RTÉ television advertising prices set to drop

Advertising on RTÉ Television will be cheaper in the second half of 2013 compared to the same period last year as the broadcaster has cut its trading prices for the autumn.

An advertising buyer using RTÉ’s advanced booking system to purchase television spots will pay an average of 13.8 per cent less in the July to December period than they did a year earlier based on the “adult 15-plus” audience category. The cost of targeting other audience groups has, in some cases, come down even further.

RTÉ Television commercial director Geraldine O’Leary attributes the price fall to an oversupply of advertising minutes across a television market that is “flooded” by channels, including the 23 “opt-outs” on which Sky Media sells local Irish advertising.

“The supply of minutage is outstripping demand and that leads to deflation,” she says.

Paul Moran, managing director of media buying agency Mediaworks, describes the fall in costs as a "significant deflation" that is "very good news" for advertisers.

“All of the media would prefer deflation to end because that would be a signal that demand is no longer falling,” says Moran. “But I think it’s important that advertisers see the positive side of this.”

Audience fluctuations
RTÉ's policy of releasing trading prices to agencies means television is "one of the most transparent mediums" when it comes to price deflation, he adds.

As well as normal month-to- month variations, prices in January and the summer months are always lower – television advertising costs also rise and fall in response to supply, demand, fluctuations in audiences and the ways in media groups manage their advertising inventory.

In the second half of 2012, RTÉ removed some of its advertising minutes after bookings fell short of expectations.

“We don’t want to close down inventory, but we did have to do it last autumn,” says O’Leary.

The other option is to “over-deliver” to advertisers which have made bookings, but there is a limit to how much the broadcaster can do this before the practice starts to feel like an “irritant” to clients, she says.

RTÉ’s pricing for the second half of 2012 ended up being “higher than it should have been”, says Eddie O’Mahony, trading director at Core Media, Ireland’s largest media buying group. As a result, this year’s deflation is not unexpected.

“It’s good for advertisers that the pricing in the back half of the year is more reflective of what’s going on in the market,” he says.

An “unusual” pattern of television advertising spending in 2012 (due to major sporting events) makes it harder to predict revenue trends this year.

“If September is not good, based on what we have seen, the market could be down about 5 per cent,” says O’Mahony. “There’s no denying the market is very soft. I do anticipate modest growth in 2014 and 2015, but for this year, the jury is out.”