MEDIA SPOTLIGHT: Airtime adjudicator on course for a winter storm

But is it a storm in a teacup as some industry comment suggests?

Right up until David Connolly was handed the job of Ofcom's adjudicator last week, the widespread assumption across large parts of the industry was that the job was going to be a "pop" - one of those well-paid but sleepy quasi-governmental sinecures that don't really interfere with your sporting interests. Nice work, if you can get it.

And then, almost within hours of Connolly being given the nod, some sectors of the industry changed their minds. Not ne-cessarily because they want to create work for him but because they've begun to work through the implications of some pretty powerful market dynamics already in play.

They're realising that, actually, this year's negotiation season could be the most aggressive in recent memory. For a start, agencies will have little to lose if they pick a fight with ITV. After all, ITV might just cave in; but, if they don't, all that will happen is that Connolly will step in and impose the status quo. The worst outcome, in other words, is a nil-nil draw, so it's going to be worthwhile chancing your arm. If enough agencies see things that way, then Connolly could be a busy boy.

And the market is starting to realise that quite a few agencies in town - the ones, in particular, with the largest commitment to ITV - may be very motivated indeed to take a tilt at this, because their exposure to ITV leaves them (arguably) in a very undesirable position indeed.

Historically, ITV's large peaktime audiences have always commanded a premium, so its share of revenue has always exceeded its share of impacts. As ITV's audiences have continued to decline, it's been the job of the network's sales teams to keep that gap as wide as possible. Buyers, obviously, try to narrow it, and pull money out, roughly in line with the broad historical decline in ITV audiences. But some buying points with big agency deals have been slower than others to achieve this.

There may be very good reasons for this. For instance, Initiative's ITV commitment is buoyed up by a deal specifically struck on behalf of Unilever, an advertiser that's traditionally a big backer of ITV because the network delivers a demographic profile very much to its liking. But, in other cases, an agency's position may well be down to its particular method of striking agency deals.

The introduction of the Contract Rights Renewal remedy on 1 January potentially restricts their room to manoeuvre, enshrining as it does the status quo (minus a maximum of two percentage points of share). Agencies that don't do agency deals are watching with interest. So, too, are non-ITV broadcasters.

Chris Locke, the group buying director of Starcom MediaVest UK, comments: "The television world will evolve and change, ever faster. If you have a high ITV investment, the CRR will not allow an agency or advertiser to embrace this change. How will any of these agencies and advertisers change their ITV commitments to follow viewing patterns more naturally?

Either the agency has a huge collective row with ITV or they sort individual client problems within the deal, or they get very busy down at the adjudicator. All this before the end of December so all the January advertisers are on ITV. Whatever move they make could mean taking a value hit. You have to question if this would be passed on to all clients."

Locke also claims that some media auditors in town may be very embarrassed about some of the issues that begin to surface here. After all, the auditors have, he claims, been telling clients for many years that they have nothing to lose from towing the line in their agency's overall share deal. Advertisers are surely going to realise that they're increasingly being given airtime that doesn't suit their strategic goals.

Auditors, however, point out politely that this is arrant nonsense. The likes of Carat and ZenithOptimedia have been known for decades as big ITV spenders. Clients are not stupid.

They wouldn't necessarily commit themselves to a big slug of ITV if that didn't suit their interests.

But surely the fact remains: there are some agencies in town that will want to reduce their ITV commitment but will be stymied now by CRR. "We don't feel overexposed to ITV, nor do our clients," Mark Jarvis, Carat's head of media, responds.

"Your position with regard to ITV reflects the interests of your clients - and buyers will always look to take as much value as they can from a market."

Interestingly, however, Jarvis feels that Connolly could well turn out to be busier than many people had assumed. "Yes, I think we could well see some activity early on. He'll certainly be a damned sight busier in the first year than in the second year," he adds.

Some, however, disagree with that analysis of the adjudicator's probable workload. And the director of one buying point confesses to being angry with some of the talk he's heard in recent days.

He states: "At best, all of this is wishful thinking on the part of some people who should know better and, at worst, it is dangerous mischief. The truth is that many agencies have large ITV commitments for extremely sound reasons."

And some argue it's the agencies with low ITV commitments that could be in trouble. They are last in the queue when it comes to getting special favours on the slots they want and may well be at the end of the queue for many years to come.

One source says: "I think the reality is that Connolly's office is going to be a bit like that Carlsberg commercial - the one where someone stumbles across an office with a sign saying 'head of complaints' on the door and he opens it and finds this dusty room that's no-one's been in for years."

ITV SHARE OF SPEND

Top-ten UK buying points and the share of spend they give to ITV for the

period January to October 2003, ranked according to share. ITV's share

of total broadcast spend across the whole market is 51 per cent.

ZenithOptimedia 57.4

Initiative 57.1

Carat 54.1

MindShare 51.4

PHD 50.7

OMD 50.0

Universal McCann 49.3

Starcom Motive 49.1

MediaCom 46.4

Starcom MediaVest 43.5

Source: Nielsen Media Research.

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