ITV gets a lucky break

Higher ad minutes allowances may give advertisers better value from TV – but they will be forced to spend the same just to stand still, says Colin Mills

Colin%20Mills%20the7starsIt’s probably not the done thing to start with a profanity, but we really do make life bloody complicated.

Ofcom has made it pretty clear that the terrestrial commercial broadcasters should (probably) have the same allowance of ad minutes as their digital rivals. And so they should: according to Ofcom, digital penetration is now at 85% and advertising to inform viewers about the analogue switch-off has started with the good people of Whitehaven in Cumbria being told by the town crier that they should buy a Freeview set.

The US and a number of European countries permit significantly more ad minutes than we do. Anyone who has visited the US will have been enthralled by the 30-minute ad spot where you get a glimpse of the new Ford before finding out who got thrown out of American Idol.

If you ever get stuck in a hotel room in parts of the Middle East, ad breaks of up to 20 minutes have to be endured. I was once asked if it was best to be in the first or second half of the ad break for a client running a TV campaign in Oman – it was at that point that I decided to focus my media planning efforts in the UK.

Commercially, there is no linear model to equate how much this inevitable increase in commercial impacts will add to the bottom lines of the broadcasters’ TV revenues.

If Ofcom was to grant parity on ad minutes it is highly unlikely that revenue would increase at the same rate. This will mean deflation in the TV market for quite a while, which – theoretically – is good news for everyone.

Interestingly it is not only the people at ITV, Channel 4 and Five who have been pushing for this ruling. Apparently a number of major advertisers have added their support. They will be doing this for one reason only – to reduce the amount they spend on TV advertising.

But the real world is not quite so simple and the change is bound to attract the most interest from advertisers and media planners who do not enjoy £50m budgets to work with.

The way a number of people will look at this revision will be that Ofcom is increasing the amount of clutter on our TV screens, meaning that programming will be edited to be shorter, and the consumer interrupted for longer as they enjoy Britain’s favourite pastime – watching the telly.

Inevitably, this has to mean that the average advertising impact is not going to work as hard as it previously has. So you have to buy more to catch up.

As a result of this ruling, advertisers could well get better value from the TV market – as measured by an auditor – but they will have to spend the same to stand still. I did warn it was complicated.

One thing for certain is that the penetration of personal video recorders (PVRs) will accelerate with more advertising clutter. The latest estimates are that one in three households will own a PVR by 2010. I reckon that figure looks a touch conservative and I have no doubt that James Murdoch has got the Sky-Plus manufacturing team working double time. Take-up has been, and will continue to be, faster in higher income households and more stuff will be watched on the PVR.

If people say that they don’t fast-forward through the ads when they watch their favourite programme through their Sky-Plus box, then they should run down to the confession box now. The point is, there is every likelihood that all these lovely new impacts are being fast-forwarded or delivered to households on a lower income who can’t afford a PVR.

To add some additional spice to these announcements, Michael Grade has hinted that ITV1 1 could be on the way to offering even more choice to the TV-watching public.

Will this mean more advertising impacts? Most certainly. Will this increase ITV’s commercial share? Without a doubt. It seems an entirely logical idea and any brand that makes life easier for its consumers must gain.

Actually, ITV has had a pretty good week: plenty more to sell; a better product offering on the way and a new man in the midfield – Rupert Howell – to feed the Gary Digby-led strike force. Good team.

I’m off now to buy some more ITV shares and a second Sky-Plus box.

Colin Mills is founding partner at the7stars

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