Group Suggests New Spot TV Biz Practices

A group of broadcasters and media shops are recommending that buyers and sellers agree to four new business practices, ultimately changing how spot TV has been bought and sold for 40 years.

The recommendations, unveiled earlier this week during the American Association of Advertising Agencies annual conference in San Francisco, grew out of the organization’s Project Reinvention, an initiative set into motion three years ago to update buying and selling practices across all media.

Instead of negotiating buys based on cost per points (CPP), the parties would negotiate based on impressions (cost-per-thousands or CPM), as is the practice in other media. Advertisers would agree to a 30-day cancellation rule and stations would agree not to preempt scheduled spots for other advertisers that agree to pay a higher rate. Finally, stations would guarantee impressions delivery to 100 percent, up from the current practice of 90 percent.

“This was coming to terms with the pain on both sides of the desk,” said Kevin Gallagher, executive vp and local activation director for Starcom, who sat on the spot TV task force. “We all agree there are smarter ways to do business that benefits all sides.”

In addition to Starcom, other companies that have agreed to a trial of the recommendations include NBC, Hearst Television, Gannett, ABC, CBS, Cox, GroupM, TargetCast, Horizon Media, and Universal McCann.

The practices, used collectively, will benefit the business, said Abby Auerbach, chief marketing officer for the Television Bureau of Advertising. “It opens up the opportunity to have spot TV evaluated in the broader media mix. There is also better inventory control for both stations and advertisers,” Auerbach said.

“This preserves the integrity of what we set out to do in the first place for our clients in terms of targeting, rates, and building schedules,” Gallagher added.

The shift won’t happen overnight. Starcom, for example, is already pushing for firmer guarantees but using CPMs needs time to be incorporated in the planning process. Other practices will require communication with clients.