Airtime negotiations for the forthcoming year are in full swing, a juicy sales house/buyer (Laser/CIA) row has hit the headlines and ITV is rumoured to be examining numerous alternatives to the apparently discredited station average price (SAP) trading currency. You might say plus ÃÂ§a change.
This time, though, the outcome of each of these processes is more crucial. The pressure is, as ever, on ITV to outsit yet another new competitor. I have no doubt that Channel 5 will, by now, have studied every component of Channel 4’s sales strategy very carefully since its commercial independence in 1993.
Plenty of disaffected ITV advertisers are being teed-up by C5, this time wooed by the convenience and reward of doing business with someone else offering cheaper prices as well as the majority of the UK in one conversation, rather than the three arguments from the three ITV sales houses.
For media agencies, the outlook is also a little rosier. The inclusion of a new purchase point to the channel mix will enliven even the dullest spreadsheet. But such euphoria is going to be short-lived if the three competing ITV sales points fail to agree a common plan for change.
Think about it. How many other businesses, with the good fortune of owning two-thirds of the market, talk in terms of “managing decline”? In what other industry – with the possible exception of personal banking – is the investor so overtly reluctant and the profit-taker so divorced from the reality of its customers’ attitudes?
ITV bemoans the under-valuing of its prime time with the monotonous regularity of a spoilt child. We hear, but we do not listen. While it is true to say that SAP reduces all audience supply to a lowest common denominator, the onus still rests with ITV to continue to prove its case for attracting a premium against all other channels. But keeping the present currency cannot possibly further this ambition.
No change in the trading system is going to be achieved unless the majority of buyers feel comfortable that they are not seen to be jettisoning years of accepted thinking. The current, combative timbre of airtime negotiations does little to advance this cause and it is difficult to imagine ITV succeeding in imposing a fresh system.
Moreover, since no other channel declares or trades against its own SAP, ITV’s claims that advertisers wish to retain this system sound a little tenuous. In any event, why create a benchmark which assists allegedly inferior competitors to set their own market rates?
Those supporting change talk of how rival media regulate their own markets perfectly well without “average anything”. However, agencies opposed to change worry that without the market information SAP provides they will not be able to compete with big buying points.This in turn would, they argue, increase the power of media auditors.
Reference to experiences in the US provides interesting insights. SAP has never been used as a trading mechanism, and genuine competition between television networks is more developed because there is no dominant supplier.
Rather than impede self-administered deal-making, this has encouraged individual buyers and sellers to concentrate all their energies on what works best for them – not everybody else – and conduct negotiations without the distraction of an increasingly irrelevant currency.
The UK tendency is to measure everything which is measurable, regardless. This mentality too often trashes a particular media approach on grounds of simp licity, rather than the efficacy.
Ranged against change is the fact that ITV is three competing sales points, all worried about their share of revenues. An ITV with a single sales point would immediately ditch SAP. Also opposed are temprementally opposed media buyers, who by reputation, are slow to embrace change.
Driving change are the advertisers whose faith in the TV contractors has hit rock-bottom. What better time for enlightened ITV powers to restore the confidence of their customers?
ITV’s back-room technicians have mastered the art of optimising a declining audience supply. It cannot be beyond their skills to deal, manipulate and slot campaigns negotiated in advance at fixed rates. Getting it right would yield greater revenues to re-invest in superior programmes and an ability to predict how much or how little has been promised to buyers on a forward basis.
Most importantly for advertisers, it will help focus ITV’s efforts on beating the BBC. Right now, ITV has only a minor incentive to increase its audiences. Up-front, fixed pricing will ultimately benefit everybody. But the task of convincing the market to put aside its fears and prejudices falls to the leading market maker, ITV.
My advice to advertisers is to prepare for a change for the better. Like decimalisation, it isn’t necessarily going to be popular early on and the occasional cheeky price hike may catch out the unwary. Check your change carefully – mistakes will not be rectified.