Commentary

Is Advertisers' Love Affair With TV Cooling?

A New Year -- and it's a new row between a broadcaster and holding company over the thorny issue of how to charge for ad space. What's interesting about the current dispute between Channel 4 and Publicis is what ultimately lies behind the dispute.

Typically, stations and holding companies fall out over fees based around how much an agency needs to spend to get a certain price per spot and how much they need to spend before serious reimbursements are offered. That is kind of what's happening here, but we are entering new territory as the dispute hints at the new pressure tv channels are going to start facing as advertisers' love affair with the medium starts to cool a little.

To the outside world we have a dispute where the two sides have failed to agree a charging mechanism for ad space, and so Publicis agencies and their clients, including Samsung and Asda, are not buying spots on the channel for the time being.

It is not the first time a holding company has fallen out with Channel 4 over pricing. Last September, in what is believed to be a similar dispute, Dentsu Aegis kept its clients off the tv channel for more than a week before a deal was struck.

The interesting aspect with this current disagreement is that according to Campaign, Channel 4 wants to link the price Publicis pays for spots to the holding company's overall spend with the channel. Publicis wants a price formula to be based on the audience share that the channel delivers. 

On the one hand we have the typical pricing metric through which bargain spots can be snapped up if a holding company delivers a lot of budget. On the other, we have a holding company saying they don't want to be priced on the budget they supply but rather the audience that Channel 4 can deliver.

The issue underpinning all this is, as Campaign speculates, Channel 4 is concerned that Publicis may be going soft on tv and even considering dialling down spend. How better a way to reverse that than to encourage more spending through discounted spots?

For me, this underscores two things -- transparency and the appeal of tv. Clearly, things have moved on in the advertiser and agency relationship to a point where agencies are a little less inclined than in the past to use a big budget to earn rebates that may or may not be shared with a client. Publicis is clearly focussing on the campaign and the audience they can reach rather than kickbacks for spending a bigger pile of cash.

It also shows that television channels have read the memo that UK tv ad spending is forecast to dip this year and was similarly forecast to have a weak fourth quarter to end 2018 with.

So what does this dispute show us? Transparency is being taken more seriously. An agency wants to be able to show it has reached the right audience rather than attracted a very handsome rebate.

Secondly, tv is a great channel but its "no brainer" position is under threat as agencies consider stalling or even cutting back spend, just as it was forecast they would do this year.

2 comments about "Is Advertisers' Love Affair With TV Cooling?".
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  1. Ed Papazian from Media Dynamics Inc, January 4, 2019 at 12:08 p.m.

    In the U.S. advertisers make the decision on what media to use---guided to  some degree  by agency input. The ways that agencies negotiate deals in the clients' behalf with the media to garner exposure for their ads, while subject to review concerning getting what was paid for and other issues, has very little to do with weather the medium, itself, is to be utilized. Are things so different in the UK that an agency which gets into some sort of media buying dispute with a channel can "punish" an entire medium----TV? --- by arbitrarily reducing ad spend? I doubt that this is the case.

  2. Ed Papazian from Media Dynamics Inc, January 4, 2019 at 1:05 p.m.

    Of course, I meant "whether" not "weather"in the second sentance of my post. Sigh!

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