4      Coca-Cola - Coke Range                     901

5      Vauxhall - Corsa/Corsa Range               899

6      Pantene Pro V - Shampoos                   831

7      Renault - Megane/Megane Range              804

8      BT - Friends & Family                      769

9      Finish - Detergent Tablets                 756

10     Vauxhall - Vectra/Vectra Range             704



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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).