Advertising might continue to be a relatively unimportant source of
revenue for BSkyB - just under 14 per cent of the total - but that side
of the business has really started to take off in a big way. Just look
at its annual results, published last week. In the year to 30 June 1998,
Sky’s ad revenues were pounds 195 million, up a whopping 30 per cent
year on year.
Just what is going on? Some buyers believe this to be a purely
mechanical phenomenon. Dish sales might be slowing but cable growth is
largely compensating for that.
More subscribers means bigger audiences. That means advertisers have to
pay more for the privilege of reaching them. If you then factor in a bit
of natural inflation, you’ll derive a figure not that far removed from
30 per cent.
The truth is a little more complicated. Sky’s big strength - its USP in
the airtime market - is adults under the age of 44. Because of growth in
subscriptions and a slightly greater share of viewing in multichannel
homes, Sky’s total young adults impacts increased by 13 per cent year on
year for the January to May period. Add in that little bit of natural
inflation and you arrive at a figure of 15 per cent growth due to purely
Which still leaves us far short of that 30 per cent figure. The balance
is down to that holy grail of sales: increased yield. So what’s the
How have they done it?
According to buyers, there are two big factors. Point one is that Sky
has become crack optimiser of its airtime. Take the example of an
advertiser that wants a campaign of ten ratings against housewives. If
you schedule the commercial into breaks where each delivers one
housewife rating, you use up ten ad breaks. But slot it into a break
that has a housewife rating of ten and you only use up one break, still
leaving you another nine to sell. Easy, you might think, but it’s odd
how many broadcasters still manage to run sanpro ads in the half-time
breaks of football matches.
Point two is all about critical mass. Two years ago, Sky’s airtime was
regarded as a commodity. Its airtime was, on average, half the price of
ITV’s, so buyers would buy 5 per cent of their schedule on Sky to keep
But it didn’t have any distinctive programming and although its audience
was biased towards the younger age group, it didn’t deliver any extra
cover that you weren’t already getting via ITV.
These days Sky does deliver unique cover, and it also has some extremely
attractive advertising environments. When buyers start asking for
specific programmes, the trade-off is that the seller can start pulling
back some discount.
David Connolly, the joint media director of Leo Burnett, explains: ’In
the past, when Sky was merely being used as a cost-reducer, agencies
tended to dictate terms. Now that it has realised critical mass and is
delivering cover in its own right, it is able to take much more control
Mick Perry, the deputy chairman of Universal McCann, would add a third
factor: namely, the sales director, Peter Shea. ’I’d say this was the
biggest factor. He has a strong level of contact with many major clients
as well as key decision-makers at buying points. He’s a tough guy who
knows the value of what he’s selling to advertisers.’
Others echo this opinion, adding that Shea has more-than-able backup
from the sales controller, Mark Chippendale, and the client sales head,
Is Sky emerging as a big player in the sales arena? Well, perhaps. But
many believe that, notwithstanding all the good points, there’s still a
clear lack of strength and depth.
As the boss of one media operation puts it: ’It doesn’t matter how good
you are if you don’t have a heavyweight market share when it comes to