Autoren: itp (in the picture). Media Education Magazine, .

Titel: Advertising on television.

Quelle: http://www.itpmag.demon.co.uk/Downloads/adhistory.html 2005.

Verlag: itp (in the picture). Media Education Magazine.

Published with kind permission of the publisher.

Advertising on television

In the beginning

Television as a public service began in Britain and Germany in the late 1930s. In the UK the new service was provided by the BBC and in Nazi Germany viewing theatres were erected next to major post offices. Both services were effectively paid for by public funds. In the US the privately-owned radio broadcasting companies began trials before 1940 but it wasn't until the late 1940s when 'commercial' services paid for by advertising developed very quickly. BBC television was shut down from 1939 until 1946 and German broadcasting was reorganised after the war under direction from the Occupation Forces.

The concept of funding a broadcast service through advertising was well established in American radio, which had reached a mass audience by the end of the 1920s. Radio in Britain was publicly funded through the BBC licence, although it was possible to hear commercial broadcasts from Radio Luxembourg. These carried advertisements, but the broadcasts could only be heard in the UK in the evenings on a not very reliable signal.

In the early 1950s the number of television sets in the UK began to expand along with rising affluence. The Coronation of Queen Elizabeth in 1953 is often cited as an important step in the development of television. Many people bought television sets in order to watch the 'outside broadcast' of this event and television started to rival and then overtake radio as the prime source of 'home' entertainment (and, at first to a lesser extent, news and 'arts' programming). However, the BBC in the early 1950s was still quite a 'stuffy' institution and with the example of American television in front of them, some entertainment industry people in the UK began to press for a 'commercial' alternative to the BBC. The Conservative government of the time was sympathetic and in 1955 'independent television', funded by selling airtime for 'commercials' (as television adverts were then termed), was born.

The creation of ITV

The British version of commercial television did not follow the American model. Instead of the three private networks that were allowed to compete in the United States, the UK was to have just two channels - the existing BBC service and an alternative commercial service to be controlled by a new public body called the Independent Television Authority (ITA). The ITA was charged with awarding 'licences to broadcast' to different companies for the regions of the UK. The first licences were for services in London. These began in 1955, followed by services in the Midlands, North West and so on until the whole of the UK was covered. A company holding the licence for a specific region was able to sell advertising time in that region. This sale of advertising was expected to raise enough money to either fund programme production or acquisition of programmes from elsewhere. Since the late 1950s was a time of economic growth, there was a big demand for advertising time and the new 'ITV' companies were soon making profits. Indeed, one of the new ITV bosses, Lord Thomson, famously called ITV "a licence to print money".

Soon, the new ITV companies had more money coming in through advertising than the BBC could raise through the licence fee and they were able to make more expensive programmes and to attract bigger stars. Inevitably, ITV began to attract the majority of viewers. There was so much advertising revenue in the early days of ITV that the private companies were able to make profits and to fulfil the requirements of the ITA to include certain kinds of 'quality programmes' such as news and current affairs and serious drama alongside quizzes, light entertainment and American filmed drama series. But this situation was subject to change. The demand for advertising goes up and down. When the economy is not growing, customers are not spending money and therefore advertisers don't want to buy space. Because the licence fee income of the BBC does not go down, there have been occasions when the BBC has had an advantage over ITV.

The original ITV system

ITV began as several distinct regional companies. The UK government's aim was to ensure that services were relevant for the local population in terms of news and that there should be some locally produced programming in each region. However, the regions were not equal in size of population or production possibilities. The most valuable regional markets in the 1950s were London, Birmingham and the Midlands and Manchester and the North West. The companies that won the franchises for these regions were often large entertainment companies that could make big budget programmes in their own studios. These companies became the providers of the important programmes that formed the core of the 'ITV network' service. The network allowed the smaller regional companies to broadcast a full programme made up of nationally broadcast ITV network programmes and their own locally produced news and magazine type programmes.

At this time, there were two main sources of television programmes apart from the BBC. The first source was the group of large regional ITV companies. Granada, in 1956 responsible for just the weekday programmes in the North of England, is one of the few companies to have continuously held an ITV franchise for 50 years. In the 1950s Granada was a cinema and theatre exhibition company with a chain of large 'super cinemas' in many parts of the country. Coronation Street, which began in 1960, was one of several Granada programmes to find appreciative audiences across the UK through the network.

The second main source of programming was the new 'made for television' film industry in Hollywood and in the UK. This industry made short films and drama/comedy 'series' of 25 or 50 minutes on film (videotape had not yet been invented). These programmes could be easily broadcast anywhere in the world and proved very popular with audiences. The BBC also bought such series (Westerns, Police, Hospital dramas etc.) in an attempt to compete. What we now call 'terrestrial' or 'free to air' television carried more American programming in 'prime time' during the 1960s and 1970s than does present day ITV1 or BBC1.

Channel 4

The balance between ITV and BBC remained more or less undisturbed until the early 1980s. BBC2 had launched in the mid 1960s, but at first it appealed to a minority audience who were willing to buy new television sets (with the new '625 line' picture) and later colour sets. It tended to attract viewers from BBC1 rather than from ITV.

The aim of those who promoted a fourth television channel was not to duplicate ITV (even though commercial interests were keen to see a second ITV channel). Instead, Channel 4 was designed to be a service offering new kinds of programmes and also targeting audiences who were not being served by the existing services.

Channel 4 was set up as a trust, administered by the Independent Broadcasting Authority (the successor to the ITA) in 1982. It would not have shareholders - its aim was not to make profits but to offer a new kind of public service. However it would carry advertising. The advertising space was not sold by Channel 4 itself, but by the ITV franchise company for each region in which Channel 4 was broadcast. The ITV companies were not confident that they could sell the space, as they weren't sure if Channel 4 would actually attract any viewers. They had to be guaranteed by the IBA that they would not lose money on the deal. In effect, ITV funded Channel 4 and hoped to recoup the money from selling ad space. In the early days of Channel 4, there were often advertising breaks, especially late at night, when no adverts appeared - just a title card for a couple of minutes. The advertisers didn't yet appreciate that Channel 4 could target very special audiences and could therefore be very useful to them.

Channel 4 also introduced a new aspect of television which would eventually have an impact on ITV. It was set up as a 'publisher-broadcaster'. This means a broadcaster which doesn't actually make any programmes - everything broadcast is an 'acquisition' or a 'commission'. Some of the programmes could be made by ITV companies, but others were expected to come from new, smaller, 'independent production companies'.

Satellite and cable television

In 1985 the UK government of Margaret Thatcher was keen to promote 'competition' and 'choice' in the UK television industry (and to promote new technologies). One aspect of this was a policy of promoting new television 'delivery' mechanisms. Cable systems had been trialled in the UK for several years, but now a new Cable Authority was charged with offering cable franchises across the UK.

Two satellite services were licensed and eventually launched by Sky in 1988 and BSB (British Satellite Broadcasting) in 1990. Although it had better technology, BSB did not have the marketing and programming clout wielded by Rupert Murdoch, who was an important shareholder in Sky and eventually the two services were merged as BSkyB.

Satellite and cable broadcasting brought a new form of television into play in the UK. Instead of being 'free to air' they required an installation fee and a special decoder and also a subscription. Although they do carry advertising, the relatively small audiences (by 'terrestrial' standards) do not fund the services. Both cable and satellite rely on subscription income, both basic for the service and 'premium' for specific channels (e.g. sport and movies). In some cases there is also 'pay per view' income. By 2004, 'subscription income' of one form or another had overtaken advertising income across UK television as a whole.

Changes in terrestrial broadcasting

Following the 1990 Broadcasting Act, two important changes to terrestrial broadcasting were implemented. First, Channel 4 was allowed to sell its own advertising space and could now control its own finances. This was an important step because it allowed Channel 4 to concentrate on particular audiences. By the late 1990s it was clear that Channel 4 had turned itself into a channel focusing on young middle class people (and probably women more than men with shows such as Friends and Sex in the City).

The second change was the establishment of Channel 5 in 1997. The new channel was originally conceived as a network of 'city' tv stations using some spare broadcasting capacity. A new company was formed which eventually came to be dominated by two media groups, European broadcaster RTL and United Media (at the time, the owner of ITV stations and national newspapers). From the outset, Channel 5 was a strictly commercial venture, designed to compete directly with ITV. It had two big disadvantages. First, it couldn't broadcast to the whole of the UK - missing out some wealthy parts of Southern England that were prime targets for advertisers. Second it had to build up audiences from scratch with a limited budget. From the outset, Channel 5 relied on cheap American programming, especially films, and late night 'adult' material. In 2004, 'Five', as it is now known, achieved around 5-6% 'audience share' in the UK.

Digital television

By the late 1990s, it was clear that the future of television was 'digital', allowing many more channels to be broadcast. 'Multichannel television' had arrived. The three different digital delivery services: digital satellite, digital cable and digital terrestrial (Freeview) had by 2004 achieved 50% penetration of television households in the UK. In other words, the majority of UK television viewers will soon be those with the choice of 'multichannel television'. The government will eventually 'turn off' the analogue signal (i.e. withdraw the licences to broadcast from conventional transmitters) - probably in the next five to ten years.

Advertising in the age of digital television

With hundreds of possible television channels on which to sell advertising space, the advertising 'market' has significantly changed.

One obvious point to make is that the money that advertisers have to spend cannot simply go on increasing. Where there were once two or three commercial channels, now there are hundreds. If each expects a share of advertising business, the price paid for advertising space must fall. If it falls, the money available for programme production also falls. Most new satellite/cable channels offer programmes either made with very low budgets or acquired at a very low price. (American filmed series can be sold at low rates since they will already have covered costs in the American market). An already limited number of programmes will then be repeated several times.

There are some new forms of advertising in the new digital television system. 'Interactive' services mean that television viewers can be persuaded to pay to use certain services - such as telephone voting on 'reality' shows. This isn't advertising revenue as such, but it is related in that the 'interactivity' may be sponsored in some way. A better way to describe these new transactions might be as 'exploitation' of new television opportunities - new ways to earn revenue from a television service 'replacing' advertising revenue as a source of income.

The impact of multichannel television has already been felt by ITV, Channel 4 and Five. The UK government has allowed the gradual merger of ITV companies into a single large company with only STV, UTV and GMTV as 'independents' in the network. This 'consolidation' has been allowed because the falling advertising revenues from terrestrial broadcasting would otherwise make it difficult to operate the network. ITV has already made an abortive attempt to establish its own digital service. The collapse of 'ITV Digital' forced ITV to concentrate on offering services only via other digital systems in the form of ITV 2 and now ITV 3. Channel 4 and Five have similar problems and the media press has been full of their attempts to find possible partners for merger.

The new UK 'super-regulator', Ofcom, has taken over responsibility for television from the ITC and it is currently consulting on the future of broadcasting in the digital age. It already recognises the problems faced by ITV, Channel 4 and Five and some of the consultation material is available to download from http://www.ofcom.org.uk/consultations/current/psb2/?a=87101

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