Out in the cold

While owners of media companies welcomed the communications White Paper, advertisers were left feeling cold-shouldered by the Government. Far from being the “communications revolution” promised by culture secretary Chris Smith, the long-awaited White Paper appears to be aimed at avoiding conflict with media owners and consumers in the run-up to a general election.

Advertisers say the Government’s efforts to appease media owners fails to protect the advertising industry from proposals such as the removal of the barriers to merging ITV’s owners Granada and Carlton, so paving the way for a single owner.

Advertisers’ concerns over the resultant market sales power of a single ITV are not allayed. An ITV owned by just one company would have a 60 per cent share of TV’s £3.3bn annual advertising revenue. The White Paper does not allow for further consultation on the separation of sales structures from the broadcasting company.

Despite months of lobbying by the media industry, the Government has not extended self-regulation to include broadcast advertising. Instead, control for regulating ad content is to be handed to the new regulatory body Ofcom.

Ofcom will encompass the roles of the nine current regulators including the Broadcast Standards Commission, the Radio Authority, Oftel and the Independent Television Commission.

Fury in the market

Advertisers are furious, believing they have been cut out of the media equation. Trade body the Incorporated Society of British Advertisers (ISBA) calls the paper a “missed opportunity”.

ISBA says it fails to fully recognise the role of advertising both in enabling competition and innovation in economy and in funding the media.

The industry body argues Ofcom should have a “duty of care” to look after advertisers’ interests as well as those of broadcasters and consumers.

“We do not really understand why advertisers have been excluded in this way,” says Ian Twinn, director of public affairs at ISBA.

“It is very important that Ofcom has a statutory duty to look after the concerns and interests of advertisers such as competition issues, access to channels, minutage, and ownership issues. Without that, it is not going to have the support and respect of a major part of British industry,” says Twinn.

ISBA is seeking expert competition advice on the implications of the removal of the rule that bars any one ITV company controlling more than 15 per cent of the total television audience.

“Serious financial interests of advertisers are at stake here. Human nature is such that people are moved towards charging monopoly prices if they can get away with it. We need protection from that,” says Twinn.

The Institute of Practitioners in Advertising (IPA) shares ISBA’s concerns about the lack of protection given to advertisers: “At the end of the day it is advertisers that fund the commercial broadcast sector and the Government needs to pay attention to the sort of things that we need,” says director-general Nick Phillips.

IPA president Rupert Howell adds: “We would have wanted much more recognition of the role advertising has in funding a pluralist media and an acknowledgement that their concerns are as important as anyone else’s.”

But John Horrocks, broadcast director at Walker Media, is not convinced it is realistic to expect the Government to introduce legislation to protect the interests of advertisers.

“I cannot see how they can do it because it will be impossible to cater for everyone. Someone with lots of money like Unilever or Procter & Gamble needs ITV more than a small advertiser because they need to reach a mass audience.

“But then again they spend so much money that they will be in a very good position to negotiate,” says Horrocks.

The advertising industry’s concerns are shared by Channel 4, which fears ITV consolidation will lead to a less competitive sales market.

Any merger between the two ITV owners will have to comply with fair trade legislation and the fact that the resulting company would be left controlling 60 per cent of advertising spend will not be taken lightly.

But a source at Channel 4 says the Government’s endorsement of consolidation is likely to sway the competition authorities in favour of such a merger.

The question remains as to why an industry that funds at least 80 per cent of public service broadcasting has been so neatly cut out of the equation.

Twinn thinks the omission is accidental and based on a lack of understanding of the role of advertising in the British economy as well as a failure to recognise the changing media landscape.

“I think the Government takes advertising for granted: they think advertisers have no choice – where else would they go? That may have been true when there was just terrestrial television and radio. But the changing media landscape and the move to digital TV opens up new avenues for advertisers and the Government cannot take us for granted any longer,” says Twinn.

But ITV is still the only medium for advertisers to reach a genuine mass audience and an ITV owned by a single company would squeeze smaller advertisers by hiking air-time rates.

The Advertising Association (AA), which last year launched a campaign to ensure that ministers and civil servants have a better understanding of the advertising industry, says it is vital that the industry continues to lobby the Government after the election.

“People sometimes get very suspicious or emotional about advertising, but it is merely a means to an end. It is about selling a product,” says Andrew Brown of the AA.

He says that advertisers need to make sure their concerns are high on the agenda when the white paper becomes a bill, which is not expected to happen for another two or three years.

ISBA has already pledged to “involve itself in the debate at the highest level to promote the views and interests of those whose funding keeps the UK at the forefront of media innovation”.

There is no question that the Government has snubbed the advertising industry, which is bound to have a few bruised egos. But it is what happens next that matters.

Advertisers need to pick themselves up from the floor and use the White Paper as a starting point for a serious and frank discussion about their place in the modern media landscape.

It is time for an industry that prides itself on its powers of persuasion to indulge in some self-promotion. Failing that, it could find life after the media revolution very tough indeed.