How does TV advertising work? (1 Viewer)

[BradleyS.]

I have always wondered about this. Do companies that want to advertise go directly to the Cable or satellite station to advertise, or do they advertise through each channel(abc,nbc,tbs,ect.)? couldnt cable companies refuse to advertise directv,voom, and other sources of sattelite TV, and vice versa? I might be entirely wrong on how things work but that just crossed my mind.

 

[Greg_R]

I believe that there are network as well as local advertising time slots. This ratio varies depending on the programming. The local slots are controlled by the station (or cable company). That's why every single 'local' timeslot on DSS is filled with Bowflex and diet pill commercials but not on OTA broadcasts.

 

[Don Black]

Well, you have two basic types of channels: 1) national broadcast networks (CBS/ABC/NBC/FOX/WB/UPN) and 2) national cable networks (ESPN, TBS, USA, Comedy Central, MTV, etc.). National broadcasters consist of the "network" and local affiliate stations. National and local ad sales are split among the two groups (many local affiliates are owned by their parent network though).

Pay TV providers (cable/satellite) do not pay or charge for broadcast network coverage. Meaning, they get re-transmission rights to these broadcast channels for free. In exchange, they agree to also carry other channels (cable networks) owned by the parent companies of the broadcast networks.

The national cable networks, however, do charge the pay TV providers for their national cable networks. ESPN costs a freakin' fortune (like $2.35/household/month). In exchange, they get re-transmission rights and the allocation of certain local advertising inventory (which they re-sell).

Premium channels have different models, as do home shopping channels. It's a big mess basically which is why a la carte pricing will never happen (except via the Internet ... maybe).

 

[BradleyS.]

yes it definitely sounds like mess, but I think I get the drift of it. I didnt know there was so much involved in broadcasting commercials.

 

[Don Black]

Just the tip of the iceburg...

 

[DaveDickey]

Rather interesting actually... I also wonder about TV ratings. I know that there is / was such a thing as Neilson Ratings years ago. Do they still do this? I've never known anyone who participated in rating TV shows.(I don't mean to hijack the thread). Dave

 

[Ted Lee]

afaik, nielson ratings are still active.

http://www.nielsenmedia.com/

 

[Don Black]

Nielsen is the only game in town right now. Their local people meters have caused a big hullabuloo in NYC and LA due to issues of accuracy and minority representation.

 

[Yee-Ming]

OK, dumb foreigner here, let's see if I understand the US network thingy correctly: a local TV station that is affiliated to a network (are they all affiliated to one?) broadcasts the network's feed for certain hours a day (6 to 11?), but the rest of the day broadcasts whatever it wants, typically local news or shows by local reporters or producers, or shows bought directly from the producers (is this the "syndication" thing that everyone speaks of?)

 

[Lew Crippen]

It all depends, Yee-Ming.

To begin (this is only for OTA telecasts) there are six commercial networks: NBC, ABC, CBS, Fox, WB and UPN and one non-commercial network, PBS. Not all local stations are affiliated with networks. Many local stations are oriented towards a niche market (religious or Spanish-speaking), while others provide general programming.

There are somewhat different agreements between the networks and their affiliates, but in general the networks are obliged to provide programming during certain times (and sometimes certain types of programming) and the affiliates are required to telecast the network feed during certain periods.

The evening time slot is referred to as ‘prime time’. Some years ago the FCC required the networks to give the affiliates the first hour of prime-time back in order to encourage local programming. This was seen pretty much as a failure, as most local stations just ran nationally developed programs (such as ‘Hee Haw’) or reruns of old shows, such as M*A*S*H or Mary Tyler Moore.

Many of the ‘traditional’ networks (ABC, NBC, CBS) have a lot of daytime programming, like soap operas and early morning shows, such as ‘Today’. Local stations usually have a half-hour of news before prime-time and another half-hour after prime-time. Some networks kick back in after the late news with more shows such as ‘Letterman’ or ‘Tonight’.

But the newer networks don’t do much in these areas.

Many of the networks also provide national news for their affiliates.

Finally, the weekends are often dominated by sports on some networks. Saturday morning has some networks showing cartoons.

And on and on.

 

[Denward]

I don't have any insider knowledge but I think Yee-Ming is essentially correct. A TV station is a local entity and they're under no obligation to affiliate with a national network. That being said, the major national networks have a local affiliate in any city of reasonable size. Sometimes network affiliations change which can be confusing. Our ABC and CBS affiliates switched a few years ago. One of the local stations liked the other network's programming better so when the contracts expired, they made a bid for the other network. That left the other network without a Louisville affiliate for a short time until they signed up the other local station.

Local TV stations are granted a broadcast license by the Federal Communications Commission (FCC). The federal govt grants a license to use the airways but the local stations must fulfill certain community service obligations. They typically fulfill these obligations with local news programming. They can't just show Seinfeld 24/7 and expect to keep their license.

I'm not sure exactly what the obligations are to broadcast network programming. Around here during college basketball season, the local affiliates frequently pre-empt network programming to show local basketball games instead. In recent years, The West Wing has been a frequent victim. The local station gets better ad revenue from the game than it would from the network show. The pre-empted show is either shown on the same station at a later time, or they arrange for one of the smaller local stations to carry it at its regular time.

 

[Kevin Hewell]

I wish it was still that way here. We have two hours of local news before the network news comes on. That's just too much, IMO.

 

[Yee-Ming]

Thanks for the clarification folks!

 

[Denward]

Like I said above, the local station has to satisfy its FCC community service obligation. I think a local news program is the cheapest way to do that.

 

[Alex Spindler]

(Edit: Wow, wrote a whole lot more than I thought I was going to.)


The method of funding and advertising is something my work has brought me into recently and it's a fascinating look at how the whole machine works.

The food chain for television is pretty amazing as a whole and seems remarkably delicate.

A studio will produce a show, hoping to make it a hit by having a good premise and cast and be edgy enough to not be boring but not so much that it scares away advertisers.

A network will pick up a show based on how attractive it looks to its lineup and, by extension, how attractive it looks to it's advertisers. Recently, there has been a spate of shows moving from network to network, especially those that jump from network to cable TV.

The advertisers will then buy advertising time between the shows breaks. This is based in part on the content of the show but heavily based on how many people are watching the show. More eyes, more advertising revenue.

Now the show has the interesting challenge of keeping itself on top of the ratings heap while not alienating it's advertisers. Every once in a while you hear a flap about a show with a controversial subject not being shown by a local station because of objections to its content. Others lose advertisers when they go too far in the advertisers eyes (happened with Ellen and a few other shows). But if it doesn't keep up it's interest in the public's eye, the advertising revenues will drop. And for expensive hour long dramas, that's practically death. You can't have a show like ER, which has huge casts with large salaries and big crash scene set pieces if it weren't at the top of the ratings.


The other interesting tweaks to the whole ecosystem was the method of generating ratings. There was a critical time period where advertisers (among others) would base their decisions on how a show performed during this time. So, in response, the studios and networks responded with the so-called 'sweeps weeks' when they would try to peak the interest in their show with cliff hangers, guest stars, and expensive projects to sway the opinion their way. And it left huge dead zones of new content as they rode out the results over the long summer months. So you get a real ebb and flow for shows as they play reruns over the summer and you search for new things to be on. In a bit of a change, the low cost reality TV craze has reinvigorated summer television watching somewhat because the networks can deliver shows and win some of the summer sweeps periods (July and August) without spending a good deal of money as they do on their new fall shows. So, we have the benefit of not seeing such a total catering of television programming to advertising schedules, but it's still close to it. As best I remember, there are four four-week sweeps, with the May (Season enders) and November (new Fall shows) ones being the critical focus times.


Another thing is how cable works into the whole mix. Broadcast television is available to everyone, over the air, on cable, and on satellite. But cable stations are available to only a select few who subscribe to a cable package. Because the audience is smaller, cable channels supplement their lower advertising revenue (fewer eyes, less money) with per month rates passed on to the customers. The rates, mirroring advertising, are based on their attractiveness to audiences. More people are interested in getting ESPN and Disney than the Game Show Network or Oxygen, so the former charge more per month than the latter. But as you're aware, you pick up a package with those key channels including those channels you're not all that interested in. But chances are, you've watched a show or two on them as well, if something interesting was added. That's the value that those high interest channels bring, which is why they command $1.81 per month while MSNBC is only $0.12. Those smaller shows wouldn't survive on advertising revenue and per channel costs alone, which is why everyone is so reluctant to go to an ala carte channel lineup. Think to yourself if you have cable only for one or two stations, and still find yourself switching over to Comedy Central for the Daily Show now and then and you'll see why they continue to build the package plan into every cable and satellite offering.

Premium channels like HBO completely eschew advertising revenue and charge the customer, using the cable company as a proxy, for all of their programming. That's why you pay upwards of $10 for HBO's suite of channels while basic cable is only $20.


The newest wrinkle is Tivo and other methods of avoiding commercials. It used to be the only time advertisers lost your eyes was during a bathroom break. A remote control allows you to easily switch stations, but they try to schedule commercials during the same time for all shows. But a Tivo allows you to watch TV without having to see any commercials at all, which is the deadly pathogen to this whole ecosystem. The way to fight it is to make the commercials unavoidable, through obvious product placement, official sponsoring of programming ('brought to you by Ford Trucks'), and the now the popular advertising banner on some cable stations. Expect to see this grow dramatically as advertisers lose confidence in the expensive spots for ER when they start to believe that all of their Time Warner cable subscribers are using their built in DVRs to skip those precious commercial minutes. Obviously the networks have been creative on developing new revenue though syndication of shows that they have rights to (often to niche cable stations) and through lucrative DVD releases of their shows. But until they get completely weaned off of advertising revenue like an HBO, the popup fever of websurfing may be coming to a television near you.

 

[andrew markworthy]

Another dumb foreigner question - do companies specify when they want their adverts to appear in the USA?

It's my understanding that in the UK, unless you pay extra, you don't get to say specifically when your advert will appear. Basically, you'll be guaranteed that for £X you'll get the advert playing y times during prime time and z times at other times. Generally the TV companies will ensure that your advert isn't placed in the same commercial break as a direct rival (e.g. if you're selling soap powder, then yours will be the only soap powder advert during that particular break).

Another thing - on daytime TV, every other advert seems to be by litigation lawyers or loan companies. Is it the same in the USA?

 

[Joseph DeMartino]

Here it varies. On primetime broadcast network and local shows advertisers generally buy commmercials during specific shows, sometimes specific spots (first ad after the teaser and before Act 1, last commercial break between Act 4 and the tag, for instance.) Local companies sometimes buy the "insert" slots from cable companies to air during specific shows.

On many "basic" cable networks (like the U.S. Sci-Fi Channel) advertisers get exactly what you suggest, "X" number of showings in a given "day-part" (mornings, primetime, whatever.)

Regards,

Joe

 

[andrew markworthy]

Joe, thanks for the info. I think over here it's got to be a really big event (e.g. the FA Cup Final - equivalent of your Super Bowl) before you get into the bespoke advert slot status.

 

[DaveDickey]

Alex, Great info. The whole process is really quite dynamic and complicated.

 

[nolesrule]

As for local affiliates, when I was away at college, we didn't just have a pair of stations switch. We had a 3-way switch.

ABC affiliate > CBS
CBS affiliate > FOX
FOX affiliate > ABC

And since it happened while at college, it took me a very long time to get used to the change.