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Discovery renews contract with Sky Media

Discovery Networks announced it is renewing the estimated £150 million a year TV ad sales contract with Sky Media. The multi-year deal for Discovery’s 11 factual and entertainment channels took at least four months to negotiate, with tensions thought to be high throughout the process.

Discovery allegedly discussed alternative options with Channel 4 and ITV. Most radically, they had also been examining whether they could set up their own ad sales house. But a joint statement confirmed a deal had ultimately been reached: “The multi-year partnership begins with immediate effect and includes responsibility for managing the sale of Discovery’s full advertising inventory, including sponsorship and video on demand.”

All Response Media Viewpoint

According to my old faithful Thesaurus, ‘discovery’ means exploration, invention and experimentation. Yet, Discovery Networks’ decision to remain with Sky could be viewed as an uninspiring ‘safe’ bet to some, us included.

Over the last 5 years, the majority of TV airtime sales has been consolidated into the big three of ITV, C4 and Sky. This move isn’t a major positive for advertisers, especially acquisition focused spenders. We want response and business generation today. ‘Generic eyeballs’ seeing our ad today, in the hope of business tomorrow, are less of a concern. Even more so if broadcasters try to dictate the stations, days and day parts that best suit themselves! Acquisition advertisers and agencies face a continual battle with broadcasters for the three fundamentals of a successful campaign: efficient pricing, flexibility and granular level management and optimisation.

We should applaud the smaller sales houses that are fighting to thrive in this market. Yet, they still represent only a small piece of the action and cannot deliver significant audiences for any campaign. Discovery’s decision to step away from an independent operation comes as a real disappointment. Associated costs and logistics may have proved prohibitive, but longer term benefits for both Discovery and advertisers may have been lost.

A standalone sales outfit could control its own airtime far more effectively. More expertly and aggressively sold airtime could have lowered cost per thousands for advertisers. Airtime would also have been elevated above the ‘commodity basket’ it currently sits in with 150+ Sky-sold stations.

Most importantly, a focused sales remit would provide more love and attention to campaign delivery requirements. That is the killer benefit for acquisition focused advertisers. Granular optimisation and stricter adherence to booked campaign metrics will always deliver the greatest performance gains. Sadly we cannot expect Sky Media’s breadth, structure and business objectives to provide the same.

The dilution of the UK TV ad sales market would be a welcome reversal to the trend of recent years. It would encourage greater competition and improved price efficiency; but it is likely wishful thinking. We can only hope the remaining flexible, independent sales points don’t get gobbled up by the behemoths any time soon. Maybe one day in the future, programmatic buying and execution will give acquisition focused TV buyers the control they crave.