Good news fails to raise a smile from advertisers

TV advertisers and airtime buyers have much to be content with in 1998. Commercial TV audiences are growing. This year, airtime inflation for most demographs will run below the Retail Price Index. And the vast majority of TV deals have been delivered. These are positive trends, but advertisers are still not happy.

Market conditions may be improving, but airtime sales practices are increasingly seen as restrictive and out of touch with advertisers’ requirements.

Two recent phenomena have encapsulated much of what is wrong with the buyer/seller market. First, the World Cup. June ITV prices were on average 13 per cent cheaper than last year, despite the fact that the channel was showcasing the most highly valued TV event of the year. Yet very few advertisers could take advantage and pick up cheap airtime at short notice.

Many had already been scared away by quoted rates, while their agencies were deterred from buying late because “short-term” buying on ITV has come to mean paying a “premium price”.

The second phenomenon is Channel 5. In the past six weeks, C5’s commercial audience share has grown to eight per cent – a rise of 64 per cent year-on-year. C5’s price actually gets cheaper as its audience grows. It is currently as much as 70 per cent cheaper than ITV on some demographs.

But C5 feels aggrieved. It cannot attract additional advertising money as 90 per cent of airtime budgets have already been committed in share deals, and there is nothing left in the agency pot.

These two phenomena are not isolated incidents. As viewer choice increases, there will be greater volatility in audience shares – and therefore airtime prices – than ever before.

But just as greater opportunities emerge, the TV buying culture has become risk-averse. Advance booking deadlines have got longer, late money is penalised more heavily than before, and agencies are under increasing pressure to deliver discount guarantees. As a consequence, the short-term market barely exists and audience success is not followed by cash. But the sales policy will not change simply because of the generosity of the larger sales houses.

Advertisers can help to create a climate of change by rewarding absolute price achievements, rather than relative discounts, and by taking a more circumspect view of what constitutes “value”. However, perhaps the key lies with the media buying companies themselves.

As consolidation creates even larger media buying groups, the balance of power may at last start to shift back from the seller to the buyer. It falls to the emerging super-buyers to exact a more flexible approach from the sales houses.

If the buyers fail, however, then many advertisers will start to negotiate for flexibility from their own media buyers. While some advertisers will gain, many other deals will be left in a very sorry state indeed.

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