Polsat's programs pay off as advertisers tune out TVP
Until last year, TVP sat back and welcomed more than 50% of all television ad spending into its coffers. While Poland had independent television stations, until recently no one had attracted enough viewers to threaten the public broadcaster's profitable dominance and the leading edge of its most popular station, TVP1.
But the good old days are gone. Polsat, a five-year-old independent station, continues to pull away viewers with its popular, mainstream programming. And advertising spending has followed those viewers, meaning that for the first time Polsat this year became the No. 1 station in terms of ad revenue. It attracted 41% of all television money spent from January though May 1998. That compares with a starkly lower-than-normal 37% for TVP's two national stations (TVP1 and TVP2).
And Polsat doesn't plan to stop there. The station, which has competed head-on with TVP since first entering the market at the end of 1992, is gunning for 45% of all ad spending by the end of the year, said Andrzej Muszynski, sales director at Polsat's advertising division PAI-Media.
"We worked damn hard and damn long for it," Muszynski said. "What we have today did not come without effort."
The loss of ad zloty at TVP follows a slow but steady desertion by viewers. Forced to show stale, state-of-the-union addresses and dry parliamentarian elections, TVP has had to sit by while viewers zap its programming and tune in instead to competitor Polsat's popular movies and quiz shows.
"It's all in the programming," said Witold Gawda, former head of TVP's advertising division Biuro Reklamy, who left in June to become the managing director of MindShare media house.
During the elections last fall, for example, TVP lost almost 5% of its viewers, dropping from 52.5% at the end of August to 47.7% at the end of September, according to Osrodek Badania Opinii Publicznej (OBOP). Polsat picked off the unhappy watchers and saw its viewership rise 6% in the same period to 32.5%.
"We could not do anything about it, but just watch the viewers flow away," said Tomasz Sieniutycz, public relations manager at TVP's Biuro Reklamy.
Despite the mainstream programming, Polsat's viewer figures have not risen at the same pace as its ad revenue. At the end of May, 24.2% of the television audience was glued to Polsat, while 29.6% watched TVP's flagship station, TVP1, according to media research firm AGB Polska. That compares to the 31.7% TVP1 had a year ago, and the 25.2% Polsat accounted for.
Advertisers, however, are more concerned about the kind of viewers that are choosing Polsat, namely a younger segment of the population with greater spending power. In addition, the station also has the flexibility to break into its programming with commercials, splitting shows into parts and letting the advertisers speak. While TVP is forced to show commercials at the beginning or end of every show.
Putting further pressure on TVP are two new stations which also started up over the last 12 months, tvn and Nasza TV. At the end of May, tvn had 6.6% viewership, while Nasza TV had 1.8%.
But those two competitors do not have TVP nearly as worried as Polsat. Polsat has a good shot at making its goal of attracting 45% of all ad spending and remaining the highest-earning TV station, he said.
Why will Polsat triumph?
"Because it's not public," Gawda said.
Public responsibility
TVP benefited for years from being a monopoly - the public broadcaster of Poland. But in a free market, TVP is finding that doing the public bidding brings more limitations than opportunities. Although, unlike other public broadcasters in Europe, TVP is able to show as many minutes of commercials per hour - 12 - as its competitors.
But that doesn't change the fact that the times TVP can show commercials is restricted and that some of its content is designed more to inform the populous than to entertain it.
"We have to inform, educate and provide entertainment, exactly in this order," said Robert Kwiatkowski, newly-appointed president of TVP's managing board.
As a public broadcaster, TVP in the elections last fall had to provide 10 running parties and alliances with 15 hours of free-of-charge air time, allowing each to present its platform. TVP did make some money in the deal - it was allowed to charge zl. 500 to as high as zl. 13,000 for a regular 30-second, election ad spot. But having to show election coverage was not necessarily the best way to compete with the fun movies Polsat aired during the prime fall viewing season, said Tomasz Sieniutycz, TVP-Biuro Reklamy's public relations manager.
"Elections are definitely not the most attractive programming for fall," he said.
The result was the 5% drop in viewership TVP experienced. That led to a downturn in advertising revenue, said Biuro Reklamy's Gawda.
"Viewers go away and advertising revenue does the same," he said.
And the loss of viewers last fall translated into lost revenue this year for TVP. According to data compiled on the basis of official television price lists by AGB Polska, grossed zl. 524.6 million ($152 million) over the first five months of the year, while TVP's national channels TVP1 and TVP2 together grabbed zl. 473.42 million ($137 million).
The relation was reversed a year ago, when the stations grossed zl.268 million ($83.75 million) and zl.359 million ($112.19 million) respectively over the same period.
"It was a loss stemming directly from the outflow of viewers," said TVP's Sieniutycz.
Better value for money
In addition to its younger audience and better-timed commercial breaks, Polsat also offers nice prices for its spots, said Malgorzata Grzyb, media director of advertising agency Leo Burnett.
When an advertiser looks at the number of viewers it is reaching in its target audience, Polsat often comes out ahead even though the station's total viewership is lower than TVP1.
Advertisers like to look at the gross rating points (GRP) a particular commercial delivers. GRP guarantees that a certain number of people will watch a given advertising spot. The higher the GRP, the more competitive the station, said TVP's Sieniutycz, who also is head of the station's GRP department.
TV stations usually sell advertising time based on their total viewership or on GRP, he said.
And Polsat takes the lead when it comes to GRP, particularly for young people. In May, a 30-second spot on Polsat for a target group of people 10-40 years old had a GRP of 35,063 people. That compares with a GRP of 21,557 people for the same group on TVP1. The GRP represent 1% of target viewers who actually watched the given 30-second spot.
And the more people watch, the lower the CPP (cost per point) gets, added Leo Burnett's Grzyb. Advertisers use CPP, or the price of a 30-second spot divided by the number of viewers, to determine if their money is being well spent. Media planners rely heavily on the figure when making recommendations to clients about where to put their ads.
"(Polsat) has a very good offer," Grzyb said.
She added that the station's willingness to negotiate prices along with its less expensive CPP makes it particularly appealing. Polsat is also known for cutting aggressive deals with large advertisers.
Those numbers have enabled Polsat to attract the big spenders. The biggest advertiser in the first five months of the year, consumer goods maker Unilever, including its branches Lever, Van den Bergh Foods and Algida poured zl. 82.73 million ($24 million) into TVP and Polsat. Procter & Gamble took the No. 2 spot, shelling out zl. 79.71 million ($23.10 million).
Both companies work well, and often, with Polsat, Muszynski said.
"I'd say we get more of their advertising budgets than ... TVP," he said.
But it isn't all about TVP and Polsat. Smaller, newer stations such as tvn, RTL7, Canal+ Polska or Nasza TV give advertisers additional room to maneuver, media agencies said.
"It all depends on the client and the target group you're trying to reach," Gawda said.
According to AGB, over the first five months of the year tvn attracted 16% of advertising spending, while Nasza TV reported 3.2% and RTL7 won 2.3%. But AGB emphasizes that the data is easily distorted as some stations have their own gimmicks for manipulating their cost per viewer.
And for the time being, everybody agrees that the turf war will continue to be between TVP and Polsat. Media planners have to go to one, or both, of the stations when doling out ad money.
"They are definitely the two strongest players on the market," said Pawel Sawicki, media director with Saatchi & Saatchi advertising agency.
But TVP's newly-appointed Kwiatkowski takes heart in one thing: competition. He said that as the new stations find their footing they too will chip away at Polsat's revenue, just as Polsat ate away at TVP.
He even sees a chance for TVP to regain its lost glory.
"I believe we'll be No. 1 again," he said.
But the good old days are gone. Polsat, a five-year-old independent station, continues to pull away viewers with its popular, mainstream programming. And advertising spending has followed those viewers, meaning that for the first time Polsat this year became the No. 1 station in terms of ad revenue. It attracted 41% of all television money spent from January though May 1998. That compares with a starkly lower-than-normal 37% for TVP's two national stations (TVP1 and TVP2).
And Polsat doesn't plan to stop there. The station, which has competed head-on with TVP since first entering the market at the end of 1992, is gunning for 45% of all ad spending by the end of the year, said Andrzej Muszynski, sales director at Polsat's advertising division PAI-Media.
"We worked damn hard and damn long for it," Muszynski said. "What we have today did not come without effort."
The loss of ad zloty at TVP follows a slow but steady desertion by viewers. Forced to show stale, state-of-the-union addresses and dry parliamentarian elections, TVP has had to sit by while viewers zap its programming and tune in instead to competitor Polsat's popular movies and quiz shows.
"It's all in the programming," said Witold Gawda, former head of TVP's advertising division Biuro Reklamy, who left in June to become the managing director of MindShare media house.
During the elections last fall, for example, TVP lost almost 5% of its viewers, dropping from 52.5% at the end of August to 47.7% at the end of September, according to Osrodek Badania Opinii Publicznej (OBOP). Polsat picked off the unhappy watchers and saw its viewership rise 6% in the same period to 32.5%.
"We could not do anything about it, but just watch the viewers flow away," said Tomasz Sieniutycz, public relations manager at TVP's Biuro Reklamy.
Despite the mainstream programming, Polsat's viewer figures have not risen at the same pace as its ad revenue. At the end of May, 24.2% of the television audience was glued to Polsat, while 29.6% watched TVP's flagship station, TVP1, according to media research firm AGB Polska. That compares to the 31.7% TVP1 had a year ago, and the 25.2% Polsat accounted for.
Advertisers, however, are more concerned about the kind of viewers that are choosing Polsat, namely a younger segment of the population with greater spending power. In addition, the station also has the flexibility to break into its programming with commercials, splitting shows into parts and letting the advertisers speak. While TVP is forced to show commercials at the beginning or end of every show.
Putting further pressure on TVP are two new stations which also started up over the last 12 months, tvn and Nasza TV. At the end of May, tvn had 6.6% viewership, while Nasza TV had 1.8%.
But those two competitors do not have TVP nearly as worried as Polsat. Polsat has a good shot at making its goal of attracting 45% of all ad spending and remaining the highest-earning TV station, he said.
Why will Polsat triumph?
"Because it's not public," Gawda said.
Public responsibility
TVP benefited for years from being a monopoly - the public broadcaster of Poland. But in a free market, TVP is finding that doing the public bidding brings more limitations than opportunities. Although, unlike other public broadcasters in Europe, TVP is able to show as many minutes of commercials per hour - 12 - as its competitors.
But that doesn't change the fact that the times TVP can show commercials is restricted and that some of its content is designed more to inform the populous than to entertain it.
"We have to inform, educate and provide entertainment, exactly in this order," said Robert Kwiatkowski, newly-appointed president of TVP's managing board.
As a public broadcaster, TVP in the elections last fall had to provide 10 running parties and alliances with 15 hours of free-of-charge air time, allowing each to present its platform. TVP did make some money in the deal - it was allowed to charge zl. 500 to as high as zl. 13,000 for a regular 30-second, election ad spot. But having to show election coverage was not necessarily the best way to compete with the fun movies Polsat aired during the prime fall viewing season, said Tomasz Sieniutycz, TVP-Biuro Reklamy's public relations manager.
"Elections are definitely not the most attractive programming for fall," he said.
The result was the 5% drop in viewership TVP experienced. That led to a downturn in advertising revenue, said Biuro Reklamy's Gawda.
"Viewers go away and advertising revenue does the same," he said.
And the loss of viewers last fall translated into lost revenue this year for TVP. According to data compiled on the basis of official television price lists by AGB Polska, grossed zl. 524.6 million ($152 million) over the first five months of the year, while TVP's national channels TVP1 and TVP2 together grabbed zl. 473.42 million ($137 million).
The relation was reversed a year ago, when the stations grossed zl.268 million ($83.75 million) and zl.359 million ($112.19 million) respectively over the same period.
"It was a loss stemming directly from the outflow of viewers," said TVP's Sieniutycz.
Better value for money
In addition to its younger audience and better-timed commercial breaks, Polsat also offers nice prices for its spots, said Malgorzata Grzyb, media director of advertising agency Leo Burnett.
When an advertiser looks at the number of viewers it is reaching in its target audience, Polsat often comes out ahead even though the station's total viewership is lower than TVP1.
Advertisers like to look at the gross rating points (GRP) a particular commercial delivers. GRP guarantees that a certain number of people will watch a given advertising spot. The higher the GRP, the more competitive the station, said TVP's Sieniutycz, who also is head of the station's GRP department.
TV stations usually sell advertising time based on their total viewership or on GRP, he said.
And Polsat takes the lead when it comes to GRP, particularly for young people. In May, a 30-second spot on Polsat for a target group of people 10-40 years old had a GRP of 35,063 people. That compares with a GRP of 21,557 people for the same group on TVP1. The GRP represent 1% of target viewers who actually watched the given 30-second spot.
And the more people watch, the lower the CPP (cost per point) gets, added Leo Burnett's Grzyb. Advertisers use CPP, or the price of a 30-second spot divided by the number of viewers, to determine if their money is being well spent. Media planners rely heavily on the figure when making recommendations to clients about where to put their ads.
"(Polsat) has a very good offer," Grzyb said.
She added that the station's willingness to negotiate prices along with its less expensive CPP makes it particularly appealing. Polsat is also known for cutting aggressive deals with large advertisers.
Those numbers have enabled Polsat to attract the big spenders. The biggest advertiser in the first five months of the year, consumer goods maker Unilever, including its branches Lever, Van den Bergh Foods and Algida poured zl. 82.73 million ($24 million) into TVP and Polsat. Procter & Gamble took the No. 2 spot, shelling out zl. 79.71 million ($23.10 million).
Both companies work well, and often, with Polsat, Muszynski said.
"I'd say we get more of their advertising budgets than ... TVP," he said.
But it isn't all about TVP and Polsat. Smaller, newer stations such as tvn, RTL7, Canal+ Polska or Nasza TV give advertisers additional room to maneuver, media agencies said.
"It all depends on the client and the target group you're trying to reach," Gawda said.
According to AGB, over the first five months of the year tvn attracted 16% of advertising spending, while Nasza TV reported 3.2% and RTL7 won 2.3%. But AGB emphasizes that the data is easily distorted as some stations have their own gimmicks for manipulating their cost per viewer.
And for the time being, everybody agrees that the turf war will continue to be between TVP and Polsat. Media planners have to go to one, or both, of the stations when doling out ad money.
"They are definitely the two strongest players on the market," said Pawel Sawicki, media director with Saatchi & Saatchi advertising agency.
But TVP's newly-appointed Kwiatkowski takes heart in one thing: competition. He said that as the new stations find their footing they too will chip away at Polsat's revenue, just as Polsat ate away at TVP.
He even sees a chance for TVP to regain its lost glory.
"I believe we'll be No. 1 again," he said.
