TVN emerges as serious contender for market share
The TV advertising market is no longer a battle between the two largest stations, Telewizja Polska (TVP) and Polsat, with the smaller broadcasters fighting for the leftovers.
Advertisers placed 26.86% of their budgets with TVN in the first six months of 2000, as compared to 15.08% during the same period last year, according to data gathered by AGB Polska. At the same time, Polsat's ad market share dropped by 4% and TVP's by 6%. Market insiders are saying this is not a temporary change of fortune.
"We used to call TVN one of the minor stations along with RTL and Nasza Polsat 2, but it's really up there with the big boys now," said Al Harris, general manager of the Media Group. "TVN has got to a size where it's pretty much regarded as a major player."
In the first six months of this year, Coca-Cola spent 27% of its zl. 43.4 million ($9.8 million) ad budget at TVN, and Procter&Gamble assigned more than 20% of its ad budget to the station, AGB Polska said. Maciej Morawski, the head of sales strategy and planning at TVN, said the station's success is the result of judicious calculations.
Last year, TVN's salespeople assumed that in 2000 the market would not grow as fast as it had done for the past few years. "Instead of 200%, 80% or 30%, the market was to grow by 12%, and if you add the inflation rate it means that the market has barely grown," Morawski said. "We assumed that advertisers with smaller budgets might want to get at least the same amount of rating points as they used to."
So TVN came up with a new offer. "We suggested that they (advertisers) should start treating TVN as an already viable medium and that they should begin placing 70% of their budgets with one national broadcaster and 25% with TVN," Morawski said. "What we wanted was advertisers' reactions on a larger scale as some companies were using that strategy already. And it (TVN's plans) worked."
According to Morawski, TVN offers a 7% bulk advertising discount and a further reduction for advertisers who place more than 25% of their total ad budget with the station. "As a result we got what we wanted more small and medium clients, which gives us greater financial security, because their withdrawal will not ruin us," he said.
Andrzej Muszynski, the head of Polsat's advertising office, Pai Media, was skeptical about AGB Polska's figures. "It's already a tradition that their (TVN's) officially published prices differ greatly, I would say more than 40%, from TVN's real prices," he said. "So, it's not that TVN got that much more when compared to other stations."
Muszynski said changes in the ad spending structure are temporary and due to economic stagnation and the Russian market upheavals last year. "We've noticed of course that TVN is getting more money than it used to, but advertisers are not happy that they had to limit their target groups due to budgetary constraints," he said. "Stagnation shouldn't last too long. The Russian market is already improving and the markets of Poland and Russia are internationally still perceived jointly."
TVN's less expensive ad rates as compared with those of Polsat and TVP were not its only source of success. "It also benefited from a trend that we've seen for the last two years and it's probably the biggest thing that helped TVN," Harris said. The trend involved advertisers placing 60-70% of their budgets with one national broadcaster. According to Muszynski, Polsat proposed that its clients place 45-50% of their budgets with the station once its market share reached 33%. "Of course we were never interested in what they were doing with the rest of their money," Muszynski said.
Thanks to this practice, advertisers got better discounts and were able to reach almost the same number of viewers. "You like all kinds of discounts, but you feel that you're cutting yourself off from a large part of the audience," Media Group's Harris said. "So, if you do that you want to use all the other little stations as much as possible." Consequently, TVN has featured in the schedules of almost all advertisers.
"We've noticed that we have crossed the line by treading on our competitors' corns," TVN's Morawski said. "When reaching 26-28% of total ad budgets we had to take it from the big ones and they got nervous."
According to Morawski, one of the competitors' secret weapons might be TV4, a new TV station launched in April following a merger between Nasza TV and Polsat 2. "They can use TV4 to lower prices and that might not threaten public TV, but it will be dangerous for us," Morawski said. "Advertisers that don't care about market share data would go for it and we will lose some money."
According to Muszynski, whose Pai Media also handles TV4, the station has ambitious plans. "It was launched without a promotional campaign, but that was just the beginning," he said. "TV4 wants to reach 6% of the market share in the fall. That's when it will really join the competition." AGB Polska said TV4 had a 3% market share in June. Meanwhile, TVN plans to improve its market share, which dropped from 14.1% in March to 10% in June. "If we manage to regain the better market share in September when introducing new programming, it will be O.K.," Morawski said.
