SELLING TELEVISION

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SELLING TELEVISION

• TV is the most exciting believable advertising
  medium
• The TV commercial is the most persuasive and
  pervasive form of communication known
• TV influences habits/ thoughts of millions

2
The average American household watches 7 hours 26
minutes daily

• A 40-year-old American has watched well over one
  million spots in her lifetime and will watch well
  over one million more before her first social
  security check arrives

3
Women spend the most time watching 4 hrs, 40 mins
per day

• Women 440
• Men 402
• Teens 302
• Children 258
• Viewing 1999
• TVB

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ALTERNATE TV DELIVERY SYSTEMS

• BROADCAST TV 99 of homes
• CABLE TV 68 of homes
• SATELLITE 8 of homes

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As the number of channels available to a TV
Household increases, what is the effect on the
number of channels actually viewed?
6
After reaching the 50-channel level, additional
channels produce no significant increase in
channels viewed. The viewing remains in the 15-to
16-channel range.Even with 105 channelsviewable,
only 16 are viewed.
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Television is the top ad medium

• Newspapers had been the 1 ad medium since 1776.
• TV became 1 in 1994 and led newspapers by 3.8
  billion in 1999

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Major media spending 1999in millions

• Television 50,440 28
• Newspapers 46,648 26
• Direct Mail 41,403 23
• Radio 17,215 10
• Yellow pages 12,652 7
• Magazines 11,433 6

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TV AD REVENUES1999, in millions

• Stations 23,180
• Network 13,961
• Cable 10,429
• Syndication 2,870

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TV ADVERTISING POSITIVES

• Visual Sight, sound, emotion
• Part of lifestyle 726 HH viewing daily
• Reaches all US HH with a single exposure
• High Reach into generalized consumer segments
• Intrusive spots interrupt programs

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TV ADVERTISING POSITIVES

• Program types allow viewers to reach viewers in a
  specific environment and state of mind
• Entertainment value Spots are as entertaining as
  programs
• Agencies and creative people like working with TV
  best of all media
• Can be bought national, regional, local

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TV ADVERTISING NEGATIVES

• Clutter/surfing distracts viewer attention
• Poorly targeted inefficient at reaching small
  target groups
• Most not upscale Affluent watch less
• Market demand supports high rates
• Spot production cost 250,000
• Market increasingly fragmented

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TV commercials are so much a part of the American
culture ...

• that they are considered as entertaining as the
  programs in which they run.

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30-Second Super Bowl spots last year cost 2.2
Million

• Spots on the final summer Survivor episode
  sold for 1 million
• Spots on Millionaire sold for 750,000
• Spots on final Seinfeld sold for 2 million
  each

15
Broadcast Networks have narrowed demographic focus

• Faced with cable competition that targets demo
  groups favored by adver- tisers, true mass
  appeal to all ages has changed to targeting
  viewers 18-34, 18-49, and teens.

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While broadcast audience has eroded, nets and
stations have increased revenues 6-8

• Raising rates based on market demand at higher
  CPM and CPP
• Adding more spot units to shows (more clutter)

• Advertisers have no other medium that reaches a
  huge national audience simultaneously in one
  shot.

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Cable, Internet, satellite nipping away at time
watching broadcast TV

• But the WB, UPN, Pax Net, and Univision are
  helping keep ratings and dollars in the broadcast
  segment of television

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SELLING NETWORK TELEVISION

• NETWORKS SELL THEIR TIME
• IN 3 STAGES
• The upfront market
• The scatter Market
• The opportunistic market

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Television sells spotslike airlines sell seats

• If a flight leaves with empty seats, revenue for
  the seat is zero.
• To assure full planes, sell the seats at a price
  that will sell them out early.
• Charge last -minute buyers highest price

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Annual buyers who commit to long-term contracts
get best price

• Business booked in advance - you know youll meet
  your revenue budget.
• Less paperwork and effort - not always starting
  from zero again on every sale to advertiser.

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THE UPFRONT MARKET

• Annual purchase of commercial time well in
  advance of the telecast time.
• Upfront advertisers buy 70 of prime time and 50
  of other dayparts. Most buy for one year. Get
  best price.
• Biggest national advertisers buy childrens
  programs, prime time, daytime, news, and late
  night.

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SCATTER MARKET

• Sale of most of the years remaining inventory
  not sold at upfront.
• Inventory generally tight.
• Prices usually 50 higher than upfront.

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OPPORTUNISTIC MARKET

• Last-minute buying of inventory due to
• Changes in programming
• Advertisers dont want to be on controversial
  programs
• Advertiser inability to pay.

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Cancellations and Guarantees

• Most network orders are non-cancelable. If an
  advertiser cannot or does not want the time, it
  is the advertisers responsibility to sell the
  time - not the networks.
• Networks cancel programs with no notice to the
  advertiser with the provision that commercials
  will run in another program that delivers the
  same audience profile.

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Ratings Guarantees

• The cost of network time is based on network
  guarantees of spot price vs. audiences, computed
  in cost per thousand.
• If the ratings projected by the network to the
  advertiser are not achieved, the network runs
  the spot in other programs to accumulate
  sufficient ratings to bring the CPM down to the
  promised level.

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The extra spots the advertiser gets are called

• MAKEGOODS

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Selling network time involves consistently high
demand

• Why is it not a simple
• commodity sale ?

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Spots are not a commodity because .

• Advertisers willingly pay a higher CPP for
• special demographics
• special content
• timeliness

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Sale of Syndicated Shows

• Syndicated shows
• Sold to individual stations on a market-to-market
  basis
• sold for a certain length of time
• sold for a certain number of broadcasts per
  episode

• WHEEL FORTUNE
• JEOPARDY
• JUDGE JUDY
• ENTERTAINMENT TONIGHT
• OPRAH
• SEINFELD
• FRASIER

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2 TYPES OF BARTERON SYNDICATED SHOWS

• ALL BARTER
• The program is made available to the station at
  no cost
• Station gives syndicator half the spots to sell,
  usually 6-7 30 second spots

• CASH and BARTER
• Station pays cash price to broadcast show.
• The deal includes 2-4 spots to be sold by
  syndicator
• The station gets 10-12 spots to sell

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SYNDICATED RATINGS

• Most successful in daytime/prime access
• Effective reaching 18-34 and18-49
• Ratings have been slipping in recent years
• Syndicator guarantees rate to advertisers

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TOP 10 SYNDICATED ADVERTISERS

• 1.Food products
• 2.Toiletries/toilet goods
• 3. Proprietary medicines
• 4. Soft drinks/ candy/snacks
• 5. Restaurants
• and Fast Food

• 6. Automotive
• 7. Sporting Goods/Toys
• 8. Movies
• 9. Consumer services
• Telephone services
• 10. Household equipment and supplies

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INFOMERCIALS

• The best way to get viewers to watch
  commercials is to make them better than the
  programs

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INFOMERCIALSLong Form Commercials

• 2830 program - Products over 30 that must be
  explained
• Talk show, drama, documentary format
• Urges viewers to respond immediately
• Entertains, informs, product credibility
• Explains benefits/addresses objections
• Has 3-4 breaks urging viewers to order

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DIRECT RESPONSE TVShort Form Infomercials

• Run 60-90 Seconds
• Products under 30 that are easy to understand.
  (CDs)
• Urge viewers to order product immediately
• Run on broadcast stations and cable systems
• Run on per inquiry (PI) or Direct Response
  (DR) basis

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Selling local broadcast TV Local news is top
selling product and local image of the station

• Ratings eroded by cable/satellite
• Radio/cable selling audience lifestyle, specific
  target audiences, creative ideas
• How to respond?

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Broadcast sellers must

• Compete as radio and cable have - Become problem
  solvers and not commodity brokers.

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1995 LOCAL STATION REVENUES

• 49 LOCAL
• 47 NATIONAL
• REGIONAL
• 4 NETWORK

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Broadcast TV stationsare like all evolving
creatures

• They face enormous technological and market
  changes
• Strong today, but must adapt to change
• How stations handle challenges today is
  determining their survival in the new media
  marketplace