NEWS ANALYSIS: Dotcom ad buyers accuse TV sales houses of unfair pricing - Can TV companies justify charging net brands high rates, Rachel Minter asks?

Dotcoms are being charged a steeper rate for their airtime than offline advertisers and, unsurprisingly, many are unhappy about it.

Dotcoms are being charged a steeper rate for their airtime than

offline advertisers and, unsurprisingly, many are unhappy about it.



Established advertisers such as AOL are especially resentful. AOL group

marketing director Keith Hawkins argues that as one of the UK’s top

advertisers, it should be treated the same as any other major brand. ’We

are not a here today, gone tomorrow start-up. Although we must accept

penalties for late entry into the market in terms of campaign planning,

the system is totally unfair.’



In addition, internet advertisers are often lumped together in the same

ad break, which confuses viewers who are bombarded with ads for similar

companies.



Sky justifies charging dotcoms a premium by stating it is simply a

matter of supply and demand. ITV companies are also charging prices that

are well above ratecard. TV buyers claim that, in many cases, they are

paying almost 20 per cent more for airtime than they were this time last

year.



Steve Platt, managing director of sales at Carlton TV, says dotcoms are

creating the market. He insists the new market is not squeezing out

traditional fmcg brands because they have different target audiences

’We take dotcom advertisers on a first come, first served basis,’ he

says. ’We are not being unfair to anybody. We can’t be expected to turn

money away.’



Some agencies support this view. They say dotcoms are so desperate to

build a presence in the market that they will pay any price for

peak-time TV slots.



David Jowett, deputy director at MediaCom TMB, says that while a

different pricing structure is unfair, he understands what Sky is doing.

’There is only a limited supply of peak-time evening slots available to

online companies,’ he says. ’Sky needs to push for top prices to balance

its books, otherwise it will run out of airtime and end up over-trading

like last year.’ Another agency source says: ’What you have is an

auction- room environment where the highest bidder wins.’



But others are not so happy with the way their internet clients are

being treated. One buyer warns that the venture capital fuelling these

prices is unlikely to be sustained. He predicts the current price

inflation might soon make television too expensive a medium for some

dotcoms. For example, although Fish4 was happy to advertise on

television in February, that was the only month it could afford to do

so.



Andrew Canter, the broadcast director of Mediapolis, says: ’A dotcom

with a mass appeal has attractive alternatives such as outdoor vying for

its ad budget.’



This should serve as a warning to the TV companies. It is inevitable

that prices rise when demand for TV slots outstrips supply. However,

buyers are used to the level of spending determining the price paid for

ads, and charging dotcoms extra might just drive them away.



Opinion, p11.



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