Call to end the station average price system

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.

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

advertising.



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

delivery.’



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.



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