Magazine article Marketing

Can C4 Stand Alone?

Magazine article Marketing

Can C4 Stand Alone?

Article excerpt

No longer a dependant of ITV, Channel 4 now sells its own airtime. Claire Beale asks what's in it for advertisers and discovers how they are reacting so far

Channel 4 burst into 1993 as a fully fledged competitor to ITV, selling its own advertising airtime. Two months into its new existence it's no longer a humble add-on to ITV sold by the ITV sales divisions. Now C4 has its own dedicated sales team intent on branding it as a unique TV advertising opportunity.

Is it an opportunity to grab or one to miss?

A lot depends on how companies respond to C4's airtime sales policy. C4 broke with the conventional system based on cost-per-thousand relative to station average price. According to conventional wisdom, the revenue for an individual station is divided by the number of people viewing in that month to calculate the average cost advertisers are paying to reach a thousand viewers on that station.

"This means that the stations can react to changes in the marketplace," says Media Audits managing director Michael Cluff. "Airtime costs can vary according to the levels of revenue actually received by the station in the month -- supply and demand."

C4 has decided not to sell versus a market average, but is selling fixed cost-per-thousands, with the cost agreed at the point of booking. What you see now is what you pay for. Fortunately for C4, what you see is pretty attractive. Overall adult TV viewing was up by around 3% in 1992 and is expected to increase again in 1993. C4's share of viewing is up around 20% year-on-year to 11.3% in January 1993. And new programmes like The Big Breakfast have proved its ability to draw in new audiences.

SmithKline Beecham's advertising controller John Blakemore is not against the idea of fixed pricing, "but it is bound to make some advertisers wary," he says. "Advertisers are certain to reassess the price paid against ITV or good old station average at some time in the future." Another senior client media controller says advertisers could end up losing out if audiences rise because they will have signed deals at what turned out to be above the market rate.

C4's system looks good to Heinz, which has dipped a toe in the water. "Heinz is not necessarily a natural C4 advertiser," says HJ Heinz's media manager Nigel Smith, "but they have come in pretty sensibly on price and are professional and efficient so we are supporting them." C4 must turn such cautious endorsement into lasting loyalty.

Many industry observers believe that a degree of flexibility is vital if C4 is to keep its customers happy. But C4's sales and marketing director Stewart Butterfield insists that once a deal is made, the price won't change if audience levels fluctuate. "Advertisers will get what they pay for and will know exactly where they stand."

And much to the chagrin of the ITV companies, C4 has succeeded in increasing its available advertising airtime by adding in minutage that cannot be used during its educational programming. The extra minutage must be slotted in off-peak. Because the station is selling on fixed price, this increased supply won't mean advertisers will pay less. Despite debate over the wisdom of fixed pricing, consensus is that the Channel has got its prices right. "C4's pricing policy is bullish," says TMD Carat associate director David Peters. "C4 is playing for 17% of combined ITV/C4 revenue, which is a competitive rate because they often account for over 18% of adult viewing. …

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