MEDIA
buyers and the pay-television industry have attacked the $2.8 million
metropolitan TV sector over a bullish beginning to the annual
advertising rate negotiations, claiming the cost of free-to-air TV
advertising will rise by an average of 10 per cent next year.
The
increase relates to the average cost of reaching 1000 viewers in the
five capital cities in prime time, according to Anthony Fitzgerald,
chief executive of pay-TV sales company MCN.
It is pegged on the Seven Network’s opening gambit to increase its
rates for the key buying groups by 9 per cent to 11 per cent, but takes
into account a low expected claim of 3 per cent to 4 per cent from the
Nine Network. Ten is expected to slot in between the two.
Also included in the calculation, Mr Fitzgerald said, was a 5per
cent decline in the number of people watching prime-time free-to-air TV
on the three commercial networks during the present ratings year.
"In my view, advertisers should be outraged by this level of
increase in a marketplace where free-to-air audiences again in 2008
will decline," Mr Fitzgerald said. "The picture is significantly worse
in the Sydney market, where audience declines are even greater."
The claims come as a large media buying agency, which asked not to
be named, released calculations to Media showing advertisers are paying
63 per cent more today to reach 1000 viewers – the standard TV buying
unit – across all demographics than they were in 2000.
The calculation is based on the weighted cost of reaching 1000
viewers (CPM) in the five capital cities using casual rate cards, and
involves an equal amount of money spent on Seven, Nine andTen.
Figures obtained from the Australian Bureau of Statistics show the
consumer price index increased by 26.9 per cent during the same period.
"You’re looking at something of the order of about 9 per cent in
real increases for advertisers each year," the agency’s research
director said.
Media analyst Steve Allen, from Fusion Strategy, backed the claims.
He said the big buying groups, which will conclude annual rate talks
for 2008 in the next three months, stood to pay 9.7 per cent more on a
weighted CPM basis next year if Seven achieved a 9 per cent rate
increase and Ten increased its prices by 4 per cent but Nine remained
flat.
That figure would drop to 5per cent or 6 per cent once negotiations reached the client level, he predicted.
Advertisers are also looking down the barrel of a high-demand TV
market next year, with most forecasts to date predicting total
free-to-air revenues will grow by about 7 per cent.
Figures from the Commercial Economic Advisory Service of Australia
for the six months to June this year showed total free-to-air TV
revenues, including SBS, increased 7.1 per cent to $1.229billion.
The Australian Association of National Advertisers has condemned TV
rate increases in the past and raised the prospect of advertisers
turning to media such as the internet if TV became too expensive.
Executive director Collin Segelov could not be reached for comment this
week.
However, Toyota’s general manager of marketing, Peter Webster – who
manages an annual main media budget estimated at more than $65 million
- said large advertisers would not bear the brunt of the increases.
"The free-to-airs overall have had a good year, but we’d need to get
some accurate data about audience erosion this year and in 2008," Mr
Webster said.
"Let them talk about increases now all they want. We’ll talk to them
closer to the end of the year. There’s no question the internet’s
playing a bigger role," he added. "(In the automotive category) it’s an
unbelievable information source."
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