Ofcom's long-awaited rules on advertising food and drink high in fat, salt or sugar (HFSS) have shocked the TV industry. By banning ads around programmes for which under-16s account for at least 20% of the audience - rather than under-nines, as had been proposed - the regulator struck a huge blow to channels such as MTV, The Box and Smash Hits.
The ruling, which will be implemented in stages from March, is disappointing for media agencies. However, ITV and Channel 4 see it as 'a relatively benign judgment', according to ZenithOptimedia's head of TV, Chris Hayward.
The rules will displace £39m of TV advertising in the first year, although Ofcom estimates that counter-measures by broadcasters will reduce this to £23m a year subsequently. Revenues for children's channels are expected to drop by between 9% and 15%. To put this in perspective, Ofcom predicts a pre-9pm HFSS ban - another option - would have wiped £250m off the TV ad market.
Nevertheless, it remains to be seen where the sector's big spenders will now put their cash. While no media owner will want to be seen as taking advantage of the child-obesity crisis, outdoor, online, print and radio would happily take a share of the funds previously destined for TV.
There are catches. First, according to Universal McCann managing partner for investment Richard Oliver, it is wrong to assume all £39m will leave TV. 'It is still the perfect medium for a lot of these FMCG brands, and it will be possible to create viable campaigns within the new regulatory framework,' he says.
Oliver adds that while cross-generational shows such as The Simpsons and Hollyoaks are likely to fall within the under-16s definition, there is still scope in the ITV and C4 schedules, including soaps and reality TV, for HFSS advertisers to target a broad audience. Similarly, Ofcom's decision to allow broadcast sponsorships that do not include references to HFSS products will ensure some clients stay in TV.
Second, several major FMCG advertisers - notably Kraft, Masterfoods and Nestle - had withdrawn their spend from most children's programming in advance of the new regulations. Starcom estimates that self-regulating HFSS advertisers cut TV spend by 40% from 2003 to 2005.
Finally, regulators will try to drive child-oriented HFSS advertising out of other media. Ofcom is about to launch a consultation with the radio industry, while the Committee of Advertising Practice is changing its rules so that other sectors are in line with TV. The likelihood of further restrictions mean that the owners of other media may want to avoid HFSS ads until they receive a clean bill of health from regulators.
So, which medium is likely to benefit most from TV's Ofcom misery?
Historically used by FMCG advertisers to extend TV campaigns, outdoor is well placed to benefit from diverted spend, argues Chris O' Donnell, business development director at Kinetic.
'Outdoor was the original broadcast medium and still has a lot of these clients,' he says. 'In addition, the medium is so well mapped that you can construct highly targeted campaigns around supermarkets and shopping routes.' To avoid falling foul of regulators, outdoor must not target areas frequented by children. 'Outdoor has always behaved responsibly in siting tobacco, alcohol, gambling and film ads,' says O' Donnell.
Food and drink advertising accounts for only £20m-£30m of radio revenue, and Chrysalis commercial director Don Thomson believes radio could supplant TV. 'It has similar broadcast attributes to TV and a proven track record,' he says. 'Tango, McDonald's and Coke have produced great radio work.'
The fear is that Ofcom may extend regulation into the medium at a time when it is commercially vulnerable. 'Ofcom will consult with radio shortly and we have to make sure we aren't bundled in with TV,' says Thomson. Areas of concern are chart and breakfast shows, which have a lot of children listeners.
The national press is a big underperformer when it comes to food; it is print's 12th-biggest advertiser category, spending just £46m in 2005. Linda Smith, chief executive at Starcom, says: 'It has been a tough time for print, so maybe this is an opportunity for the Newspaper Marketing Agency to build a strong case for the medium's effectiveness.' But she adds that no medium will want to be seen as touting for HFSS advertising.
Food and drinks brands' online expenditure is low compared with travel, electronics and finance, but the advent of broadband video means the sector is well placed to gain ground at TV's expense. However, because the regulation of online is weak,there is already evidence of a backlash. The Food Commission has accused high-profile brands such as Nesquik, Frosties, Chewits, Skittles and Kinder of manipulating children with internet games and promotions.