Free TV position for tough year ahead

The global financial meltdown has marked the dawn of a new era in TV advertising and programming business. Two free-to-air broadcasters in Hong Kong, ATV and TVB have invented new business models to sustain their future network growth as many marketers have frozen and slashed their advertising budgets under the financial pressure.

Media planners and buyers have raised concern that media owners will struggle to survive if they do not pick up a newer or stronger weapon to battle for more advertisers. They argue rethinking strategies and priorities is necessary that they now need to concentrate on programming innovation and creativity to hold back audience and advertisers.

Roid Sin, managing director of Carat, told Marketing most advertisers are facing a dilemma that more ad expenditure spent on TV during the recession could possibly drive up sales revenue but at the same time they fear that it could hurt their ROI if consumer confidence continued to fall.

Ada Wong, GM of ZenithOptimedia, shares a similar viewpoint with Sin, arguing the networks can no longer rely on traditional format of advertising by only selling airtime, rather they have to explore other means such as product placement and tailor-made programs to increase revenues. She suggests digital TV and HD channels are the areas media owners need to explore next.

Although this year's total ad spend ended September on Hong Kong's terrestrial TVs increased by 9.31% to HK$13 billion (12,550,000,000) compared to last year, according to The Nielsen Company, many media analysts said it was mainly due to the Olympic boost.

Last month, Asia Television (ATV) announced the resignation of its CEO Louis Page, a move that signifies management changes within the group in the long run. In its annual sales presentation this week, Dewy Ip, executive vice president of ATV, told Marketing that the group has experienced double-digit advertising growth this year. He said it would be irresponsible to give any projection for 2009 as the markets are heading to a tougher year.

When asked to comment on the impact of current economy on ATV, Ip said, "I truly believe we are in the critical stages of transformation. It [2009] will be a very interesting year for everyone."

Despite facing a stronger player in the market, Ip admitted, ATV not only offers flexible and tactical solutions for advertisers but has started to look beyond traditional media to change the TV rating landscape and viewers' general perception about its market position and brand.

In the wake of digitalization of broadcasting, ATV further pursues investment opportunities in the HD and digital channels (HD TV, CCTV 4, Atv News & Business Channel, His TV, Her TV and Plus TV) to reach target audience across different demographic segments and further expand network penetration across Hong Kong and China.

Its partnerships with social network portal like Tencent, Youtube and Sina to launch online videos and interactive media on the ATV portal reflect its aggressive approach to reach the growing online audience. As the internet has accelerated the commoditization of media, ATV will foster online collaboration to lift online content and advertising effectiveness.

ATV's next-door rival Television Broadcasts (TVB), on the other hand, was forced to abandon its sales plan in the same month due to tumultuous situation in the financial markets, ending talks with potential bidders to sell 75% share of its property. KW Leung, controller of TVB told Marketing that the demand for advertising airtime in Hong Kong has slowed down slightly, especially from the finance, banking, insurance and real estate sectors.

On the bright side though, fast food and daily necessity product brands are "flexing their muscles" and have chosen to advertise more on TV, which is still believed as the most cost effective medium compared to print and online, to gain market share and accelerate revenue sales. Leung said TVB is working closely with these advertisers to bridge the revenue shortfall.

On 20 October, TVB announced its 2009 commitment schemes to advertisers, resetting its rate card with the entry level for mega-upfront booking from 108 to 100 next year, and offering extra bonus (meaning discounts) for mega-upfront and super-upfront advertisers depending on their booking amount.

In Leung's own interpretation, TVB's financial position will remain strong and benefit from changes in a weaker financial environment, given the fact that TVB owns more than 80% market share among all the networks. "Advertisers will rather put their budgets on a core advertising medium than spreading them thinly across different platforms."

Meanwhile, TVB will speed up the process of its new business strategy, called One-Stop Service, which was unveiled before the Olympics, to bolster up its production and advertising businesses. The new plan will provide advertisers with short lead time for urgent campaigns, and assist them in production by lending talents to and setting up events for advertisers.

Suffice it to say audience is still a key consideration since they are what determine the value of advertising and TV revenue. Therefore, it is vital for the networks to continue producing programs and dramas to gain audience ratings. However, these two TV network giants are looking beyond selling tradition products, such as scatter ads, 30-second spots and primetime programming to stimulate profits. They have been advised to project advertising service across multimedia platforms to meet marketers' needs.