OPINION: Overtrading could ruin TV buying’s reputation

Advertisers perusing our feature this week - A Client’s Guide to

Overtrading (page 28) - may find it hard to believe what they are

reading. They will probably have seen press reports of TV buying points

owing cash to sales houses - a practice that has become known as

overtrading. On reading Campaign they may speak to their media agency

and be reassured that this is all part of the cut and thrust of TV

airtime negotiation, but they will probably still be left with nagging

doubts.

Overtrading doesn’t happen in the US, because the notion of Station

Average Price (a TV station’s revenue divided by its audience) doesn’t

exist and deals are negotiated on behalf of specific clients. And about

80 per cent of US TV spend is committed up front, so TV companies have a

much clearer idea of their total revenue.

It would help ITV’s image if it didn’t have to go through the annual

battles with media buyers over who owes what to whom - this year CIA,

last year the Media Centre, before that Carat. Who will be next? And if

the CIA/Laser dispute goes to court, as is possible, what will the OFT

make of a trading environment which has such potential for sharp

practice on both sides?

Some, of course, will argue that overtrading is a market reality which

suits most participants. But if media buying is to be a respected

profession, greater transparency is required. Three things are needed.

First, sales houses must resist offering consultancy fees in the course

of negotiation.

Second, sales house heads should weed out the individuals who

deliberately and habitually overtrade. The 1990 Broadcasting Act states

that favour or showing prejudice against any advertiser is potentially

illegal.

Third, prominent media agencies and sales houses should stage

discussions on neutral ground with the aim of developing a charter for a

more transparent trading system. Until then, clients still have cause to

worry.

This article was first published on Campaign