Gaps in TVNZ charter make ad agencies uneasy

By DITA DE BONI marketing writer

The advertising industry, which waited for Tuesday's Television New Zealand charter with bated breath, is not quite ready to exhale with relief.

That is because the objectives released by Broadcasting Minister Marian Hobbs have not revealed whether the amount of advertising on TVNZ channels, especially One, will shrink, grow or stay the same.

The charter's commitment to "minority interests" programming appears to allow for less audience share, and consequently less advertising revenue, at certain times in One's schedule.

And the idea of blocks of advertising-free time has been foreshadowed by Ms Hobbs as one way the broadcaster may operate when the charter takes effect on July 1 next year.

Advertisers are worried that content changes on One will lead to smaller audiences and higher rates to make up for falling revenue.

The television advertising market has already slowed dramatically this year, losing ground to newspapers and radio. TVNZ advertising revenue has dropped almost 30 per cent since December, while TV3 and TV4 owner CanWest reported a $4.4 million loss in the six months to the end of February, which it also blamedon a soft advertising market.

Ms Hobbs told the Business Herald on Tuesday that the charter aimed to provide balanced programming and should not cost audiences or advertising revenue.

Although advertisers say uncertainty over the charter has already affected the take in television-land, Ms Hobbs vehemently denies that.

"It's part of a worldwide trend ... Soft advertising worldwide is caused by a change from brand advertising to a kind of specific advertising, and brand advertising, and the drop in that, is really affecting television markets and magazine advertising throughout the world."

But, asked about the outlook for advertisers, she could give few assurances.

"I'm not sure there will be any changes or not ... But certainly in this coming year, since the charter does not come in until 2002, it will be business as usual."

How does television advertising worldwide compare?

In all markets spending is projected to increase in the coming year, although the category remains relatively flat in most major economies.

In the United States, it is forecast to rise 2.4 per cent, roughly in line with inflation (compared with more than 10 per cent between 1999 and last year), while in Britain it is expected to rise 5 per cent.

So is Ms Hobbs right that a decline in brand advertising is causing softtelevision revenues?

Brent Impey, chief executive of CanWest, supports her view, saying radio is in better shape than television because it is transaction driven rather than brand-focused.

But while direct marketing strategies are growing in popularity, "branding is more relevant than ever as markets fragment," argues Young&Rubicam.thinking chief executive Peter Scutts.

He blames the soft market on aggressive price increases in television in the past two months, and says uncertainty over the charter is affecting forward buying.

National Party broadcasting spokeswoman Katherine Rich says the charter leaves advertisers in limbo.

"At the moment the charter is all 'motherhood and apple pie,' but nebulous platitudes are disastrous for advertisers, who cannot draw up business plans."

Even Green Party spokeswoman Sue Kedgley criticises the charter, although her beef is that it does not eradicate advertising during children's programmes.

But that issue has already been addressed this year under voluntary guidelines agreed to by broadcasters, advertisers and New Zealand On Air, including a consensus that television remain ad-free during preschool viewing times.

Jeremy Irwin, of the Association of New Zealand Advertisers, says there are strong indications that uncertainty about TVNZ's direction has led to restraint on the part of advertisers.

Association members are responsible for more than 70 per cent of the country's total television advertising spending of $501 million a year.

"The market, and advertisers, are more confident about the business climate in New Zealand than six to nine months ago ... Once the charter issue is put to bed, it should be full steam ahead."

Another source told the Business Herald that TVNZ sales staff were having a hard time conveying a "sales picture" to advertisers, and that rates would increase again in the third quarter of this year.

But one media director, Nigel Keats, of Wellington's Clemenger BBDO, says that because the market is soft for both TVNZ and CanWest channels, the charter cannot be too much to blame. He says it is more the result of an April-May weakening in the market, few major share floats, and some big campaigns - which he refuses to name - being cancelled.

Full text: the TVNZ charter (May 2001)

Full text: the TVNZ charter (Sept. 2000 draft)