A couple of months ago, Campaign asked a handful of TV buyers to
predict the big issues in this year’s round of annual airtime
negotiations.
A broad range of topics was raised but only one common strand appeared -
without exception, the buyers said they expected ITV to provide
incentives for advertisers to use ITV as a whole.
Traditionally, the three ITV sales houses have been obsessed with
competing against each other and have been seemingly oblivious to the
fact that Channel 4, Channel 5 and satellite have been nicking an ever
increasing share of the whole TV market.
As a result, Laser, TSMS and Carlton have been squabbling over an ever
decreasing ITV pot. Now they realise it’s time to call a truce and
insist on negotiations based on ITV’s share of all the client’s
broadcast spend.
In other words, decree that the more a client spends on ITV as a whole,
the bigger the discount it can get.
For years, agencies have sniggered at ITV’s stupidity in failing to take
this obvious step. One buyer, from one of the biggest players in the
market, even stated recently (off the record, of course) that this
failure was ’the biggest mistake in the network’s history’.
Well, surprise, surprise, ITV sales houses have decided that this year,
they’re actually going to do share of broadcast deals. And guess
what?
Media specialists are apoplectic with rage. Advertisers in the
membership of the Incorporated Society of British Advertisers - many of
them at least - are also unhappy bunnies.
Isn’t this a bit rich? They knew it would happen. Sales bosses admit to
being taken aback by the vehemence of the public comment last week as
the issue began to surface. Mick Desmond, the chief executive of Laser
Sales, maintains share of broadcast deals have been around for a long
time at ITV. But he does admit that the climate is changing. ’If an
advertiser is not giving the ITV network a reasonable share of its
budget, can it expect to gain access to our premium programmes, such as
sport?’ he says.
’I am here to make as much money as possible for Laser in competition
with all other television sales points but I am very conscious that the
more money that comes into ITV, the more the network will have to spend
on its schedule - and the more we will be able to deliver for
advertisers. National channels have been putting similar pressures on
advertisers for a couple of years now.’
Martin Bowley, the managing director of Carlton UK Sales, can’t see what
the fuss is about either. He comments: ’ITV is completely reinvigorated
these days. We have something extremely powerful to sell. If you take
the broad view, we are seeing a result of the fact that there is no more
discount to be had from ITV - and, in fact, we are now pulling discount
back. Agencies don’t like it. More discount each year has been a fact of
life for them for the last God knows how long. But I was amazed at some
of the comments I saw in the press last week. I do not think it reflects
well on the agencies concerned.’
Agencies, though, believe they have genuine concerns on a number of
points.
First, that the sales houses have been acting incredibly arrogantly,
presenting their view of the future as a fait accompli. Second, that the
sales houses have been chancing their arm in a major way - setting the
share they expect to get at a ludicrously high level. For instance, ITV
took, on average, 65 per cent of all TV spend last year. There are
indications that it wishes advertisers to spend the same proportion of
their budgets on ITV again next year - even though ITV share of impacts
will almost certainly be down. In other words, the network is using this
as an excuse to charge more of a premium for its airtime.
But the third concern is the most serious. Media specialists and some
clients are very worried that the three sales points could effectively
be working in collusion. Obviously, they have all hit on the same policy
at the same time. That isn’t a problem - but if it goes further than
that and they co-ordinate policy on individual deals, that would be a
cartel and clearly illegal. The Incorporated Society of British
Advertisers and the Institute of Practitioners in Advertising are
monitoring the situation and are discussing how they might construct a
joint response to the developments.
Jim Marshall, the chief executive of MediaVest, agrees that there is
cause for concern. He believes that it’s possible he could be penalised
by one sales house if he didn’t use the other two. ’Sky might talk to me
about share of broadcast but it’s not contingent on what I spend on all
satellite channels. You can’t sign a deal that proscribes what you sign
with other organisations. Clients must have the opportunity to deliver
against their marketing objectives and, in seeking to do that, have the
ability to deal with each sales house quite separately.’
If ITV succeeds, the policy will, of course, be a disaster for Channel
4, Channel 5 and satellite. Or will it? Absolutely not, insists Nick
Milligan, the sales director of Channel 5. ’Money follows viewing and
that is why ITV has a problem. Share of broadcast deals based on
audience not (as ITV sales points propose) on revenue will be the
future. ITV has never been in such a weak position. Its volume of
audience is at its lowest and its profile the oldest it has ever been.
ITV wants to punish advertisers who want to follow the audience. A
position of ’no support, no sport’ is quite ironic when its best sport
is sold separately to most deals,’ he says.
And Milligan is sceptical whether the sales houses have the resolve to
stick to their guns over this new policy. ’Judging from agencies’
reactions, I think the market has already made up its mind. Agencies and
advertisers don’t like being told what to do and now they have a choice.
Channels 4 and 5 and satellite will provide that comfort. A number of
buying points will dig their heels in and buy national stations until
ITV compromises.
ITV’s sales policy could be the best Christmas present that we could
have wished for.’
