RTE report urges increase in advertising rates

The 250 page Review of Structures and Operations says RTE is selling advertising too cheaply and recommends the company increase rates by a fifth within the next five years. While the report advocates Job losses in many areas, mostly production, it also recommends an increase in sales and marketing staff. The report is intended to deal with the challenge faced by RTE due mainly to the arrival of TV3, digital television and changes in government policy with regard to independent production.

The report suggests the phasing out of the current auction style selling of advertising ( i.e. there is a set rate for a slot, but advertisers can then outbid each other for the slot above the set rate) and move instead towards a system of making deals, committing the station to supply certain audience figures over a period of time for a negotiated rate. This the report believes this will lead to increased income so long as the station maximises its audience share. It argues the cost of advertising on RTE is cheap in terms of the cost per thousand people reached compared to newspapers which is the reverse of the situation in Europe. Also Multinationals do not like the pre-emptive system, because they prefer to have a fixed price settled for a given audience also because under the current system media-buyers have to judge when (i.e. time, day and month at what its worth) their target viewers are present. This means there is a rush at 4.50 p.m. every day as agencies try and buy space at the last minute in the hope of achieving the lowest price. The report also recommends RTE should use its "unique strength" and cross promote between radio and television and on different channels. It says that RTE can increase its advertising revenue by widening its net, Northern Ireland, London and further afield in Europe.

If this lunacy is the so called solution to RTE's current difficulties in facing up to competition it has some very obvious flaws (even apart from displaying the staggering lack of imagination and inability to face some hard truths it displays). In the face of competition how the hell can RTE raise advertising costs, the old system had to go out the window anyway, only a monopoly would get away with it, but TV3 will inherently reduced audience share and drive down the cost of advertising. According to Steve Shanhan, Media Director of QMP, quoted in the Irish Times the low cost of advertising in Ireland is partly due to the fact advertising spending in Ireland, per head of population, is very low compared to Europe, so that kind of knocks a hole in the idea that advertising costs are set to low for the market. UTV has already threatened legal action if RTE boosts its signal into Northern Ireland as it has exclusive rights to certain programmes for that territory such as 'Coronation Street' (the fact that they broadcast into the republic and take advertising is beside the point). When I spoke to the RTE press office on this issue their answer was that they wouldn't call it a "long running sore" but more of an "ongoing issue" and that any work on their transmitters in the border counties was to improve reception to RTE viewers in the border counties and if there was an overspill into the north well that couldn't be helped. Fair enough, but the fact that they couldn't just say that if UTV are going to broadcast south and take revenue, then we will of course broadcast north displays a certain refusal to take the bull by the horns and face up to the issue. The revenue from London and Europe can hardly amount to much. This sort of thinking is not going to help RTE face up to the realities of an open market.