MEDIA: What are advertisers willing to pay for Freeview?

The launch of Freeview at the end of the month should put digital terrestrial TV back on track. Will advertisers buy into it, Alasdair Reid asks.

If the forthcoming BBC promotional campaign for Freeview hits its targets, every single member of the UK population will see at least 100 messages about digital terrestrial television within the next 12 months.

That's an enormous campaign by any reckoning - to hit similar targets with 30-second ads on commercial channels would cost in the region of £100 million.

There will be no Monkey - but equally there will be no hiding place.

There will be no acceptable excuse. You either buy your digital terrestrial decoder box or the campaign continues for another year. But maybe it won't be much of an uphill struggle. Maybe the time is right for the last phase of the digital revolution to acquire some real momentum.

Dixons last week was selling boxes for £80 and there's talk in the retail trade that by next year there will be some products available for around £30. By the time the electronics are integrated into all new TV sets as standard, these gizmos will be changing hands for loose change.

So price won't be much of an entry barrier here. But what about the programmes?

That, after all, is the whole point here. Last week, in the run-up to Freeview's 30 October launch, it confirmed its channel line-up. There's an almost complete portfolio of BBC properties - Channels 1-4, News 24, Parliament - plus the usual terrestrial suspects, though while ITV2 is also there, E4 isn't. Sky News and Sky Sports News are aboard, plus Sky Travel, which is a transparently obvious stalking horse for a yet-to-be-unveiled general entertainment proposition. There are a couple of music channels, plus three Flextech offerings including a new entertainment channel that labours under the vowel-lite neologism, Ftn. It's apparently nothing to do with Japanese sofa beds, though.

Is this line-up going to look attractive to the punters - especially those who've proved resistant so far to the whole notion of multi-channel TV? And if Freeview is a soaraway success, what implications will there be, if any, for the media marketplace?

David Cuff, the commercial director of Flextech, argues that this channel line-up extends choice for current multi-channel rejecters - and for people who already have pay-TV, it gives them the chance to pick up additional channels for second sets. "Our channel offering hasn't been put together on a wing and a prayer - we've done a lot of research among the rejecters and the maybes. For instance, there's a whole tranche of ABC1 male rejecters. They say they don't watch ITV and are anti-Murdoch for one reason or another, but they do tend to watch quality TV such as UK History."

So does Cuff expect a great stampede to high-street electrical shops?

"Who knows?" he responds. "There will be a significant amount of marketing behind this and I think the campaign, allied to the price (of the decoder boxes), will be the main stimulus - but content is also vital and I think people will be pleased with what they see. Any time you ask people questions about the attractions of digital, the responses are usually about getting more channels."

And, of course, Sky and the cable companies are happy to be involved, confident in the knowledge that, having acquired a taste for multi-channel television, many of these late adopters will trade up to the real thing.

One agency that has recently researched the attitudes of multi-channel rejecters is Starcom Motive. David Connolly, an executive director at Starcom, says: "A viewer's decision to enter the multi-channel arena is based on three key factors - channel-package offering, value for money and, for the older generation, the difficulties in embracing new technology.

Freeview will appeal to an audience that has long been awaiting a compromise between terrestrial and pay-TV packages. The terrestrial audiences most inclined to adopt Freeview are the older group of BBC loyalists as well as younger families. Until now, the cost and package value of pay TV has barred the way for them adopting digital TV."

Connolly believes Freeview's one-off cost and relatively wide channel offering will remove such obstacles for these audiences. But he also thinks Freeview purchasers will not solely be upgrading from analogue. The portfolio of news, entertainment and children's channels will offer some basic pay-TV subscribers a lower-cost option, particularly in empty-nester households and homes with young families. For the latter group, a key consideration will be whether to sacrifice quality (E4, Cartoon Network, Nickelodeon) for value (BBC3, Boomerang, CBBC and CBeebies).

But will there be significant implications for advertisers? Will a big rise in multi-channel viewing in rejecter households - by definition big consumers of ITV - transform the dynamics of the airtime market?

Nick Theakstone, the head of investment at MindShare, agrees the whole proposition looks very attractive. "Pay your money, no contract and, bang, you're away. I think there's a good mix of channels from a consumer point of view and it has to be good news for advertisers that there's another platform out there. Yes, it could give a boost to Sky at a time when ITV continues to struggle. But, equally, we can't ignore the fact that this is a very competitive market. Competition means TV channels have to deliver quality or people won't watch. Overall, though, I think it could lead to an increase in commercial impacts, which will lead to an overall drop in the price of airtime," he states.

Which advertisers will welcome, obviously. But Alan Doyle, Volkswagen's communications director, says he has a few niggling worries about the channel line-up - for instance, he'd like it to include more entertainment channels. "With the great proliferation of channels, it's important to maintain a balance. I think it also emphasises Sky's dominance in terms of sport. At least ITV Digital provided some semblance of competition in sport. Now, even collectively, the rest of the market just can't compete with Sky," he says.

But is Freeview likely to encourage a rapid conversion of current rejecters?

And if it does, is that in advertisers' interests? Doyle thinks that, on balance, it is. "Multi-channel means more television, which means people have to make more effort to choose. Which in turn means there is more appointment-to-view programming and that tends to be a good environment for advertisers."

But isn't it likely that ITV will be the terrestrial channel with the most to lose as multi-channel expands? Perhaps, Doyle agrees. He sums up: "ITV may well have to reappraise its performance in the market. Maybe someone will have to look into the abyss and say: 'Hang on a minute, there must be another way, we really do have to change.'"

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