The current mechanism of trading TV airtime is heading for
meltdown, according to participants at last week’s TV conference in
Monte Carlo, where more than 70 per cent of delegates called for an end
to the station average price system.
Delegates heard that while station average price is universal, flexible
and proven as a trading currency, it is open to abuse.
Phil Georgiadis, the chief executive of Initiative Media, described
station average price (SAP) as a ’charter for inflation’. Discount is
the prime driver behind the SAP mechanism, according to Georgiadis, but
actual cost inflation is masked. However, he went on to suggest that
calls to scrap SAP could lead to rising prices for peak-time
Bernard Balderston, the media manager of Procter and Gamble, pointed out
that: ’Station average price exacerbates airtime inflation and is no
longer a workable mechanism.’
John Blakemore, the advertising director of SmithKline Beecham, said SAP
means that ITV doesn’t have to guarantee an audience volume and, when
audiences fall, under the SAP system, prices rise.
Initiative’s broadcast director, David Cuff agreed, adding: ’If
advertisers accepted a fixed price mechanism, it could help halt ITV’s
audience decline by incentivising ITV to maximise its audience
However, Laser Sales’ chief executive, Mick Desmond, pointed out that
fixed prices would mean that advertisers themselves would need to commit
to delivering a certain volume of spend, and claimed that some
advertisers in the UK were reluctant to do this.
When asked to vote, 72 per cent of delegates voted in favour of an end
to SAP, with 38 per cent of advertisers admitting that they were already
asking their media buyers to look at trading off a different currency.