TV channels sign equity-for-ads deals with hi-tech companies

Moves by TV companies to swap airtime for technology equity are finally bearing fruit with high-profile deals for two broadcasters.

Moves by TV companies to swap airtime for technology equity are

finally bearing fruit with high-profile deals for two broadcasters.



Channel 5 has taken an 8 per cent stake in the online insurance company

Rapid Insure in exchange for a sponsorship package worth pounds 1

million. In addition, it has sold pounds 200,000 worth of advertising

spots to the start-up.



Meanwhile, the Money Channel, the 24-hour consumer finance TV channel

devised by former pop star Adam Faith, has entered into a similar

arrangement with Updata Software.



In return for pounds 20,000 of loan notes - which can be converted into

regular shares in 2003 - Updata gets 360 slots for its campaign, which

features the voice of former Doctor Who actor Tom Baker.



As reported in Media Business (14 February), Channel 5 has been

interested in equity-for-space deals for some time. And the formula has

obvious attractions for other broadcasters - not to mention their

start-up clients.



’You couldn’t put a price on it,’ said Richard Dunbabin, managing

director of Rapid Insure, which launched at the beginning of this month.

’What we’re about is brand dominance - it’s important to get that

initial exposure.’



According to Money Channel deputy chairman Matthew Orr, the channel’s

aim is to use the stakes in start-up companies to create a ’growth

investment portfolio that will strengthen and complement our core

broadcast activities’.



He said: ’Many technology companies are focusing on exactly the type of

private investors that comprise most of our audience. Obviously we can’t

promote shares but we can raise the profile of these companies, many of

which are looking towards IPOs.’



Orr added that it offered an ideal route for companies with a restricted

ad budget. ’We also produce the advertising campaigns,’ he said.



But the move should not be regarded as giving away cheap ad space.

’These slots work out to be more costly than regular space,’ Orr said.

’But if we invest in successful companies, we get a lot of bang for our

buck and a stronger balance sheet.’



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