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SELLING TELEVISION

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SELLING TELEVISION

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    1. 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 4:40 Men 4:02 Teens 3:02 Children 2:58 Viewing 1999 TVB

    4. ALTERNATE TV DELIVERY SYSTEMS BROADCAST TV 99 % of homes CABLE TV 68 % of homes SATELLITE 8 % of homes

    5. 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 channels viewable, only 16 are viewed.

    7. 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

    8. Major media spending 1999 in 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%

    9. TV AD REVENUES 1999, in millions Stations $23,180 Network 13,961 Cable 10,429 Syndication 2,870

    10. TV ADVERTISING POSITIVES Visual: Sight, sound, emotion Part of lifestyle: 7:26 HH viewing daily Reaches all US HH with a single exposure High Reach into generalized consumer segments Intrusive: spots interrupt programs

    11. 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

    12. 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

    13. TV commercials are so much a part of the American culture ... that they are considered as entertaining as the programs in which they run.

    14. 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.

    16. 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.

    17. 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

    18. SELLING NETWORK TELEVISION NETWORKS SELL THEIR TIME IN 3 STAGES The upfront market The scatter Market The opportunistic market

    19. Television sells spots like 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

    20. Annual buyers who commit to long-term contracts get best price Business booked in advance - you know you’ll meet your revenue budget. Less paperwork and effort - not always starting from zero again on every sale to advertiser.

    21. 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 children’s programs, prime time, daytime, news, and late night.

    22. SCATTER MARKET Sale of most of the year’s remaining inventory not sold at upfront. Inventory generally tight. Prices usually 50% higher than upfront.

    23. OPPORTUNISTIC MARKET Last-minute buying of inventory due to: Changes in programming Advertisers don’t want to be on controversial programs Advertiser inability to pay.

    24. Cancellations and Guarantees Most network orders are non-cancelable. If an advertiser cannot or does not want the time, it is the advertiser’s responsibility to sell the time - not the network’s. 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.

    25. 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.

    26. The extra spots the advertiser gets are called MAKEGOODS

    27. Selling network time involves consistently high demand Why is it not a simple “commodity” sale ?

    28. Spots are not a commodity because …. Advertisers willingly pay a higher CPP for special demographics special content timeliness

    29. 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

    30. 2 TYPES OF BARTER ON 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

    31. 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

    32. 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

    33. INFOMERCIALS “The best way to get viewers to watch commercials is to make them better than the programs”

    34. INFOMERCIALS Long Form Commercials 28:30 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

    35. DIRECT RESPONSE TV Short 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

    36. 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?

    37. Broadcast sellers must Compete as radio and cable have - Become problem solvers and not commodity brokers.

    38. 1995 LOCAL STATION REVENUES 49% LOCAL 47% NATIONAL REGIONAL 4% NETWORK

    39. Broadcast TV stations are 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

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