Television Watch

Airtime costs are rising, and advertisers are worried they are not getting value for money, as viewers are increasingly drawn to satellite and cable

Television price inflation is back on the advertising industry’s agenda. Always a very sensitive subject, it is difficult to comment upon it without risk of criticism over “vested interest”. But here’s an attempt to offer a balanced view.

In the mid-to-late Eighties, ever-expanding TV budgets and a raft of new TV advertisers drove the price of airtime to great heights at an alarming pace. Agencies benefited substantially from these conditions.

The industry, as a whole, has been almost completely remodelled since then. Advertisers, agencies and media owners are all more interested in value for money and tighter cost control is being exerted in every discipline, including the setting of ad budgets.

Even in this changed media scene, growth in advertising budgets is obviously to be welcomed. It is not wrong to enjoy the rewards of a healthier economy. However, in this more sober atmosphere it is understandable that advertisers are concerned about TV airtime costs that seem to be rising much faster than RPI and are out of line with customer spending patterns.

The need to feel reassured about the level of TV inflation in the future has contributed to the ISBA calling for an increase in ad minutage. It also explains why interest in Channel 5 is so high.

Viewing the situation from ITV and Channel 4’s position produces a different attitude. Although the terrestrial stations are by no means blind to the concerns of their chief sponsors, there is a conflict of interest between satisfying client needs and running a business. It is not a fault that the product they sell is of great appeal to advertisers.

The terrestrial TV companies could also point to the fact that between 1989 and 1992 there was only a very small rise in airtime costs, well below the level of RPI. Extending this analysis to 1994 shows a six-year rise in adult cost per thousand of just 11 per cent.

The concern of all sides in this debate is Channel 4 and ITV’s ability to deliver consistent audience levels in a period where satellite and cable channels threaten to take shares of viewing away without necessarily providing an equivalent number of commercial impacts (because of subscription movie channels, and so on).

The delicate partnership between supplier and customer remains the key issue. Both parties must work together in finding the right solution to a difficult problem.