MEDIA: FORUM; What changes will Channel 5 bring to TV trading?

Things are starting to happen at Channel 5. But concrete details - on its programme strategy and the audience it intends to target, for instance - remain thin on the ground. Is the market pleased with what it has heard so far? And just how tough is its airtime sales task likely to be? Alasdair Reid reports

Things are starting to happen at Channel 5. But concrete details - on

its programme strategy and the audience it intends to target, for

instance - remain thin on the ground. Is the market pleased with what it

has heard so far? And just how tough is its airtime sales task likely to

be? Alasdair Reid reports

At last there seem to be signs of activity on the sales and marketing

side at Channel 5. Not before time, some would say. At the end of this

summer the channel, which launches in 1997, is going to ask agencies and

their clients to sign on the dotted line and stump up some advertising


Channel 5 has a strong team in place - Nick Milligan as sales director

and David Brook as marketing director, for instance - and it obviously

means business. Last week it sent a mailshot to the advertising

community and Saatchi and Saatchi was given the task of running the

channel’s first campaign (Campaign, 3 May).

A new Media Audits survey of advertisers, however, suggests that on

average they are planning to divert just 5 per cent of their 1997 TV

budgets to the new channel, although more than 90 per cent said that the

majority of this money would come from ITV.

The survey also revealed that advertisers’ favoured currency for trading

airtime on Channel 5 is a price relative to ITV station average price,

followed by fixed pricing and a Channel 5 station average. Most welcome

Channel 5 because they hope it will offer them the opportunity to reach

specialist audiences, providing sales competition to existing channels

or a low cost per thousand are less important.

So are advertisers and agencies encouraged by the noises they’ve heard

from Channel 5 so far? Is the channel about to enter a ferocious bearpit

of a market?

Nick Milligan at Channel 5 says that he’s keen to do battle, but he

points out that the channel still has some enormous tasks ahead of it.

‘We are structuring a retuning strategy, building a programme schedule,

commissioning our original product and developing our brand,’ he

insists. ‘We intend to build a mass, modern, youthful and energetic

channel and we have the BBC in our sights. We will inevitably increase

the hours of commercial viewing and help to ease audience-related cost

inflation in the TV marketplace.’

This will be good news for all advertisers. But Milligan has bad news

for ITV: ‘In 1997, more than a third of all audiences will be supplied

by national channels [Channel 4, Channel 5 and satellite]. Advertisers

can take advantage of this one-stop ease-of-purchase and then top up

where necessary using regional contractors. Also, fixed price deals and

deals that reflect audience delivery are here to stay. Contractors such

as ITV, which sell relative discounts to disguise their decline in

audiences, will increasingly need to justify their absolute price.’

Fighting talk. Will advertisers buy it? Patrick Burton, the group media

manager of Allied Domecq, is confident that the Channel 5 team will get

it right. ‘There are some people around who believe that Channel 5 is

going to be an ITV clone,’ he states. ‘Our view is that if it turned out

that way, it would be of little use to us. It must carve out its own

niche. The problem is that it will not have a huge programming budget.

It will have to rely on innovation and the quality of its thinking. I’d

like to think it can pull it off.’

As for the negotiation period coming up, Burton believes that ITV will

control the agenda. ‘I think that Channel 4 will react imaginatively.

But ITV might see its role as doing anything it can to kill Channel 5,’

he says.

‘If it does, that will affect our negotiating stance. When Channel 4

began selling its own airtime in 1993, it tried to get advertisers to

talk to it first and then fill up the gaps using ITV. It was a terrific

ploy and it almost worked. Channel 5 - maybe alongside Channel 4 - could

perhaps pull it off this time around because the market has moved on in

the past three years.’

Will ITV really attempt to punish advertisers for using Channel 5? The

easiest way for it to do this would be to insist on negotiating deals

against a share of all broadcast spend - in contrast to its current

practice of dealing against a share of all ITV spend.

Jerry Hill, the managing director of TSMS, says that ITV is already

heading down that path. ‘As the stations square up to increasing

competition, it is likely that the sales houses will naturally develop a

sales policy along more common lines,’ Hill says.

He agrees that the three ITV sales houses are undoubtedly reviewing

their individual policies. ‘One thing is for certain - those sales

policies will be evaluated within the context of the total commercial

market, not just against Channel 5,’ he maintains. ‘After all, current

forecasts put Channel 5’s revenue alone at one fifth of Channel 4’s -

and therefore there are other potentially broader considerations to be


‘All three sales houses want to see the ITV network win the highest

possible share of revenue and will use the most effective policies that

the market will permit in their endeavour to achieve this. Success will

be determined by competing on many fronts, not just policy alone. We

will continue to win the lion’s share only if our product mix is right,

our marketing to both viewers and advertisers is relevant and

influential and if our sales and servicing techniques continue to make

the progress that they have.’

Tess Alps, a partner at Pattison Horswell Durden, is confident that

Channel 5 can attract an audience worth having and she believes that it

will enjoy a ‘honeymoon period’ in the airtime market.

‘For advertisers, the channel is the last great hope to take viewing

away from the BBC,’ she points out. ‘We can only hope that the audience

is there to justify the money that it will attract. I wouldn’t be at all

surprised if major advertisers have already had conversations with

Channel 5. ITV will be powerless to stop that happening. It may dream of

bringing in punitive trading conditions designed to deter people from

using Channel 5 but people just laugh at the word punitive these days.

ITV can’t act as if it is still in a monopolistic position.’

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