There can be few advertisers who have been in the business long enough to hear TV described as a 'cheap' medium before now. But, after decades of remorseless media inflation, the word is doing the rounds once more.
Channel 4 head of client and strategic sales Mike Parker puts the scale of the market correction in perspective when he says TV's cost per thousand (CPT) is, in real terms, 'as cheap as in 1985'. In addition, he argues that despite prolific expansion in the number of commercial channels, '£1m spent on TV in 2006 could reach more people, more frequently than 10 years ago'.
Various factors have contributed to TV's bargain-basement price. First, there has been a drop-off in demand at a macro level, as nervous corporations look to protect margins by controlling adspend. Second, there is an ongoing shift in spend toward online, with marketers targeting lower advertising avoidance, improved accountability and greater contextual relevance. Finally, there is CRR, which shackles market-leader ITV1's airtime prices to its ratings. With the channel on a losing streak in recent years, the prevailing view is that this has caused a downward spiral in prices across the entire industry.
While cheap does not always equate to good value, Parker says the metrics suggest TV is a good deal at the moment. 'The obsession with CRR disguises the fact that total commercial impacts are up,' he says. 'The growth in channels means the TV market is open to far more advertisers because of their ability to segment audiences.'
ITV trading director Simon Lent is doing the rounds at agencies, trying to convince them that ITV1's contribution to the TV-value debate comes in the shape of a bold programme commissioning strategy. 'When CRR came in, ITV got risk-averse to protect share; in hindsight that was the wrong response,' says Lent. 'We are now decommissioning shows to make space for properties that appeal to a wider audience.'
Out have gone Footballers' Wives, Bad Girls and Stars in Their Eyes; in come Trinny & Susannah and a high-end sci-fi drama called Primeval.
'The strategy is not just about delivering audience mass, but providing younger, more affluent viewers,' adds Lent. 'When you combine that with the price of airtime and the money we will spend off-air promoting key events, such as next year's Rugby World Cup, TV looks like great value.'
All the above may sound like TV sales-house propaganda, but it seems the buyers agree. 'TV is cheaper than ever, but just as powerful,' says Starcom UK trading director Chris Locke. 'The growth in digital channels means advertisers can benefit from the mass audiences delivered by ITV1 or the kind of targeting usually associated with magazines.'
MediaCom director Steve McDonnell is equally bullish. 'With multi-channel sitting at about 80% penetration, a lot of our clients are able to top up frequency at extremely competitive prices.'
He points out that high-end clients not already in the TV market may find it difficult to capitalise because of the lead times and entry costs involved in creating a campaign. But for advertisers that can turn out a low-cost ad swiftly, the value is there for the taking. Moreover, the erosion of late-payment penalties will help those up-weighting activity.
Not all advertisers have pulled spend out of TV. While there has been a decline in traditional FMCG and automotive revenues, categories such as TV technology, mobile and healthy-living food products have been active. Flora pro.activ, Benecol and Tropicana have all run high-profile activity. Elsewhere, Sony used a heavyweight TV campaign to position its Bravia television, Magners used the medium to gatecrash the cider market, and Marks & Spencer's 'Your M&S' TV-led work won the Grand Prix at the 2006 IPA Effectiveness Awards.
There are also signs that FMCG giants such as Procter & Gamble, Unilever and Reckitt Benckiser are returning. All three have spent significantly more in the second half of 2006 than they projected at the mid-year stage.
It remains to be seen how long TV will remain cheap. To some extent this will depend on the economy, emerging sectors such as gambling advertising and the ROI achieved through online.
But the broadcasters have a part to play too, according to ISBA director of media Bob Wootton. 'Airtime price is simply a function of demand in the market. The way for TV to get out of its rut is to improve performance,' he says. 'Advertisers have been looking for a merit-based market, whereas broadcasters still feel the world owes them a living. The fact is that CRR does contain a performance-incentive element for ITV, but a very cost-focused approach has resulted in a disappointing ratings performance.'
ITV's refocus on risk-taking content seems to be a tacit acknowledgement of this, and Parker accepts there is also a greater need for TV to present a unified front. 'We are getting better at saying positive things about TV through bodies such as Thinkbox,' he says.
One point he is keen to explore is the role TV plays in driving people online. 'There is emphasis on cost per click, but not on the role traditional media play in driving audiences to websites.'
With Yahoo! recently predicting slower online ad revenue growth, Parker may be on to something. It does not necessarily follow, however, that TV will benefit. In the US, P&G has just switched money out of TV into print, as Unilever did in 2005. This should act as a reminder that TV is not the only traditional media keen to claw back share.