Television is believed to be the most authoritative, ideal, influential and exciting medium for advertising, because of its ability to combine visual images, sound, motion and color.
Television is not a homogenous medium and reaches a variety of audiences. It is a constant companion to some users, to others it is a source of news or occasional entertainment. It is a complex medium that occupies so much of audiences’ time and substantial amounts of advertising money.
There is no strictly uniform method of buying TV time across countries. Television networks mainly function as suppliers of programmes to local stations. They sell commercial time to offset their costs of buying shows and pay a fee to stations to carry their programming.
Buying Network Time
Network television advertising is concentrated among few large advertising agencies and advertisers who spend huge sums of money. There are three basic elements to buying TV network time.
- Negotiation. There are no rate cards, unlike most other media, for network television advertising. Buying agencies and networks bargain to reach a cost figure for the upcoming schedule. Agency comes to the bargaining table with a fair idea of what level of cost per rating point they can pay, because the difference of just a few rupees per rating point is significant when the agency is buying hundreds of commercials. Networks too have some gross monetary figure in mind for their upcoming schedule. Each party knows that there will be some give and take. These negotiators are quite experienced and know the parameters within which the final deal will be struck.
- Scatter plans. Networks offer agencies a list of programmes with predicted household and demographic ratings. Agencies are greatly interested in placing the commercials of their clients in the most popular shows that meet the predetermined demographic criteria. The negotiations for highly rated programmes are tough. Similarly, commercials during major sports events command a higher cost.
- Availability. TV commercial time is limited, particularly on highly popular programmes. While negotiating with agencies or advertisers, a major issue for networks is to spread out the select spots in the scatter plans of their largest and most important clients. It is a major exercise because the number of potential advertisers is more than the number of premium spots. A situation may arise that the advertiser wants to buy a spot, but it may not be available. In such situations, the advertiser’s total investment on a particular network and the price the advertiser is willing to pay are taken into consideration. Scatter plans allow the networks to reach an agreement with agencies to place commercials across their total schedule, whereby each advertiser has to accept some relatively low rated but demographically acceptable spots in order to get the choice spots.
Network buying period was divided into two distinct periods – up-front buying session, and quarterly scatter buying session. Up-front buying involves the largest network advertisers who plan their media schedules and often purchase TV time as much as a year in advance. Large ad spenders, who use heavy TV advertising, force large agencies to make up-front buys. Upfront buyers are given certain important concessions, such as lower prices and cancellation options.
When national advertisers buy local station time, this is known as spot buys. It is also referred to by other names such as spot advertising, or spot television. Network schedules offer blanket coverage and spot advertising is meant for certain markets covered by the station. There are two types of spot advertisers – those that use spots advertising only and others who use spots to augment their network buys. Some major reasons for using spot advertising are:
- Inadequate budget for network or uneven product destination.Often some national companies lack the funds to purchase time on national TV basis, and by intelligent buying of spots in markets where they can get maximum returns, they can compete more successfully in selected areas. Often products have uneven distribution and national coverage creates unacceptable waste coverage.
- Targeting geographic markets. Brands often do not have a consistent sales pattern in every market. Spot advertising offers the advantage of building local TV weight in markets with most potential and complementing the national advertising effort.
- Local identity.Audiences in different markets have unique viewing habits and tastes. and networks cannot deal with these aspects easily. Some programmes or local nature are often more popular in terms of demographic fit. National advertisers, through spot advertising, can more closely identify with the local market preferences.
- Flexibility. In case of network advertising, commitments are made far in advance. Spot buys allow advertisers to react at short notice to changing market conditions. Spot TV can also be used in test marketing and to introduce a product by markets.
Syndication: TV advertisers may also reach audiences by advertising on syndicated programmes which are distributed or sold on a station-by-station or market-by-market basis. Off-network syndication refers to shows which were run on networks and are subsequently bought and run by individual stations. Firstrun syndication refers to those programmes that are specifically produced for syndication market. Off-network syndication programmes are very important to local stations as they provide quality shows with an established audience. Syndication is also important to studios that produce programmes and sell to networks. Advertiser supported or barter syndication refers to the practice of selling shows to stations, and in return getting a portion of commercial time in the show with or without some cash payment. The commercial time so gained is sold to national advertisers. The station sells its own portion of time to local and spot advertisers. The audience for such shows is generally rural, and older.
Sponsorship: Under this arrangement, advertisers sponsor the shows produced by independent production studios and sold to networks or produced by the networks themselves. There are a number of reasons why advertisers sponsor shows on television. Sponsorship allows the advertiser to take advantage of the prestige associated with a high quality programme, benefiting the image of the company and its products. By sponsoring a programme, the advertiser gets more control over the number, placement and contents of its commercials. The high costs of sole sponsorship limit the use of this option to very large spenders only.
Participation: Airtime on TV is quite expensive and most advertisers cannot afford the costs associated with sole sponsorship. Most of the network advertising time is sold on participation basis and several advertisers buy commercial time or spots on a particular programme. Advertisers have no financial responsibility for programme production costs which are borne by the network or the individual station that sells and controls the commercial time. This is particularly advantageous to small budget advertisers. Even larger advertisers do not have long-term commitment to a programme and can spread their budget over a number of programmes. The disadvantage of this system is that the advertiser may face the problems of availability of spot and any control over the ad placement, because preferential treatment is given to those who commit to numerous spots. Another disadvantage of participation is that when there are too many sponsors, to save on time, the announcer starts rapidly firing the names of different sponsoring advertisers. In such a situation, the confused viewers, probably miss almost all the names.
Credit: Marketing Management-MGU