FORUM: Why ISBA wants a new TV airtime trading system - Should television airtime be traded in a different way? Last week, the Incorporated Society of British Advertisers set this particular hare running once more. Will there be much enthusiasm for the ch

Everyone knows the airtime market is driven by values other than the iron laws of supply and demand. To some extent, that’s down to the ambiguous nature of the product itself which, depending on who you talk to, is either a quantitatively measured commodity or a qualitative proposition. Or both at the same time.

Everyone knows the airtime market is driven by values other than

the iron laws of supply and demand. To some extent, that’s down to the

ambiguous nature of the product itself which, depending on who you talk

to, is either a quantitatively measured commodity or a qualitative

proposition. Or both at the same time.



And then there’s the rather unhealthy relationship that advertisers and

agencies have with the dominant supplier, ITV. ITV has within its

portfolio a unique type of airtime - during peaktime it offers large

audiences that deliver massive cover in a very short time.



Buyers are so keen to buy ITV that they don’t often bother talking about

what exactly it will offer in return - they talk only of what percentage

of their budget to give the network. Then buyers and sellers across the

market get together to massage the figures so it looks as if everyone

has secured huge discounts against a measure called station average

price. Everyone in the market seems to be a winner.



ITV sells at a premium against the rest of the market and this premium

rises with impunity if ITV’s audiences decline - which they often

do.



At this point, advertisers complain but don’t actually do anything about

it - such as shifting their money to stations showing audience

growth.



Until now, that is. Last week, the Incorporated Society of British

Advertisers decided that it would like to impose a far more austere and

exacting morality on the marketplace. It issued a memo offering guidance

to members entering the current negotiation season with television

airtime sales points.



This memo, penned by Bob Wootton, director of media and advertising

affairs for ISBA, is believed to reflect the views of a large number of

ISBA members, but is not a formal policy document. It notes that ’most

negotiations have historically tended to involve a fixed commitment in

terms of volume or share of expenditure on the advertiser’s behalf in

return for a variable delivery from the broadcaster’.



The memo suggests that share of advertiser spend given to a particular

station should be directly related to that station’s audience

performance. Share of revenue should equal share of viewing.



Can it? And what is the likelihood of ISBA members following the

recommendations?



Isn’t the timing a bit odd? After all, we’re already well into the

negotiating season.



Absolutely, Martin Bowley, chief executive of Carlton UK Sales,

says.



He has never been a fan of fixed-price trading and sees this latest

initiative as a rather gauche attempt to redistribute ITV wealth. He’s

not amused.



’ITV offers more benefits and gets higher ratings than other channels so

it gets a higher price,’ he asserts. ’It reaches every nook and cranny

of this great nation of ours and has huge cover benefits. Other channels

can’t offer anything like that. The big advertisers are on ITV because

they want to appear in the highest-rating programmes on television.

We’ve long argued about ITV’s premium position in the marketplace and,

of course, we’d like to get even more of a premium.’



According to Bowley, the ISBA document implies that ITV should, ideally,

take a share of revenue that equals its share of commercial impacts.

’Put it the other way around - you’re suggesting that other channels

should take more money. You’re saying that Live TV should be taking more

money?



Have you seen Live TV? And the problem with other trading systems is

that we’d get full quickly. It isn’t flexible enough to allow late

trading.’



Lynda Graham, the managing director of Media Audits, doesn’t agree.

’Deals on the basis of guaranteed audiences and fixed prices would allow

the advertiser to win in the right sort of way,’ she argues. ’At the

moment, advertisers have to guarantee budgets and what do they get in

return?



A discount - a minus number. Under this system the winners are the

broadcasters and agencies - because they all get discount. Advertisers

are the only ones who lose out.



’I applaud this initiative. It will put the focus back where it should

be - on the real price and value of airtime. Fixed prices would also

separate the sheep from the goats where media specialists are concerned.

Advertisers are concerned about real prices and they are focused on

inflation. Agencies don’t think like that. If advertisers start

challenging agencies about the absolute price of airtime on a

year-on-year basis it will be a step in the right direction.’



Agencies understandably take issue with this world view. And they point

out that the advertisers who want to trade fixed prices already can and

do. Chris Boothby, the head of broadcast at BBJ Media Services, points

out that the current floating price system provides a recognisable and

measurable system that advertisers have been using for years. ’While

many agencies have moved away from this trading system towards

fixed-price deals, there is still a justifiable need for clients to be

aware of their relative price position - and ITV station price provides

this measure.’



He adds: ’The real measure of a campaign’s performance should, of

course, involve looking at the overall communication effect of a

schedule in terms of coverage, environment, attraction levels and

absolute cost. Effective buying requires an understanding of the value

and contribution of each media opportunity in order to maximise

communication delivery. Using station price as a trading mechanism on

ITV should not adversely affect performance.’



Graham Duff, chief executive of Zenith Media, broadly endorses that

view.



’It doesn’t mean that this is the end of the current trading system -

which is a sadly misunderstood beast. For instance, I am not aware of a

single advertiser whose whole strategy is about achieving discount.



We look at coverage and frequency and we take a number of different

spins into negotiations. This business is all about finding ways to meet

client needs and the thing about clients is that they are all different.

The main thing that advertisers want is value and ISBA is right to

remind its membership there are several factors they should consider.’



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