It's a Buyer's Market Out There1 Oct, 2009 By: Nicole Urso Reed Response
How Low Will They Go
This strategy hasn't gone unnoticed on the selling side. Brian Fays, senior vice president of direct response/paid programming for MTV Networks, says that his team is very cautious about how they sell excess inventory and how low they'll push DR rates.
"Whenever prices get too low, we'd rather sell our own products and run in-house advertising rather than give it away so cheap," says Fays, a member of the Response EAB.
The lowest rates are typically found on niche networks with less viewership. MTVN's major networks, like MTV, Nickelodeon, Comedy Central and Spike, saw 2Q rates spike higher than they have been since 3Q 2007, according to Fays.
"We have demand on the national side," he says. "We'll cut deals to national advertisers to fill the bucket so you don't have to go to the filler spots."
MTVN fills inventory more efficiently by giving national advertisers a slightly discounted rate, and in turn, advertisers often increase spend up to 20 percent to ensure better response rates and to compensate for other symptoms of the weak economy.
"We do sense caution in evaluating continuity stick rates, credit card declines and other elements of a campaign's P&L that would be subject to a credit crunch and a depressed economy," says Medved. "On the media front, revenue has been subject to declining response. Year-over-year rates for long form are off more than 20 percent. But we must account for the noise of fragmentation in that number. For instance, even though we are paying 30-percent less for certain time periods, we may be buying 20-percent more media due to stations and networks opening up more paid programming. Short form is also seeing a surge in the amount of time being offered."
Rates remain low while corporate brand advertisers continue to test and incorporate DR strategies into their media plans. Brand advertisers are often pinned as the culprit of high media rates and low inventory because they can afford to buy out all remnant space typically reserved for the DR buyers. Cost efficiency and accountability are two of the primary reasons why corporate advertisers began a stronger push into the space five to six years ago. Now that they've become a permanent fixture in the media buying landscape, networks have carved out special rates for them to keep DR buys competitively low.
"An advertiser that has been a long-time brand advertiser and is utilizing DRTV to create brand awareness and sales has opened up a category called brand response or, as we call it, hybrid broadcast buying," says Hank Cohen, CEO of New York-based KSL Media. "These advertisers create specific offers or promotions or E-commerce events that will qualify them for a hybrid rate, where they have the ability to purchase media at a lower than traditional rate, but they are not holding every spot accountable to a sale."