TV ad rates and demand on the rise

By SIMON HENDERY

The main television networks have once again raised their advertising rates as demand for commercial airtime continues to outstrip supply.

TVNZ, TV3 and Prime all released their September to December advertising ratecards last month with TV1's average peak-time rates topping the increases at between 10 and 11 per cent above rates for the same month last year.

Despite being the big winner in terms of audience share over the past year, Prime has dropped its rates for October to December.

Media strategist Michael Carney, of media planning agency MediaCom, said the latest increases were less than those posted by the networks for the previous May to August period, when oversubscription had hit 40 per cent.

The latest increases, however, mean the broadcasters are continuing to cash in on strong demand for advertising fuelled by a healthy economy.

"It's really a matter of the superheated market in 2004," Carney said.

Prime's decreases in the latest rates round went against the trend but were related to making their ratecard more reflect reality, Carney said.

As with all broadcasters, Prime negotiated large discounts for big spenders, but was moving away from that practice, having vowed a strategy of "delivering a rate card with integrity".

"Prime are just trying to drive some of that [discounting] out of the system and list it closer to what it's worth," Carney said.

Advertisers and broadcasters expect less buoyant times next year, both locally and internationally.

Bob Jeffrey, the chief executive of J. Walter Thompson, the largest US advertising firm by revenues, told Reuters he expected the share of dollars spent by advertisers on network TV could decline by half over the next five years.

"I think companies that now spend 70 to 80 per cent in network TV, in five years I think you could see it go down to 30 to 40 per cent," Jeffrey said.

"I think it's a foregone conclusion that network TV will decline if it continues to operate on the same model."

Charging more or chasing more customers were options.

In New Zealand, while television's share as a medium has remained flat, TVNZ and TV3 have been losing share to pay network Sky and to newcomer Prime, which has boosted its ratings performance since a programming revamp in 2002 after an alliance with Australia's Channel Nine.