Media buyers want TVchannels to link ad rates to performance

Media buyers want TVchannels to link ad rates to performance
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First Published: Tue, Feb 06 2007. 12 23 AM IST
Updated: Tue, Feb 06 2007. 12 23 AM IST
MUMBAI: Something had to give. With advertising rates for television commercials inching up and ratings of many top-ranking—read very expensive—shows headed south, a growing number of ad buyers are saying it is time TV channels get paid for performance.
While no one is going public with it, several media buyers said they are starting to negotiate deals with broadcasters in a way that gives them room for “price correction” if the performance, or the television rating points (TRPs), of the relevant show are below what was promised or expected.
The top boss of a leading media buying house, who declined to be named, said that Star Plus, the channel that airs Kaun Banega Crorepati-III, was forced to cut its rates “by 20-25% after the show failed to deliver the promised numbers (viewership)”. The industry expected the programme to deliver TRPs above 20, but the first, and highest, daily TRP so far has been 12.33.
“If a show doesn’t deliver eyeballs, why would one bet one’s money on it,” said the buyer. “Broadcasters are being forced to account for deliveries.”
Paritosh Joshi, president, advertising sales and distribution, Star TV, dismissed talk about the discount. He said all the ad slots for February were sold out, and it was too early to discuss March. Still, he said: “Prices for any media product are dictated by the quality and quantity of audience delivered. If we see any dramatic changes in these variables, then we will make a price correction.”
Despite a concerted effort by the ad buyers, TV channels are balking at offering rates that are directly pegged to a show’s ratings, especially in terms of post-show discounts.
“We would like our deals to be performance-driven, but the channels are resisting such terms,” says Sunil Tandon, group head , strategic marketing, Videocon, the large electronic goods company. “It will be a year or two before all major deals are linked to performance.”
The pay-for-ratings push is part of a broader effort that stems from buyers who want to move away from long-term pricing contracts, giving themselves the room to bail out from sinking shows.
“Till a year ago, 70-75% of contracts on most leading channels used to be annual. Now, not even a third of these are annual. The industry prefers to work on short-term contracts now,” said Lakshmi Narasimhan, national director, Central Trading Group, of Group M.
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First Published: Tue, Feb 06 2007. 12 23 AM IST
More Topics: Marketing and Media | Advertising |