MARKETING MIX: HOBBY HORSE - Strategy is the key to beating media inflation

In recent weeks I’ve had a number of conversations with advertisers who say: ’Can’t work this one out Jerry. A few years ago we were pushing for more choice and competition in the TV market. We now have almost everything we asked for, yet the cost of advertising on TV is still going up faster than the RPI.’

In recent weeks I’ve had a number of conversations with advertisers

who say: ’Can’t work this one out Jerry. A few years ago we were pushing

for more choice and competition in the TV market. We now have almost

everything we asked for, yet the cost of advertising on TV is still

going up faster than the RPI.’



My answers include: ’Until the BBC begins to lose share faster to the

commercial stations, demand-led inflation will continue.’ True.



I also say: ’People only actually watch Friends, Coronation Street, The

X Files and football. Everyone’s piling into them, putting the rates

up.’ Also true.



Add to this what a quaking Barb panel does to the more exotic target

audiences, revenue polarised around the World Cup, Olympics etc, and you

have a reasonably accurate, if slightly depressing, picture.



The overall picture of cost inflation is, however, extremely

misleading.



It is either far better or far worse than you think, depending on your

TV strategy. Cost inflation is led by ITV, whose audience is declining

faster than its ability to attract revenue. ITV understands that, with

the programme-buying power of satellite, Channel 5 and Channel 4, this

trend will continue and has taken steps.



There is another factor which splits TV advertisers: regionality. About

50% of all TV campaigns are genuinely regional, effectively making them

reliant on the only true regional commercial network: ITV. This locks

half the market into inflation at double the market rate, while national

advertisers take advantage of lower inflation at national channels. So,

ironically, many regional advertisers who became regional to protect

their advertising weights suffer the worst inflation.



While the new national channels are changing the way we plan TV

campaigns, ITV’s audience performance is forcing all marketers to assess

the affordability and value of regional advertising. The corollary of

audience decline might be to sever the considerable anchor on ITV’s

revenue base of regional campaigns. In part reflection of this, ITV is

considering many more macro options, like HTV West and Meridian.

However, it will take real audience increases to improve the attraction

of regional activity. But the pressure to cut cost inflation on ITV may

be at the cost of regional flexibility.



A national or semi-national ITV with, as Granada’s Gerry Robinson says,

one or two owners paying a lower levy to the government with a looser

remit, would help improve ITV’s competitive position.



As the battle for audiences intensifies, it is likely that the BBC will

begin to lose share and overall cost inflation will moderate.

Increasingly, however, overall pictures and averages are

meaningless.



Developing the right TV strategy for individual advertisers, and the

winners and losers in terms of audience delivery, will have a far

greater effect on media inflation than any other criteria.



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