At the press announcement for BSkyB’s financial results last week, you could be forgiven for feeling slightly sorry for the company’s advertising sales team.
The company talked about its good news; profits up 67 per cent, subscribers up to more than 4 million and revenues up 41 per cent to 778m. But as 84 per cent of that revenue was from subscription revenue, it was talk of its subscribers that dominated the presentation.
There was even talk about BSkyB’s company that fits satellite dishes.
But ad sales, which brought in 93.3m in the 12 months to June – 12 per cent of revenues – was mentioned only in passing.
David Chance, BSkyB’s deputy managing director, denied that the company has no commitment to advertising sales. “The amount of money it brings in is not to be sniffed at,” he says. “We’ve narrowed the gap on the price we sell our airtime against ITV and even as subscriptions grow we expect to see ad sales grow as a percentage of revenues.” BSkyB’s 1995 total was up 18 per cent on 1994.
Agencies maintain that, even if BSkyB as a company is geared towards subscriptions, its sales team works hard to maximise its revenue: “They are one of the best sales teams in town,” says David Cuff, broadcast director at Initiative Media. “They take it very seriously and there is absolutely no suggestion that they undersell the station.”
BSkyB sells its airtime in a mixture of ways, sometimes on a fixed price and sometimes at a discount related to the ITV average price for certain audiences. As an average of all of its airtime, BSkyB operates at a discount of about 30 per cent on ITV. The value of its airtime is shown when you compare its share of impacts – how many people see an ad – with its share of national revenue.
This year’s total of 93m gives BSkyB about a 4.5 per cent share of TV ad revenue, while its share of impacts is about seven per cent. In viewing terms, Sky is akin to a large regional ITV franchise such as Central, while in advertising revenue terms it is nearer to a smaller operator, such as HTV.
The price discount of BSkyB is due to its supply of audiences. Its audience is skewed so that it has a dominance of certain viewers. Young males are particularly numerous. This means that the young males it supplies to advertisers average out cheaper than those on mass audience channels.
It is that audience skew that is BSkyB’s selling point to advertisers and agencies. Half of all BSkyB’s viewers are under 34, while 55-year-olds account for only 15 per cent. This compares to 38 per cent of ITV’s audience and 34 per cent of Channel 4’s.
The same point applies when looking at UK households with children, over 25 per cent of which are connected to BSkyB. This makes them essential for the media schedule, enabling agencies to get the required household coverage.
There is, however, another side to BSkyB’s skewed audience and discounted average price.
All the agencies that buy on the station will achieve a discount on the ITV price. This helps to lower the average total price of TV campaigns and allows TV buyers to convince their clients that buying performance is more competitive than it really is.