Mechanics of TV

SUPPLY = Viewers

DEMAND = Investment

(These two factors set the station price)

Share of commercial audience

Very little movement in share between larger sales points – market consolidation no longer driving the movement in share.

MEMs has more than doubled its market share, Five and C4 have grown 0.26% and 0.95% respectively – likely to be a result of C4 putting Really onto Freeview

TV market mechanics

Different TV trading mechanics exist

• Discount vs. average station price
• Revenue / Impacts = Station Average Price
• Negotiated discount dependent on a variety of factors including
• Share & Volume of revenue relative to rival broadcasters

Cost per spot

• Applicable to channels that naturally deliver smaller audiences
• A mechanic rarely utilised by major broadcasters
• Too much variation between predicted and actual performance

Fixed CPT

(Cost of reaching 1,000 sets of eyes)

• Favoured by DRTV advertisers
• Removes a degree of fluctuation
• Allows for more accurate forecasts

Regional macro factors

TV is also traded against different audiences….but you may want to start with Adults

There are 15 separate buying audiences

• Adults is the cheapest route to market as it’s the broadest
• Great for ROI focussed advertisers
• Limits ability to access key programming
• Broadcasters tend not to favour it as they make less money

16 – 34 Men is often the most expensive audience

• Young men are the hardest demographic to reach as they watch the least TV

Buying 16 – 34 men in London is often the most expensive

• Hardest demo to reach combined with most expensive region

Terrestrial TVs Regional Profile

ITV1 = 12 individual regions

• A National Broadcaster of programmes…But national airtime can only be achieved buying an ad in every region; even then it won’t appear at the same time in every region.

Channel 4

• C4 can be bought nationally; it can also be bought on a macro basis.

The cost of advertising in London is almost double the national average the cost of advertising. In Scotland is generally 38% cheaper than the national average, advertising in London is less viable to any Customer Acquisition business looking to generate an effective ROI due to the prohibitive entry costs.

Time length factors vs. 30” (second)

Second Length Factors
10 seconds	Simple attention message Reminder response message
20 seconds	Simple attention message Reminder response message
30 seconds	Most often recommended for brand and response ad
40 seconds	More complex response message – sectors that are heavily regulated Multiple propositions
60 seconds	Longer story telling either for emotional engagement or complicated selling techniques
90 seconds	Used, in the main, for highly demonstrable products that require a detailed level of explanation
120 seconds	See above

• A 10 second costs 50% of a 30 second, although it only represents 33% of the length
• A 20 second costs 83% of a 30 second although it only represents 67% of the length

Longer time lengths tend to be preferred by DRTV advertisers as they allow for more detailed demonstrations and longer engagement with the message (e.g. 40-60 sec).