Maximization of revenue has become increasingly difficult for broadcasters in today’s economic climate. Traditional income sources such as advertising revenue were hit going into the downturn in 2001, and the market was further weakened significantly following 9/11 with advertisers cancelling campaigns that might be deemed inappropriate.
Viasat Broadcasting regularly uses secondary events such as voice-overs and static or rotating logos on the screen to generate additional revenue.
The good news is that now advertising revenues are returning. The Advertising Association states that UK TV advertising rose from E5,927,000 in 2001 to E6,183,000 in 2002. However, because this income source doesn’t look as certain as it once seemed, with major events such as the World Cup being responsible for boosting the figures, it is time for broadcasters to look at the alternatives. Apart from license fees, subscriber revenue is the other traditional source of income for numerous broadcasters. The challenge today is to increase average subscriber revenues. Broadcasters such as BSkyB have set ambitious targets for revenue growth in this area and have undertaken aggressive marketing campaigns to achieve them.
Challenges and opportunities
As a result, non-traditional revenue is quickly emerging as both a significant opportunity and the biggest challenge to media companies today. The alternatives are diverse and can include:
- Shopping channels. QVC is said to be one of the most profitable TV stations per audience size in the world.
- Interactive television, the use of telephone, SMS voting and merchandising. “Pop Idol” and “Who Wants to be a Millionaire?” are good examples of this.
However, there are also a number of options available to today’s broadcaster to take advantage of selling airtime itself in a more creative way. Advances in technology are enabling organizations to target viewers in new ways and, as a result, increase the value of their airtime in the process. Commercial television advertising is now going far beyond the traditional 30-second spot.
One example of this is where broadcasters can sell secondary events to clients to promote their brands. A secondary event is defined as anything that is overlaid onto the primary event — i.e. the program. However, there are different rules (depending on the country) relating to what proportion of the station’s output can be saturated with sponsored secondary events.
Secondary events can include:
- Logos (channel idents, thematic idents). A client brand logo can be displayed on-screen and rotated with other brand logos paying for an onscreen ‘slot’ of a particular duration.
- Crawls (text that moves across the screen). A message from a sponsor can be displayed to visually promote its brand and/or products. This could be a Web site address displayed onscreen, for example.
- Voice-overs (e.g. ‘coming up next’). Here a message from a sponsor can promote its brand or products (e.g. ‘this program was brought to you in association with ...’).
- Special effects. The broadcaster can squeeze back one event to insert another, effectively ‘splitting’ the screen. Or perhaps a sponsor’s billboard could be inserted into the visual frame alongside the program.
Each example offers the opportunity to increase revenues and to differentiate the channel’s brand to advertisers, but most importantly, these events all happen during the editorial time. The program itself actually becomes the commercial, which, therefore, is watched by more viewers.
While it is clear how selling program concepts, shopping channels, interactive TV and merchandising can bring in revenue, the challenge with creative sales of airtime lies in being able to ingest, source, playout, log and track these valuable airtime assets in a cost-effective and efficient way.
In today’s broadcast center, acquisition of media assets usually means capturing or ingesting the item into a video server from where it can be moved through the system and transmitted under automation control. Programs and commercials arrive at the transmission center in a variety of ways and seldom in the order required for transmission. (See Figure 1.)
Figure 1. This block diagram illustrates a multiformat broadcast center. The playout automation system pulls items forward from the content storage to the transmission cache storage as required by the broadcast schedules. The ingest automation acquires material as it becomes available, and the asset manager and browser allows program staff to review it and initiate re-coding for alternative delivery formats. Click here to see an enlarged diagram.
A good automation system will prioritize ingest operations to meet the demands of the schedules, but time must be allowed for file conversion, quality checking and the possibility of repeating the process. It is not unusual for 20 percent of incoming tapes to be rejected, requiring fresh copies from the production house.
Technology has moved on to the point where media delivery by file transfer is a practical proposition, although tapes will be around for some years. A modern ingest facility will probably simultaneously create multiple copies of the source material in MPEG-1, MPEG-4 and Windows Media 9, as well as the normal broadcast MPEG-2 version.
These copies become assets in their own right for use in interactive applications, Internet streaming, browsing, DVD release and other alternative delivery mechanisms, as well as in-house viewing.
In addition to program content, there is an increasing volume of graphics, data and voice-over tracks that must be registered, quality checked and tracked through the system and eventually combined with the outgoing video. Each of these represents another revenue-generating opportunity for banner ads and sponsorship messages, so they must be managed like any other airtime sale.
Only a powerful business management system, tightly integrated with an equally powerful automation system, will enable the broadcast center to gear up to meet the challenge of multichannel, multimedia distribution while maximizing income and staying in control.
Managing the process
Managing the airtime sales process is a challenge for any channel management system. The presentation scheduler needs to place these secondary events into a playlist so that the automation system can trigger the appropriate device in the transmission suite at the correct time to put the right event to air.
Viasat Broadcasting employs Encoda’s D Series 7500 automation system as well as its media management systems Landmark and Broadcast Master.
These days the software can allow the user to overlay any number of secondary events onto any primary event in the schedule, with a specified duration and offset against the primary event. For example, the secondary event may have a 30-second offset from the end of the related primary event, meaning it will automatically be triggered 30 seconds before its end.
It is necessary for the channel management supplier to work with the automation solution provider to ensure that the correct trigger information is contained within the schedule playfile. This ensures that minimal operator input is required once the schedule has been loaded into the automation system; all events will be triggered automatically. The scheduling system will then link an airtime sales campaign to the appropriate broadcast event (commercial spot, program, interstitial, secondary event) so that revenue from all potential sources can be tracked and managed effectively.
It is also necessary to allow the broadcaster to reconcile scheduled and transmitted output. However, as we all know, there are often discrepancies between what was scheduled before transmission and what was actually played out to air, particularly in the case of unpredictable live events where promotions can be dropped or inserted by the transmission controller. Channel management software that allows broadcasters to update schedule information automatically, so that it matches the transmitted output and resolves any discrepancies between the two, is clearly an advantage.
This process can be facilitated via the import of an ‘as-run log’ file from the automation system containing the transmitted output, which is reconciled against the schedule so that the two match. The broadcaster can then produce a transmission certificate or affadavit that can be used to bill airtime sales clients.
For broadcasters selling airtime by ratings, the automated software ensures that the success of each campaign can easily be monitored. By obtaining ratings from Neilson after transmission, for example, the effectiveness of each spot or secondary event can be checked against the size of the target audience that viewed it.
It is fair to say that a broadcaster using legacy equipment may not be able to take advantage of all these sources of revenue. Without up-to-date transmission equipment being controlled by automation, it will be difficult to schedule secondary events or short duration promotions.
The ideal set-up is to have a fully automated transmission suite with an airtime sales and programming system. These generally have the capability to interface to any recognized playout system available. This would enable a facility with a non-automated transmission suite to employ some of these non-traditional sources of revenue through manual intervention. However, this would result in higher staffing levels — up to one person per channel to manage these promotions.
These days, both automation suites and business systems are available from a number of suppliers. Experienced vendors have a wealth of expertise to help broadcasters decide which system is most suitable for their requirements. If a broadcaster does not have in-house skills to manage an IT infrastructure, a third party such as a consultant or systems integrator can provide valuable advice.
Turning challenges into opportunities
If the various challenges can be overcome, there are numerous benefits to using automation and business systems to manage non-traditional sources of revenue for the advertiser, broadcaster and viewer.
To advertisers, clearly one of the advantages of commercials that can occur at the same time as program content is that the viewer is more likely to see it than during a commercial break, when the tendency to ‘channel hop’ takes over. These higher ratings command a premium for broadcasters.
However, to keep the viewers happy, use of secondary events needs to be balanced by ensuring they are sold in the appropriate content. While a crawler in a sports match might encourage the viewer to visit a Web site, for example, a similar promotion during a soap might annoy the viewer and cause him or her to switch channels. If you are selling on ratings, this will have the opposite effect than intended. The main benefit to the station is clear: More income can be generated by attracting revenue from new sources. Similarly, it is possible to attract money away from other advertising media (i.e. newspapers and magazines or posters), therefore increasing the share of money directed at TV advertising. It is cyclical. The more income a broadcaster makes, the better quality programs it can afford to air. This, in turn, attracts more viewers and, therefore, commercial investment.
Angelika Bergmann is EMEA president of Encoda Systems.