Falling ad prices allow TV on a shoestring

Falling ad prices allow TV on a shoestring
Falling ad prices allow TV on a shoestring

LONDON - The low cost of entry for TV advertising means that smaller brands are investing in the medium for the first time.

The cost of TV advertising is at its lowest level since 1992, making it an affordable option for smaller brands, several of which have appeared on the small screen for the first time over the past 12 months. Moreover, while one might assume that they have all been in the direct-response category, they haven't. From price-comparison sites to drain cleaners, brands are branching out.

Andy Benningfield, trading director at Maxus, says many clients that have not been able to afford TV before are now reapprais-ing the medium, as the price of airtime and prod-uction falls. 'The cost per thousand for TV advertising is no longer prohibitive, and targeting has never been better; you can reach high audiences on niche channels,' he adds.

This view is echoed by Thinkbox chief executive Tess Alps. 'TV advertising in terms of cost per thousand is great value,' she says. 'While other media reduce their inventory in a downturn, the supply in the TV market is the same.' Combined with a drop in consumers going out, due to the recession, many marketers spy an opportunity.

Trinity Communications partner Phil Nunn believes clients often make three mistakes when approaching TV advertising. 'The first is thinking it's too expensive, the second is thinking it's a dead medium, and the third is believing the market is the same as it was 10 years ago when there were three channels, not 600,' he says.

However, according to Alps, marketers are now better informed about the benefits of TV advertising. 'The TV companies aren't resting on their laurels,' she says. 'Even before the downturn they were developing new business models to encourage brands to reconsider TV.'

Many broadcasters have gone directly to clients with these new business models - such as revenue-sharing projects - to get brands on TV. Despite this, smaller agencies argue many clients are simply not aware of what they can get out of TV advertising. 'There are brands spending 10% of their budgets on brand building through search marketing, because they think they should. In this economy, clients have to question everything they spend,' says Nunn. 

Historically, the TV market has been hampered by high production costs. However, agencies claim ads can now be made for a few thousand pounds, and broad-casters are increasingly shouldering some of these costs.

Jenny Biggam, partner at media agency the7stars, confirms that more media owners are providing production support. 'The TV companies are talking directly to clients, especially smaller brands that sometimes get overlooked by large agencies,' she says. According to Biggam, there are many brands with budgets of less than £1m who have never considered TV advertising.

Richard Chilvers, business development controller at ITV, says the broadcaster has invested resources in attracting new brands. 'We have seen growth from computing brands, as well as more local advertising from regional concerts and theatres,' he adds. 'TV is now as nimble as the press market; retailers aren't simply abandoning the local press market, but those brands looking to make a greater impact are investing in TV.'

However, while some brands are dipping a toe in the water, others are falling by the wayside. For every Perfume Shop (see box, above) there is an MFI or Woolworths that no longer graces either the high street or consumers' TV screens.

Moreover, these figures do not reflect the brand rationalisation that has occurred across the board from companies as diverse as Procter & Gamble, Unilever and Coca-Cola, which are focusing on key brands. New product development over the past 12 months has also been lacklustre. In line with this, the total number of brands they are supporting on TV has dropped.

While agencies are clear that the cost of TV advertising has fallen, there is a lack of consensus over whether the influx of smaller brands will devalue TV advertising even further. 'The problem is there are more low-interest brands producing low-quality TV advertising with a low threshold of interest, making people more likely to switch over,' says Benningfield.

Creative ideas are key and agencies are keen to point out that effective ads can be created with small budgets. Also, the growth of digital channels means brands can be more targeted. 'I still believe UK TV advertising is way ahead of other markets such as the US,' says the7stars' Biggam. In line with this, UK consumers have higher expectations of advertisers.

Thinkbox's Alps argues that an ad break full of unfamiliar brands may have an impact on viewers. 'Consumers know it's a prestige show if there is an ad break full of prestige brands, so the reverse could be true. However, there is consumer trust in TV ads, so it's a great way of introducing new brands,' she says.

On the flipside, some well-known brands are returning to the small screen. In April last year, home-improvement firm Everest ran its first national TV ad campaign after a hiatus of 22 years, while the investment of big heritage brands such as Hovis suggests TV still has cachet in the boardroom.

Marketers are right to be wary of broad-casters and ad agencies declaring that TV advertising is the answer to every problem. 'Money is hard to come by and concerns over the quality [of TV advertising] will not hold that back,' says Benningfield.

Despite this, the market is providing unprecedented opportunities for brands, and those who believed TV advertising to be too expensive may well be asking their media agencies why.

Case Study: The Perfume Shop   

With 50% of its sales taking place in the eight weeks leading up to Christmas, it is little surprise that The Perfume Shop chose the festive period to launch its debut TV advertising campaign.

The group's head of marketing Matt Walburn says that now the brand has 175 well-established stores,  it is time to be aggressive with marketing. 'First and foremost, it's crucial to get the stores right,' he adds.

The brand made its first foray into sponsorship with the Make Me A Supermodel series on Five, but branched out into traditional TV advertising in order to reach a wider audience. 'It has definitely delivered in terms of footfall, but the added bonus is that for staff there is the motivation of seeing the brand out there playing the big game,' says Walburn. 

The Perfume Shop secured high-exposure slots on high-rating shows such as The X Factor and I'm A Celebrity Get Me Out of Here. 'While the TV market has become more fragmented, a show such as The X Factor gets 12m viewers, and that's a serious amount of exposure,' adds Walburn. 'It is vital that all our marketing activity delivers a strong return on investment and our TV ads have.'

Crucially, the fact that the retailer has a fierce focus on price means it has weathered the economic downturn well. 'There is no doubt that it's tough out there, but if you give consumers what they want there is no doubt that you can still succeed,' adds Walburn.

Advice to brands

Be clear about your objectives. 'Obviously they need to be commercial, but they should also remain true to the brand,' says Walburn.

Have clear measurement metrics in place.

Ensure your campaign is suitably extensive and appeals to the broadest possible customer base for your brand. 'We have a 60:40 split between women and men and a very broad customer base to reach,' says Walburn.

 

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