MEDIA SPOTLIGHT ON: BSKYB - Sky ad revenue soars as the sales team sharpen their act. BSkyB’s ad revenues have ballooned by 30 per cent Alasdair Reid investigates.

Advertising might continue to be a relatively unimportant source of revenue for BSkyB - just under 14 per cent of the total - but that side of the business has really started to take off in a big way. Just look at its annual results, published last week. In the year to 30 June 1998, Sky’s ad revenues were pounds 195 million, up a whopping 30 per cent year on year.

Advertising might continue to be a relatively unimportant source of

revenue for BSkyB - just under 14 per cent of the total - but that side

of the business has really started to take off in a big way. Just look

at its annual results, published last week. In the year to 30 June 1998,

Sky’s ad revenues were pounds 195 million, up a whopping 30 per cent

year on year.



Just what is going on? Some buyers believe this to be a purely

mechanical phenomenon. Dish sales might be slowing but cable growth is

largely compensating for that.



More subscribers means bigger audiences. That means advertisers have to

pay more for the privilege of reaching them. If you then factor in a bit

of natural inflation, you’ll derive a figure not that far removed from

30 per cent.



The truth is a little more complicated. Sky’s big strength - its USP in

the airtime market - is adults under the age of 44. Because of growth in

subscriptions and a slightly greater share of viewing in multichannel

homes, Sky’s total young adults impacts increased by 13 per cent year on

year for the January to May period. Add in that little bit of natural

inflation and you arrive at a figure of 15 per cent growth due to purely

mechanical causes.



Which still leaves us far short of that 30 per cent figure. The balance

is down to that holy grail of sales: increased yield. So what’s the

secret?



How have they done it?



According to buyers, there are two big factors. Point one is that Sky

has become crack optimiser of its airtime. Take the example of an

advertiser that wants a campaign of ten ratings against housewives. If

you schedule the commercial into breaks where each delivers one

housewife rating, you use up ten ad breaks. But slot it into a break

that has a housewife rating of ten and you only use up one break, still

leaving you another nine to sell. Easy, you might think, but it’s odd

how many broadcasters still manage to run sanpro ads in the half-time

breaks of football matches.



Point two is all about critical mass. Two years ago, Sky’s airtime was

regarded as a commodity. Its airtime was, on average, half the price of

ITV’s, so buyers would buy 5 per cent of their schedule on Sky to keep

costs low.



But it didn’t have any distinctive programming and although its audience

was biased towards the younger age group, it didn’t deliver any extra

cover that you weren’t already getting via ITV.



These days Sky does deliver unique cover, and it also has some extremely

attractive advertising environments. When buyers start asking for

specific programmes, the trade-off is that the seller can start pulling

back some discount.



David Connolly, the joint media director of Leo Burnett, explains: ’In

the past, when Sky was merely being used as a cost-reducer, agencies

tended to dictate terms. Now that it has realised critical mass and is

delivering cover in its own right, it is able to take much more control

of negotiations.’



Mick Perry, the deputy chairman of Universal McCann, would add a third

factor: namely, the sales director, Peter Shea. ’I’d say this was the

biggest factor. He has a strong level of contact with many major clients

as well as key decision-makers at buying points. He’s a tough guy who

knows the value of what he’s selling to advertisers.’



Others echo this opinion, adding that Shea has more-than-able backup

from the sales controller, Mark Chippendale, and the client sales head,

Graham Appleby.



Is Sky emerging as a big player in the sales arena? Well, perhaps. But

many believe that, notwithstanding all the good points, there’s still a

clear lack of strength and depth.



As the boss of one media operation puts it: ’It doesn’t matter how good

you are if you don’t have a heavyweight market share when it comes to

audiences.’



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