FORUM: Is ONdigital receiving preferential airtime rates? - There is a growing concern among advertisers and agencies over the number of ONdigital’s prime-time ad slots on the terrestrial channels of its owners, Granada and Carlton. Is the digital

If Unilever can sell Wall’s sausages at a discount in its canteen, then why can’t Carlton and Granada give its digital channel, ONdigital, preferential airtime rates for its ad campaigns?

If Unilever can sell Wall’s sausages at a discount in its canteen,

then why can’t Carlton and Granada give its digital channel, ONdigital,

preferential airtime rates for its ad campaigns?



Trite though the comparison may be, it serves to illustrate the pitfalls

of cross-media ownership. It’s a problem that faces groups such as

United News & Media and News International, just as much as the ITV

stations. It’s also a problem that will not go away.



At issue, in this the latest of a number of similar public spats, is the

amount and quality of airtime bought by ONdigital in the Carlton and

Granada regions. Advertisers and agencies alike argue that such is

ONdigital’s presence in these markets that the amount of airtime

available to other advertisers has been reduced and, calculated on a

simple supply and demand formula, the cost of advertising on ITV has

subsequently gone up.



Agencies and advertisers point to the high number of prime-time slots in

ONdigital’s schedule as possible evidence that a preferential deal has

been negotiated between the digital TV company and its joint owners,

Carlton and Granada.



Their frustration is further intensified by the accusation that such

plum ad spots would not be open to them as a package on the open market.

What’s more, if ONdigital is paying a big premium on such sought-after

slots, then this pushes up the station average price and therefore hikes

rates for other advertisers.



While there is no concrete evidence to show any of this has taken place,

the accusers point to the fact that, between January and June, ONdigital

was the second-biggest advertiser in the Carlton and Granada regions

after McDonald’s. According to some estimates, ONdigital’s adspend,

combined with those of other Carlton and Granada companies, now accounts

for 3 per cent of all ITV ad revenue.



Although it is not the first time that such disputes have been waged

(last year, the Granada-owned Little Chef’s weighty presence in the

Granada region attracted the attention of the Incorporated Society of

British Advertisers), it is the timing, coming as it does on the eve of

the annual round of TV airtime negotiations, that makes this latest spat

all the more bitter. ISBA says it will seek ’reassurances’ that nothing

untoward has taken place. But short of referring Carlton and Granada to

the Independent Television Commission, there is little it can do on

behalf of advertisers in shedding any light on a subject that is

conveniently obscured by a veil of commercial secrecy.



Russell Boyman, managing partner of Mediapolis, agrees that the issue is

increasingly becoming a problem. He says: ’I think it comes down to the

trust factor. This latest episode has demonstrated that the mechanism

that we use to trade - station average price - is becoming less

reliable.



If it is not transparent, then of course it’s going to raise doubt in

the minds of every person who is in the business of buying airtime.

Perhaps we are being a bit paranoid but, when you’ve got the big ITV

barons owning more than one franchise, this sort of thing is bound to

happen. So I think our paranoia is somewhat justified.’



John Blakemore, advertising director of SmithKline Beecham, believes the

effects on advertising rates of airtime being ’sucked’ out of the

schedule can only be inflationary. He says: ’I think we could see prices

being raised by as much as 4 per cent because of this.’ Although

Blakemore understands the need for confidentiality in the trading of

airtime, he does think that episodes such as this illustrate the need

for a new currency. He adds: ’I feel no more vulnerable in this

situation than in wondering what price a competitor such as Colgate is

paying for its time. I just feel suspicious, that’s all. But what this

does is illustrate once again the difficulty of coming up with a trading

currency that satisfies all parties: advertisers, agencies and media

owners. And, to date, no-one has come up with that.’



Another concern for Blakemore is that the increase in the share of

revenue - not only of ITV, but of stations such as Carlton and Granada -

could distort an advertiser’s media schedule for the forthcoming year.

Calculated on this year’s prices, advertisers would expect to pay more

money and therefore might allocate more of their budget to Carlton and

Granada than is actually necessary.



Bob Wootton, the director of media and advertising affairs at ISBA,

thinks the prime issue is not really about price. He argues: ’I think it

is highly unlikely that the stations would be offering preferential

deals, as that would be tantamount to getting caught with their hands in

the till. But it is more about the volume of inventory that is being

taken out of the market, which has a real effect on price. The actual

price of the deals might well become an issue at a later date if

suspicions that such a good schedule cannot be bought by ONdigital on

the open market are actually confirmed.’



ISBA has asked agencies and advertisers to analyse the figures to assess

whether there have been any preferential deals given to ONdigital. The

results of that investigation will determine what course of action will

be taken and a formal representation to the ITC is not being ruled

out.



But Steve Platt, the managing director of Carlton Sales, believes the

issue has been blown out of all proportion. He categorically denies that

either ONdigital or any other Carlton-owned company has been given any

preferential treatment. He states: ’They are treated just like any other

advertiser and, if they get good quality spots, they are going to have

to pay for them just like anyone else. This was a bona fide deal and it

would be the same for any other advertiser. ONdigital’s strategy has

been to target major conurbations and that’s why you see them

advertising heavily in the Carlton and Granada regions. Had this been

any other advertiser, I don’t think we would have seen all this fuss.

Had it been McDonald’s or Procter & Gamble, would we have heard all this

noise? I don’t think so. What do they want us to do? Not allow any of

our companies to advertise on our channels - that’s ridiculous.’