Point of View – ‘BARB figures give a boost to commercial TV’
David Spon-Smith, consultant at Accenture, comments on Ray Snoddy’s BARB figures give a boost to commercial TV article, which was published on Wednesday…
“Ray Snoddy’s comments in the MediaTel Newsline column were of interest… He seems to have skirted the main issues of why the TV market is set up in such way that has allowed deflation to occur even though audiences are doing well in general. He even appears to have blamed advertisers for this.
TV audiences, and especially commercial ones, have been on the ascent in the UK over the last few years. MCH saturation has driven this, at the expense of the terrestrials. Viewing maybe up, but programme and channel loyalty is down. This is nothing new and is well known. I do agree with Mr Snoddy’s sentiment that this is, however, worth pointing out to the doomsayers from the ‘Online’ fraternity that TV is very much alive and kicking.
However, the reason why deflation is a problem is because of the greed of the older terrestrial broadcasters and some agencies. There is nothing unfair about it, because they chose to commoditise their airtime in such a way, as to make it over-traded. Therefore the situation benefited them greatly, provided that there was enough revenue in the market place, airtime was consistently over-priced. The more advertisers pay for inventory the more profit agencies and sales-houses make.
If you look over the years TV revenue (in general) has grown steadily without the comparable rise in impacts. This has changed over the last few years as impact growth has increased ahead of revenue growth. However, for the first time in living memory, and by this I mean the last 10 to 15 years, revenue has fallen out of the TV market at an unprecedented rate. ITV and C4 maximised revenues from the market for years, simply because they could. They set up share deals with agencies that allowed them to solidify their positions for years to come by demanding more revenue from the market than their impacts were actually worth, hence why CRR was introduced to prevent ITV from abusing this even more. This stifled the opposition and facilitated a system that offered little transparency and accountability on how advertisers money was being spent. It is worth pointing out that this system of share dealing was recently banned in Germany (Europe’s largest media market) as the German Office of Fair Trading deemed it illegal after mounting complaints from advertisers who had little control over their own money.
He has quoted UTV as an example of how unfair it is to deliver successful amounts of impacts and cover, and watch your CPT’s decrease and fail to maximise revenues. The problem is that there is too much inventory out there (not unique to TV) and advertisers will only pay what they believe is the right price for their media (or anything else for that matter). Add to this the small matter that Ulster, demographically, is not as desirable to advertisers as much as say London, Granada or the South East; so yes I’m sure UTV had a tough time. The general trend in advertising is that ‘the harder it is to reach someone, the more expensive it is’. This is basic supply and demand metrics, and this is how the TV market in the UK works.
Mr Snoddy almost lays the blame at the feet of advertisers by stating – “Advertisers might show a bit more imagination by broadcasting longer, classier ads.” Well, firstly there is the extra cost of the airtime here as ads over 30″ incur additional premiums from the norm and the extra production & creative costs for such an exercise. Hardly something most advertisers can afford in the worst recession since the war. Secondly, it is not advertisers responsibility to ensure revenue streams for TV broadcasters because they have been far too use to the good times without planning for the inevitable change that the digital world would promote. ITV’s response to entering the digital world back in the early 2000’s was to purchase Friends Reunited for £170 million. They have made little revenue from it, and are now trying to sell it for £5 million a few years later.
To conclude, the real issue here is that certain broadcasters have failed to adapt with change, and have placed their faith in a model that is now utterly redundant. It is fair to say that even the sternest analyst could not have predicted the dramatic change in revenue brought about the by the recession last August/September, however, the continual impact growth caused by MCH saturation (which will carry on until 2012) was something that many could see. Add this to the growth of Digital, which again was not exactly confidential information, and one can see that TV inventory/airtime will be on the up, and revenues, regardless of a recession will be on the down. Therefore, the current TV model will only ever promote deflation in the TV market.”
Do you agree? Send us your opinion – news@mediatel.co.uk