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Taking Care of Business

Page history last edited by dylantgiordano@... 13 years ago


Ad Sales:

     A major source of revenue generated by television networks comes from ad sales. 7 out of every 10 dollars of a networks profit comes in from sales. The ad sales department traditionally consists of the actual sales force including employees at the assistant level, Sales Planners, Account Executives, Sales Manager, Vice President and President. Other departments that fall under sales or work directly with the sales team are Pricing and Planning who manages inventory, Sales Coordination who places units in programs and creates on air logs, Commercial Administration who is responsible for inserting the spot, getting it on air and running it by the correct guidelines of the advertiser, Standards and Practices will review spots to ensure they are appropriate to air and Integrated Sales works on added value, features and specific sponsorships.


How The Business Works:

     The currency used most in TV ad sales is a CPM. The CPM represents the price that it cost to reach one thousand viewers. Impressions also known as eyeballs, the viewers and targeted consumers who are watching a particular program. To calcualte a CPM you take the total cost of a campaign divIded by the total impressions delivered in the campaign schedule for example $100,000/5,000,000 = $20.00 CPM. Deals and CPM's are negotiaited during the annual televison upfront time period starting in May. The media buying agencies who represent the actual advertisers will register budgets with various networks in hopes to guarantee a certain amount of impressions for a desired demographic. Proposals or media plans are created and negotiated between buyers and account executives in May for the upcoming year. A final dollar amount, schedule and guaranteed amount of impressions is then put to order. Networks usually sell 80% of their inventory in advance during this upfront period and the other 20% is sold in the scatter market which tends to be closer to the actual airing of programs and also comes at a premium since the inventory is limited by that time.


The Players:

     Businesses hire Media buying agencies to handle their advertising budgets. The Media agencies are paid a commission, traditionally 15% of the spend, for doing the work and spending the advertisers money. The money is spent on the broadcast and cable networks at the local or national level. Networks need to make yearly budgets which are created by reviewing available inventory to sell, projected sell out levels, a networks household distribution, operating cost and estimated ratings. Ratings become so important because the more popular and highly rated a program is the more you can charge for it. If A network has one highly rated program that program can help boost ratings for other programs surrounding it. And one great way to build and keep that audience is effective on air promotion. At first it might not be so clear to see how On-Air Promotions directly effects the business of ad sales but the simple fact is that ratings are what generates revenue. 


Integrated Sales and On-Air Promotions Snapshots:

     Many advertisers are looking for custom ideas when it comes to advertising on television networks. More than ever, people today can fast forward through commercials or switch to another medium to consume their media. It is crucial for a televeision network to keep their audience, grow their audience and to offer innovative and custom solotions to their clients. Integrated Sales and On-air Promotions play an important role in the business aspect of the network. 


Importance of On-Air Promotions:

     As previously mentioned ad sales is a key revenue generator for the networks and since they sell programs based on rating estimates it is important for the program to actually achieve those ratings. On-air promotions directly effects the business of ad sales since it's main objective is to raise awareness of programs, encourage the intent to view and finally help meet the ratings goals.


Importance of Integrated Sales:

     The Integrated Sales department is responsible for organically and innovatively integrating advertisers product on air. When the demand for custom integrations is so high it is important that the integrated sales team is on their "A" game. Advertisers want more then spots and dots, they want to be in show, in game and have their logos on screen to catch the eyeballs. If the Integrated Sales team creates a package that is in-line with the advertisers goals the sales team may see increased budgets and return customers.


Team Work:

     On-Air Promotions and Integrated Sales work together on many projects. For example a promo campaign may be running on ESPN for their Sunday night baseball and that campaign may have Coors Light branded to it. Both teams will work together to communicate ideas and execution of this custom promo. It is branding the advertiser to this particular property of the network and it is added value for their deal all created by on On-Air Promotions. On-Air Promotions can also act as in house production for a sales team and help generate revenue by creating actual commercial spots for advertisers who otherwise would not be able to air. For Example El Jimador, a liquor advertiser who usually advertises in print media was intrested in having elements on air in the form of a billboard or a lowerthird since they do not have a TV commercial. Billboards and lowerthirds do not really sell for much they are usually added value or bonus inventory so this deal would not have generated much money. However Integrated Sales worked with On-Air Promotions and the advertiser to create a :30 second commercial and the deal was built around that commercial and was sold for much more then the original deal would have been. 


On-Air Promotions - ROI:

     The most important thing that On-air promotions will do to support the business of ad sales is the creation of actual promo campaigns which hopefully result in high ratings. If a rating estimate for a show or deal is not met the network takes on liablilty and will owe the advertiser impressions and spots. Not only is liabilty being inccured but the underdelivery of a deal can have implications on next years negotiations. Advertisers may reduce their spend, may not come back at all, or may demand a cheaper CPM. 


Meet The Estimate:

     One of the main factors in measuring the success of an On-Air Promotions campaign is to see if the ratings estimates of a particular show are met. If the network sells the show based on a 3.0 rating and that is the actual rating achieved then the campaign has paid off. All the money, hardwork and production can be justified. 


Beat The Estimate:

     An even better measure is if an actual rating comes in higher than its estimated rating, this is now putting the network in great position to deliver the deal and will give the sales force good leverage in negotiating the next deal. Clearly promotion was handled correctly in that example. Ratings, reach and frequency are the most important ways to determine ROI or effectiveness of a campaign


Intent To View:

     Focus groups and surveys taking place during specific On-Air Promotions can also return positive feedback to the network if the intent to view is strong. Different levels of awareness during different times of a campaign can track the responsiveness of the promo.


Viral Video:

     Virality is another way you can show return on investment of an on air promo. One of my networks created an entertaining promo spot having to do with how fanatical soccer fans are and how passionate they can get. This spot actually never made it on air because a producer decided to drop it from his rotation but it found its way on You Tube and recived hundreds of thousands of views and a few thousand likes. This is keeping the branding and network voice alive and not using network inventory to do so. It also suggest that there is a fan base for this type of production and that people are paying attention to this content.


Budgeting and Financing:

     The budget for campaigns and promotional spots come from their parent department. The On-Air Promotions group can fall under different departments depending on the network. They are usually under programming or marketing. Networks have tent-poles or annual initiatives that they will focus on. Special live events, premieres or series launches will have a bigger push behind them then already established programs or non original content.  As far as outside financing or funding that is not usually part of the promotion process. The networks have fixed costs within full time employees and equipment so the cost never really fluctuates and they never go outside the company to fund these campaigns. 


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