Ad Sales

A major source of revenue generated by television networks comes from ad sales. (still looking for a rough percentage of how much)   7 out of 10 dollars                                 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 who work on added value, features and specific sponsorships.

How it 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 are 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 are made 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. Asdvertisers hire Media buying agencies to handle their advertising budgets. the Media Agencies are paid a commision for doing the work and spending the advertisers money. The money is spent on the TV networks who compete with other networks to grab a share of as many advertisers budgets as they can. 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.

Integrated Sales and On-Air Promotions

Many advertisers today 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. They also work together at times creating custom content for advertisers. As mentioend above 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. 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, 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. On-Air Promotions and Integrated Sales work together on many projects. For example an on-air promo campaign may be running on ESPN for Sunday night baseball and that campaign will have Coors Light branded to it. Both teams will work together to communicate ideas and execution of this custom promo incorparting the advertiser. 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. 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. 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. Ratings, reach and frequency are the most important way you determine effective campaigns but 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 (Brian can add in teqnique or more detail?) Virality is another way you can show return on investment of an on air promo. One of my networks created a funny promo 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 hundred 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 of Promo's

cost of producing a :30 promo? cost of airing a :30 promo (takes from commercial inventory) Editors, Producers and staff salaries? who decides how much to spend? Trends

Money comes from parent department budget. 

MTV Networks, on-air promotions can fall under programming OR marketing, depends on channel.  On-air design usually falls under marketing and works closely with the off-air design/print departments. 

Turner Broadcasting (Cartoon Network, Boomerang, TCM, TBS, TNT, CNNetc) – Creative Services is a separate department with its own budget working in close co-operation with Programming and Marketing. 

ROI = higher ratings? 

Research department can determine which campaigns work best 

Distinguish between quantitative and qualitative research 

Use of Focus Groups 

Maybe we should consider having a separate page to dicuss the role of research?

One of the most fundamental questions is "Does on-air promotion work?" Research over the years clearly indocates that it does. Here are two links to some research results demonstrating the effectiveness on on-air promo campaigns: http://www.simulmedia.com/2009/07/yes-on-air-promotions-work/ and http://findarticles.com/p/articles/mi_m6836/is_4_47/ai_n25080269/?tag=content;col1 (this is an academic article examining audience targeting but it has a good bibliography of other research on the impact of "promotion frequency, distance, construction, clutter and placement".

Other internal benchmarks: awareness, intent to view, reach/frequency/GRPs.... executive praise

Integrated Marketing

i)       How does the business work: who sells what to whom and how is the money made?

ii)    What constitutes a target “margin” or ROI? Is this a profitable enterprise?

iii) Patterns of financing for production projects (including raising venture capital, foundation funding, government funding, advances on distribution, commercial projects, etc.)

iv)   How is success measured in this segment?

(1) By ratings?

(2) Box office?

(3) Sales?

(4) Critical Praise?

(5) Market share?

v)      Industry Benchmarks: reports, studies, organizations that regularly report on a field. For instance, search the Department of Labor.