TV's £3bn battleground
campaignlive.co.uk, Friday, 22 October 2010 12:00AM
The loss of VBS and ids leaves UK TV four sales points. Campaign's Jeremy Lee asked media agencies to score them on leadership, creativity and flexibility, and found some surprises.
With responsibility for more than £3 billion of television advertising budgets, agency TV buying departments breed a bunch of notoriously unemotional and hardened brutes. So it was surprising, then, that they showed a collective streak of sentimentality about the closure of Viacom Brand Solutions and ids and the impact that it will have on the market.
Indeed, as we enter this year's trading season, most described it as being bad for advertisers, bad for agencies, bad for innovation and creativity and, ultimately, bad for TV. A few gloomier doomsayers are convinced that unless the remaining four sales houses adopt some of the practices of VBS and ids, advertisers will turn to other media.
But the TV companies would argue that they are mirroring what has been happening among media buying groups for the past decade and are, therefore, serving the commoditised market the agencies created. Consolidation makes for a stronger negotiating position and economies of scale and is an inevitable consequence of the explosion in multichannel TV that fragmented viewing.
Campaign asked ten leading buying directors to score each sales operation out of ten on leadership, creativity and flexibility to give a total score out of 100 in each category. While each of the ten top media agencies differed slightly on their experiences of the TV sales points - which is understandable given the differing deal books that the buyers were in charge of - some common themes emerged. With a few notable exceptions, the quality of the leadership varies tremendously and sellers are considered complacent - they lack creativity (or the willingness) to see beyond the deal book and this also impacts on their flexibility in dealing with advertiser requests.
ITV scored the lowest overall, although there is some understanding that flexibility and creativity is not always in its interest. Creativity was ranked poorly across the board with Channel 4 emerging as the best. But this was the only good news for C4.
While for years, ITV has been the victim of predicted cuts in adspend, media buyers have a different prey in their sights. And, surprisingly for some, it's not Channel 5, which as the smallest player looks the easiest victim. Instead, 2011 looks like being a particularly challenging first year for C4's new chief executive, David Abraham.
Number of sales staff: 362
Number of channels sold: Seven (including ITV Breakfast Sales)
Key personnel: Fru Hazlitt, managing director, ITV Commercial & Online; Gary Digby, group commercial sales director; Simon Lent, trading director; Gary Knight, branded entertainment and digital sales director
Key channels: ITV1, ITV2, ITV3, ITV4, CITV, ITV Breakfast
Current share of net advertising revenue: 45 per cent (Campaign estimate)
The arrival of Fru Hazlitt as the managing director of ITV's commercial operations seems to have made as little impact as the departure of her predecessor, Rupert Howell, did.
While credit is heaped upon the sales director, Gary Digby, for being an effective leader of the sales operation, ITV continues to wrestle with protecting its position as the market leader while trying to engage with agencies to come up with non-spot TV ideas. Judging by how poorly it scored in the creativity section, the deal book still takes preference.
Naturally, given that it has worked so hard to protect its position, ITV scored badly for flexibility - but then this could just provide further evidence of Digby's strategy of maximising revenue by penalising late changes.
With Contract Rights Renewal widely expected to be phased out next year, agencies have taken out what revenue they can, while ITV's director of programming, Peter Fincham, is credited with doing a good job in ensuring that ITV1 maintains audience share as well as attracting new audiences.
According to Digby, there will be more of the same in 2011, with investment in drama with the landmark series Vera, starring Brenda Blethyn and factual, with a series following London Zoo, while the Rugby World Cup returns in the autumn.
Nonetheless, ITV has worked hard to protect its position and one trading director describes ITV as "a keeper" on schedules next year. One buyer said: "Gary and his immediate team especially have shown admirable consistency and leadership when the management team above has seen considerable churn. In some ways, it's not surprising that ITV adopts such an inflexible position given its CRR constraints."
It is to the credit of the sales team and the programming staff, who have endured all sorts of turmoil following the departure of Michael Grade, the interregnum of John Cresswell and the drawn-out arrival of Adam Crozier as the chief executive that ITV enters the negotiating season in a relatively strong position and for getting the grudging respect of the media buying community.
Total (out of 300): 151
Number of sales staff: 195
Number of channels sold: 15 currently (including +1s); 25 from 1 January 2010 with UKTV
Key personnel: Andy Barnes, sales director; Mick Perry, head of airtime sales; Mike Parker, head of strategic sales; Merlin Inkley, head of airtime management; David Charlesworth, head of sponsorship
Key channels: Channel 4, E4, More 4
Current share of NAR: 25 per cent
A mixed result for the sales director, Andy Barnes, and his team who, in 2011, will also represent the UKTV portfolio. Once the darling of the media buying community for its ability to provide younger audiences and lighter viewers, the shine seems to have come off the sales operation and the Channel 4 schedule.
C4 is singled out for failing to have much of a presence with agencies and that, other than its annual upfronts presentation, it does little to engage with buyers through the rest of the year. Barnes was described as "invisible" by at least three agency heads and while the head of strategic sales, Mike Parker, was identified by one agency chief executive for trying to work hard with media innovation, most felt that the focus was skewed toward meeting the letter of every agency deal.
Barnes was unable or unwilling to comment on this piece, leaving Parker to give the pitch: "The big message is that we've gone through a process of creative renewal following the arrival of David Abraham as chief executive and Jay Hunt as programme director. There's a tremendous number of new shows, all the digital channels are growing and the UKTV portfolio gives us a greater reach and the ability for advertisers to target new audiences."
He also promised that there would be greater emphasis on cross-platform selling and that the sales restructure would ensure that innovation would be at the heart of the new sales groups (although one buyer described it as being "in disarray").
There remains scepticism that C4 will rid itself of its apparent culture of complacency. In some respects, it is understandable - when agencies were rushing to take money out of ITV and with C4 growing its share, the money flowed in. But with words like "poor value", "poor service" and "inflationary", the future looks questionable with most buyers predicting that they would be taking money out of C4 and that the arrival of the ids channels would make little difference to their intentions.
Whether the arrival of Mick Perry as the head of airtime sales and an expanded role for Parker will make a difference is up for debate.
Total (out of 300): 178
Number of sales staff: 250
Number of channels sold: 95
Key personnel: Nick Milligan, managing director; Graham Appleby, commercial director; Richard Hawking, operations director; John Litster, trading director; Jeremy Tester, brand strategy director
Key channels: Sky1, Sky Sports, Discovery, MTV, Comedy Central, Nickelodeon, CBS, History, FX, National Geographic, E!, Chartshow TV, At The Races, ESPN
Current share of NAR: 17 per cent
Nick Milligan, the managing director of Sky Media, emerged as the highest-profile sales leader in the survey and by some distance. But then there is an argument that he knows that he needs to be - advertising revenue only accounts for a small minority of BSkyB's total sales and its business model is largely built around its business as a subscription-based TV platform.
While Milligan maintains such a high profile, one buyer said not much appears to blossom in his shadow - in particular, Sky's sponsorship team were singled out for failing to be proactive, instead relying on the money to come to them. However, another said that he had built a coherent and effective team around him and that they put across a unified message, although the quality of what Sky charged advertisers for was sometimes put in doubt.
The nature of Sky Media's message to agencies is also up for question.
A common complaint is that Sky is a technology rather than a vehicle for advertisers and that its presentations are thin on items of interest to media buyers, but Milligan promises that Sky is investing in programmes as well as technology. He says: "We are investing more resource in entertainment than ever before. HBO and Mad Men give a clear indication of where we're heading."
Milligan also says that Sky's technology allows it to have a deeper relationship with its customers and that this would be to the benefit of advertisers: "Technology, data and accountability have changed the way that digital is sold. Television is next and we are uniquely placed to learn a huge amount about our customers from how they view to how they purchase."
The arrival of the VBS channels and the acquisition of Virgin Media Television's channels does create a broader audience for Sky Media, beyond its traditional sports audience of young men. But one TV buying director thinks that the distinctiveness of the MTV channels has been lost: "You wouldn't know that MTV exists any more."
Milligan is adamant that Sky Media now has a more diverse offering to agencies. He says: "Living TV and Nickelodeon bring us women and kids that we were missing from our line-up. The portfolio is now nicely balanced and there's something in there for everyone."
The key point for him is to ensure that they remain distinct and treated as individual stations rather than just get packaged as part of Sky Media's 150 channels, otherwise they will just become part of the commodity sell that agencies claim to dislike.
Total (out of 300): 191
Number of sales staff: 75
Number of channels sold: Three TV channels and two +1 channels, as well as website Five.tv and catch-up service Demand Five
Key personnel: Kelly Williams, sales director; Jason Talley, sales controller; Jonathan Lewis, head of digital media; Tanya O'Sullivan, head of airtime management and operations; Rachael Wheeler, head of sponsorship and AFP
Key channels: Channel 5, FiveUSA and Fiver
Current share of NAR: 7.5 per cent
The fact that Channel 5 scored highest on flexibility is a reflection that it has to work relatively hard to earn its place on schedules. That said, the sales director, Kelly Williams, might not be in for a particularly rough ride this trading season as long as he manages to convince agencies that there are some big programmes coming up in 2011.
"Kelly needs some good news," one buyer says, while another describes him as "just managing to hold the sales operation together" after the departure of the managing director, Mark White.
Although there have been many rumours of future acquisitions, this needs to be forthcoming sooner rather than later. Williams says: "We've got new shareholders who are fiercely committed to gaining market share and we're going to have more investment in bigger programming."
He also promises that next year, Channel 5 will be offering greater cross-media sales with the Northern & Shell portfolio of newspapers and magazines, although one buyer dismissed the practicalities of this. "If N&S starts threatening to punish agencies that don't support Channel 5 by making life difficult with Express Newspapers, we'll just walk away from both," he says.
Buyers are most likely to keep Channel 5 on their schedule for its ability to provide cheap frequency - one buyer describes it as "ITV Poundland". Although if N&S fancies being particularly bold, it could perhaps try to reinvent the sales operation in the style of VBS and ids that media buyers claim to miss so much.
Total (out of 300): 185
After 14 years, ids closes at the end of the year after losing the sales contract for the UKTV portfolio of channels to Channel 4 and following Virgin Media's sale of its channel portfolio to Sky. James Wildman was its managing director.
Total (out of 300): 225
Led by the managing director, Nick Bampton, Viacom Brand Solutions closed at the end of last year when its parent, Viacom, handed its ad sales contract to Sky Media, effective 1 January 2010.
Total (out of 300): 234
This article was first published on campaignlive.co.uk
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