Negotiate Your Television Pricing

Now up-front price negotiations and built-in guarantees are a must!

On Saturday, January 18, 1997, another newspaper, the Phoenix Gazette, closed their doors. Founded in 1880, thirty-two years before Arizona became a State, the news was brought to the good citizens of this region every afternoon. Upon closing the paper, the editors and publishers admitted times had changed. People's daily routine's have changed. They get home later. They lean on television for their news and information. And why is that? The great majority of people who make up the bulk of the buying public are "television children". They were weaned on the tube. They were raised on the tube. Their heroes are past television stars. Their childhood icons are "Big Bird" and "Mary Tyler Moore".

To the vast majority, newspapers give "old" news. In fact, in some "X'er" circles, newspapers are referred to as "the old newspapers". Television is their vehicle. For many retailers, especially those who have been involved with our firm during the past two decades, television is the main focus for advertising investment. And recently, a study showed what pricing will likely be in the year 2005. Based on Myers Reports projections based on Advertising Age's 1992 and 1996 Prime-Time Surveys, the $1 million 30-second ad unit, which has been around for several Super Bowls, won't be such a bargain for long. And, a top regular television series program now commanding seven-figures, will be a great bargain by 2005. They say that by the year 2005, $1,039,000 will be the average price of a :30 second spot in all of the top 20% of the Big 3 prime-time series. That's what Myers Reports forecasts based on the accelerating rate of inflation for top-demand programming. Assuming a compound annual growth rate of 11.4%, the actual rate of inflation for the top 20% of the prime-time shows since 1992, according to Ad Age, the highest quintile will fetch $606,000 by the end of this century and will break seven figures by 2005. Most consider this a conservative estimate. The actual rate of inflation for top-demand programming could polarize even further as demand surges for even rarer high-reach, high-impact vehicles in an increasingly fragmented TV landscape.

Although the prices in FIGURE 1 all concern prime time programming, don't think for a moment that it will not affect local television rates, especially those programs which are the bread and butter blocks for home furnishings. The average price will mirror the increases of prime time. And they have to. Just look at the huge investments that have gone on during the past two years as stations are being bought up right and left by bigger and bigger corporations who will demand a quick and large return on investment. How do we combat these increases? By using our heads and becoming partners with the local television stations in our communities.

Key media buyers around the country for the best run home furnishings retailers are making sure that their advertisers are protected over the long haul with long-term contracts and with guarantees if the station's schedules under-deliver. This is the same tactic that has been used on the national level for years. If you are not exacting those guarantees, you are letting money slip through your fingers. Upfront negotiations (before the beginning of a new television season) are important if you are to be a player in this medium for long. As stations project bullish goals, make sure your goal is to get what you pay for, whether the bullish goals are met or not. More about what can be done next month.

Lance G. Hanish is the President of Lance Benefield & Co., Inc. Worldwide, a leading marketing communications firm serving home furnishings retailers. Questions on any aspect of television media management or production can be direct to Mr. Hanish care of FURNITURE WORLD Magazine at lhanish@furninfo.com.