Press Coverage

TV ad trading is ripe for change

Dean Wilson 01 Mar 2011

Dean Wilson, UK managing director at Active International, says as we leave the noughties and get stuck into the teens, expect more change and plenty of ‘Teenage Kicks’ reverberating loudly in the TV mosh-pit...

2010 was a great year for TV advertising, if you were a channel at least.

After all, digital is not killing TV, much to the consternation of trend-watchers, and there is good evidence live TV fuels conversations on social media, a particularly hot topic right now.

If you were an advertiser or media agency, 2010 was a year of inflationary rates and managing guaranteed pricing deals.

But what about the year ahead? After collating media agency forecasts for TV advertising in 2011, the consensus seems to be on a fairly neutral market overall. A likely small increase in demand (revenue) with some supply-side (loss of impacts) will mean slight inflationary pressure, varying widely on a monthly basis.

There has also been further consolidation on the media owner side, with fewer major sellers trading with buyers in 2011 than in 2010, with Sky Media taking on Viacom Brand Solutions and the Virgin Media channels; and the UKTV channels moving to Channel 4.

Traditionally, advertisers and media buyers have considered consolidation amongst media owners as a threat, leading to less flexible trading terms, cross-selling and higher prices.

In 2011 these concerns are not confined to TV; cinema, outdoor and online have the same issues. But what about the major TV channels - how buoyant are they and what do advertisers and media buyers need to bear in mind?

Channel 5 appears to be in a tough place as they have a lack of any programmes guaranteed to deliver huge audiences. However, Richard Desmond is not to be underestimated in his ability to turn an ailing media business into a cash-cow. The widely talked about deal with Endemol to secure Big Brother for C5 is on paper a match made in heaven. Nonetheless BB is a big gamble for them and it will be interesting to see whether Desmond cuts a deal, driving-down the price he pays Endemol, perhaps including performance related bonuses. In my opinion it’s not guaranteed that cross-promotions in Desmond’s press and magazine titles for the likes of BB will have sufficient reach and influence to deliver a banker for the channel.

Sky has successfully positioned itself as the UK broadcaster with the widest range of programming, even more than the ad-free BBC channels. Sky Atlantic is the latest addition to its exclusive subscriber offerings. Although the HBO programmes shown on Atlantic deliver relatively low audience numbers, these shows garner massive critical praise. Sky have continually shown their ability to give people what they want, and often previously got for free, enabling them to reduce churn and attract pay-tv refuseniks. The key issue to watch with this UK mega-player is whether with its solid 10 million+ subscriber base and a focus on average-revenue per customer, it continues to be as advertiser friendly.

Channel 4 has a newish boss and a raft of new channels to sell, as it is now also responsible for the UK TV portfolio of channels. This is interesting because C4 has historically been sold at a premium to TV buyers because it has a greater proportion of upmarket and lighter viewers than other terrestrial TV channels, whereas the UK TV channels have previously been sold at a discount to the market. The big question is - will C4’s sales policy guarantee an upturn in commercial revenues commensurate with increases in their commercial impacts?

ITV had, by anyone’s measure, a fantastic 2010 and it is testament to the power of TV, in the face of forecasters rubbishing the “linear” broadcasting model that is still ITV’s bread-and-butter. Nothing changes fundamentally this year with the exception of the commercial management team. ITV’s clean-out of its highly successful old-school traders signals a change of sales strategy. ITV continue to lobby for the removal of the restrictive, from their perspective, contract rights renewal mechanism (CRR). It looks like there is going to be a “short focused review” of the TV trading market, which would probably lead to the end of CRR.

Perhaps now is the time for ITV to strike first and move to abolish share deals and look at more flexible commercial propositions better suited to advertiser’s needs. This will allow them to kick-start the commercialisation of their entire media portfolio.

For TV advertising to really prosper, new and more flexible ways of investing in commercial TV are needed. Product placement, sponsorship, advertiser funded programmes, video-on-demand, online and social media synergy are already there.

The millstone of share deals, which in my view the market doesn’t need any more, just results in TV buyers switching money between two or three of the sales operations, with smaller players, left scrabbling for the scraps. However, don’t expect any transition to be smooth; this is TV trading we are talking about.

So as we leave the noughties and get stuck into the teens, expect more change and plenty of ‘Teenage Kicks’ reverberating loudly in the TV mosh-pit.


Dean Wilson

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