Media Forum: Are advertiser TV channels on the up?

Marketers believe advertiser-supported TV channels are back on the agenda. Are they serious, Alasdair Reid asks. First it was plain-old product placement. Then this modest invasion of the programming domain evolved into advertiser-funded programming. Now advertisers are setting their sights even higher - whole advertiser-supported channels are back on the agenda.

A couple of years ago, we saw a number of initiatives floundering and the highest-profile failure was Sainsbury's Taste channel. Launched in November 2000, it closed in August 2001. Boots' Wellbeing channel folded around the same time.

But the notion has been gaining ground again in the US, thanks to advertisers such as Coca-Cola and Procter & Gamble urging their agencies to think beyond traditional spot advertising, combined with fears over the possible impact of personal video recorders on advertising recall. And the subject was a hot one for delegates at last week's Mipcom, the content conference for the TV industry.

Coke and P&G aren't the only advertisers who believe that the industry has to learn new tricks - there's renewed activity on this side of the Atlantic, too. Neither Thomas Cook TV (a transactional channel that launched in 2001) nor London TV (a tourist board listings channel launched in July of this year) are full-blown branded entertainment channels. But Carling recently announced plans to launch a music-based channel and both BMW and Audi are working on the concept.

But are these branded-entertainment channels really a vision of the future or a misguided product of unnecessary desperation?

Tess Alps, the chairman of PHD Group, reckons that even if they're sceptical, most advertisers will be looking to make an investment in this area, even if it's just about hedging their bets. She states: "It's the same debate there was years ago about whether individual brands should have their own websites or should focus on seeding content into other websites. Not all brands are going to be able to generate a significant level of interest in a broadcast environment. Having said all that, I am dead certain we will be seeing more branded content in all sorts of places. In five years' time, they may be very glad they started looking at this when they did."

Perhaps predictably, just about everyone with an interest in this sector believes the effectiveness of conventional spot advertising will inevitably begin to plummet over the short to medium term. Mark Falconer, the managing director of Stream, TBWA UK Group's branded-content agency, points out that in the US, advertisers are keen to replicate the success of programming such as The Restaurant, an NBC show co-funded by three advertisers, Mitsubishi, American Express and Coors.

But many observers thought it featured far too many "ham-fisted" product plugs. And, indeed, Falconer admits, we're still at an early stage in developing a robust model for advertiser involvement in programmes. He comments: "It doesn't work when you focus on the brand rather than on the programme content. You must be responsible about how you integrate the brand. I think, though, that broadcasters now accept that advertisers can be responsible."

Some, however, point out that the figures just don't add up. Sure, it's relatively inexpensive to be a broadcaster these days but even the cheapest and nastiest channel on multichannel TV demands a programming budget of £20,000 an hour. If you're on air round the year for around ten hours a day with that sort of budget, you're looking to burn in excess of £70 million.

Even if you are a multinational conglomerate and can spread that budget across many markets around the globe, that's still a huge investment with no certain prospect of return. Especially when you consider how difficult it is to produce anything even approaching compelling television on a budget of £20,000 an hour.

Simon Wells, the head of commercial development at the branded TV production company enteraction, which produces both London TV and Thomas Cook TV, says some of the figures bandied about are well wide of the mark. "You can produce a compelling channel on a core of around 50 hours quality programming a year with that content being updated continually," he says.

Is this plausible? We may soon find out. But Mark Boyd, the director of content at Bartle Bogle Hegarty, says there is a lot of hype around.

"It seems to be something to do with the number of conferences on the subject reaching a critical mass," he reckons. "Don't believe all you hear. I don't expect to see the launch of many channels in the short to medium term."

- "We know that people try to avoid ads - but that doesn't mean they will want to watch advertorials. They'll only watch an advertorial if it is brilliant entertainment. It's terribly hard to make fascinating entertainment that conveys a commercial message." - Tess Alps chairman, PHD Group

- "There's a greater sense of urgency in the US because of the rapid uptake of PVRs and there's a greater tradition of close involvement between advertisers and programme-makers. The broadcast market in other countries, such as the UK, is not always as amenable." - Mark Falconer managing director, Stream

- "We're not talking about conventional TV. You won't sit down in front of it and say 'entertain me for the next four hours'. It will be about applying the same sort of parameters that are appropriate on the web." - Simon Wells head of commercial development, enteraction

- "I don't think anyone really believes that launching their own channel will solve all their problems. And we've been here before - eight years ago, everyone had to have a website. It's surprising when you see normally rigorous people swept along by this sort of thing." - Mark Boyd director of content, Bartle Bogle Hegarty.