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
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
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.