Throughout the TV industry there are ongoing trends of greater investment and fewer people watching TV, causing a year-on-year congestion in availabilities. Nowhere is this trend more pronounced than the Nordic countries, where nearly every month of the year is completely sold out. In these situations, sales houses (understandably) focus on their annual contracted advertisers, this means that there is rarely any late space and, while it is not yet common, this can result in your campaign being cancelled or reduced even after your booking has been accepted from the sales houses.
The simplest way of combating this to have your own annual agreement in place, but how do they work and what are the pros and cons of such an approach? Although it does of course vary slightly market-on-market, the basics remain the same:
Pros
- Cheaper rates: The first and, for some clients, most important is the improvement in cost. The more you commit the cheaper your rates will become.
- More flexible booking deadlines: In many regions, the booking deadlines are extended for a week for contracted advertisers.
- Guaranteed inventory: It negates the chance of any campaigns being affected by over-booking.
Cons
- Committed spend: The main aspects that make most clients uncomfortable is the spend they have to commit, this doesn’t allow for a change in strategy or unforeseen circumstances.
- Can affect flexibility: In some markets, part of your agreement is your buying audience, which heavily impacts what stations you can buy. Also, your budgets between sales houses become more fixed, meaning you can be less reactive with budget shifts between sales houses.
- Potential for penalty: Failure to meet an agreement can result in a heavy penalty, and make it more expensive long term than ad hoc buying.
- Can’t negotiate costs on a campaign by campaign basis: Although your total costs are lower, you can’t take advantage of high inventory months and any (rare) late space deals.
All Response Media Viewpoint
Whether or not an annual agreement is for you depends highly on each individual advertiser’s circumstances and also which market you plan to be active in.
In countries such as Italy and Netherlands, inventory is rarely a problem so many prefer to stick to buying ad hoc, particularly if their spends are lower, so they’d see little benefit from a cost standpoint.
In the Nordic countries however it is slowly becoming the ideal scenario to be assured of airtime, and is certainly something all clients with larger spends should be at least considering.
We understand that annual agreements are often not practical from our clients’ perspectives, due to the required flexibility on spends and in between individual markets. However, there needs to be an understanding that availability issues can and likely will happen, and that is the risk we take.
