AFP

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Advertiser funded programming in South Africa By Howard Thomas

Howard Thomas has been working in entertainment and media for 40 years. His experience with TV started from the beginning in South Africa, and he is now a media business consultant, trainer and specialist in audience psychology. He has run his own consultancy, Busvannah Communications (www.busvannah.co.za) for 21 years.

What is it?
Advertiser Funded Programming (AFP) is as old as broadcasting. Most radio stations (including the early ones in South Africa) entered into commercial arrangements with advertisers to pay for the costs of the programme in return for naming rights, sole sponsorship and a variety of other ways to make it worth while for the advertiser. Sponsorship is nothing new, and neither is product placement or naming rights. So, in one way or another, advertisers have paid for the cost of programming in many different ways. So whats new? Structurally nothing is new. But attitudes, both on the side of the broadcaster and the advertisers have changed radically. AFP fails when the advertiser thinks he knows the business of broadcasting, and the broadcaster thinks he knows all about advertising. Successful AFPs often result when a third party broker is involved who takes an independent viewpoint. Ensure that you read this chapter in the context of those on sponsorship and product placement.

The advertisers point of view

Television advertising is easy when there is just one channel. It becomes a little more difficult to attract the attention of the audience when there are more than one or more channels. But suddenly we have four free-to-air channels, an established pay-TV operator and many new low cost satellite offerings. If that is not complicated enough we have Internet advertising on social media growing exponentially. There are also viable alternatives presented by community radio, and well over 350 consumer magazines. A new word has entered the vocabulary: clutter. There is so much advertising, everywhere. People just have to turn their heads and they see an advertisement, if not on the side of a taxi, and then wrapped around the supports of a bridge. It is said that the South Africans living in metropolitan areas see thousands of brand impressions every day. What concerns advertisers is the effect of their
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advertising. This has led many to question the effectiveness of the 30 advertising spot. It started when the VHS recorders were introduced and people used to watch programmes when they felt like it. They just had to "fast forward during the ad breaks. Advertisers developed more doubts when the satellite pay broadcasters introduced the Personal Video Recorder (PVR) which made it even easier to skip the breaks. What really solidified their doubts was the proliferation of channels. It is so easy just to flip over to another channel in order to avoid the breaks. It is also difficult to road block1 unless you control a number of channels. Even the SABC finds it difficult to road block as ad breaks recorded into programmes are not always in the place the scheduler would like them to be,. Those with serious doubts put their heads together and looked at the possibility of replacing their investment in a series of slots to an investment in an entire programme. This programme would be carefully structured to: Deliver entertainment to the audience. Embed brand and product messages, usually though the benefits of the product to the audience.

This is completely the opposite of the infomercial which sells hard, and provides entertainment only though pace a synthesised suspense.

The broadcasters point of view

At the same time, broadcasters experienced a noticeable drop in audiences. The number of channels was growing, but the audience wasnt growing at the same rate, so all broadcasters experienced a shrink in viewers. What made them really nervous was the impact of digital terrestrial television when the number of channels could go up three or four times. This could only result in a serious drop in advertising revenue. So when the advertisers suggest that they finance an entire programme, which guarantees the revenue for a whole programme slot, the broadcasters are suddenly very interested. There have been a number of instances of advertiser funded programming every year for the last few decades. The SABC learned valuable lessons of the dangers in the early 1990s. However, anxiety over the changing and uncertain future landscape has given the AFP concept a life of its own. Also, because these changes in the landscape are happening at the same time all over the world, South Africans notice what regulators were doing in Europe and other countries. Foreign regulators allow these trends, as they are fully aware that traditional models are heading for big trouble2. So, suddenly broadcasters and advertisers are locked in creative sessions looking for ways of:
1 2

See Scheduling Strategies

The Office of Communications (Ofcom), the UK regulator, specifically disallows all product placement, in line with EU regulations. It says the matter is under review, but recently banned product placement in all childrens shows including content imported from the US.

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Identifying and targeting a niche audience. Attracting advertiser revenue on the basis of appreciation and attention rather than numbers. New designs in scheduling such that programmes can be repurposed in many different ways. This is another way of saying repeats that are acceptable to audiences because they appeal to convenience, rather than novelty. New versions of programmes, usually with new language versions with subtitling and dubbing. Prestigious high budget block-busters commissioned or co financed by the broadcaster. Advertiser funded programming to reduce the direct costs and improve the cash flow of the less prestigious programmes.

Advertiser funded programmes do NOT need to be prime time programmes. If they are directed to the retired, then mid-morning is a far netter time to target that audience. They are usually mid-budget programmes that advertisers can afford, like reality adventure competitions, quiz shows, panel games, talk and magazine shows. No one has been able to justify a drama or costly documentary as an AFP. AFPs are not low risk. They carry the same if not slightly higher risk than all other programming. It would be far too risky for an advertiser to get involved in any high budget content. AFP does not suit the advertiser or the broadcaster every time.

The Basic Principles

There are three basic principles:

Best broadcasting practice

Broadcasting is a long term high risk business. It is long term as programmes take a long time to develop, and have to be paid for prior to broadcast. There is no assurance programmes will ever meet objectives and predictions. However, the broadcaster will only survive if it can retain the target audience as a loyal audience and watch it grow in such a way as to increase profits to meet business objectives. Broadcasting starts with attracting a targeted potential audience through programmes that meet that audiences needs. The audience is usually targeted on the basis of available gap in the market. When this audience has its needs met, and becomes a stable audience, then it is worth selling to advertisers. It is essential to remember that regardless of new funding or structural proposals, broadcasting always starts and ends with the audience. This is particularly problematic for the SABC and all public broadcasters, from whom the audience expect quality programming the deliver carefully, crafted programming of the type not normally carried by commercial broadcasters.

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Audiences are more likely to resent the intrusion of product marketing into their programmes on a public broadcaster than on a commercial broadcaster. Although the SABC supports its revenue with commercial activities, in the eyes of the public it is a public broadcaster. Thus e.tv and M-Net are more likely to be successful with AFP than the SABC. Broadcasting also involves applying the codes of ethics traditional to broadcasting, the upholding of the dignity inherent in this medium, and the applying mandated regulations.

Best advertising practice

Advertising is a short term business that aims to produce the sales projected into the short to medium term. Although sales growth may be long term strategy and planning, the advertising methods and media have to change to align with current consumer tastes, fashions ands needs. Advertising also includes brand reinforcement and positioning. These are usually very difficult to evaluate. It also involves applying codes of advertising ethics, information, marketing persuasion and the achievement of marketing objectives.

Best business practices

Business practices are usually long term, and involve growth and market penetration through adherence to the various codes and ethics that prevail. For instance business responsibilities have changed radically over the past twenty to thirty years. In the 1980s, any business plan had to focus on the benefits to five stakeholders: customers, employees, suppliers, shareholders and government. Business aimed to be a good citizen, the mantra went. Today the focus is only on shareholders alone, which tends to make business objectives more short-term aligned and directed almost solely towards profits. Corporate Social Investment (CSI) has re Placed multiple the stakeholders of the past, and usually has a carefully crafted marketing function, in order to justify the expense. Business over the past 20 years has become more business science oriented. However, it nevertheless still involves long term partnerships, open and transparent objectives of all parties, and business ethics. Especially in Africa, successful business is the result of successful long term relationships.

What each party wants

The difficult challenges in successful AFP are the achievement of the two parties of their own objectives, which are in fact, although not necessarily in conflict, very different.

What the advertiser wants

The advertiser (whether it is the marketer directly or the representative in the form of an advertising agency) wants to achieve product sales. Even if he calls it brand recognition or awareness, the ultimate objective is increasing

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sales. This implies that existing customers must continue to buy, and advertising must also attract new customers. The advertiser is accustomed to the thirty-second hard-sell spot. His mind is focussed on sales, his experience is cemented in traditional advertising, and his outcome is written in terms of sales. Even though advertisers initiated AFP as an alternative to the traditional thirty second spot, their mindset is still on the immediate effect of the exposure on product sales.

What the broadcaster wants

The broadcasters raw materials consist of appealing programmes combined with a saleable audience. His customer is the advertiser. He sells audiences to the advertiser. He will have no audiences to sell if he has not attracted them first. These audiences may simply be as many as possible, or a target audience of specific demographics or segment. (A segment is never a primary target. A segment is an attitude and cannot be measured in terms of numbers. For instance you cannot target a language or income group (LSM) by targeting a segment. You also cannot target a culture by targeting a segment.) The broadcasters objectives are to at least maintain and preferably grow audiences, and thereby increase revenue into the long term future. In a multichannel environment, the broadcaster targets a narrower niche, with more audience-defined programming.

What it is and what it isn't

AFP can be described as any means by which an advertiser can have a deeper relationship with programming product beyond traditional media activity. Advertising spots break into programmes, and are otherwise not related to the programme content. Sponsorship means the advertiser aligns the products to the content by way of support and patronage. AFP means that the advertised products are an integrated part of the content.

By this definition there must be a funding relationship (full or part) with the programme or series. Put another way, it is 'beyond sponsorship'. The money goes directly into production and leads to a degree of content ownership. It's programming that wouldn't exist without the advertiser partner.

The compromise
The advertiser has to realise that he cannot be a foot in the door vacuumcleaner salesman. The broadcaster has to accept a devaluation of its normal total integrity and credibility. How would the audience feel if Special Assignment, Carte Blanche and 3 rd Degree were AFPs?

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It is not about product placement or editorial about a brand. It is definitely NOT infomercials. Advertisers need to remember that they are buying into the editorial integrity of the programme and reaching consumers by association with the programme's values. Broadcasters also have to realise that they sacrificing their claims to total editorial control when they get involved in AFP.

Why should brands get involved in TV programming?

AFP is more than just sponsorship or product placement. It involves all the elements of both sponsorship and product placement, and it adds more. It means that the product or the brand become an integral part of the script and production. If you want to compare AFP to an infomercial, shall we say that AFP is about 10% of the way to an infomercial. This is the part that is the hardest. It is often not done well. For the advertiser, the programme has to be part of a total campaign, where the time, place and targeted audience are just right. Both advertisers and broadcasters are making a big mistake if the advertiser thinks that it will make ad hoc impact, and the broadcaster is just looking for easy money.

Why should broadcasters get involved in AFP?

There is a simple answer to this: assured revenue. However, for the broadcaster, AFP does not mitigate risk. If the programme does not attract the targeted audience, or incur an adverse reaction, the damage could be worth far more than the revenue received. This could result in fact to a long term loss in revenue. There is also the matter of controlling the editorial so that the programme does not become an infomercial. When broadcasters are looking for easy money, they often bow to the money of the advertiser and let the advertiser have most of the control. The result is the blatant overuse of the product or the products benefits in the programme. Because it is funded, they are often over-produced, where production values are used to cover up the bland concepts and scripts. They have the danger of becoming brash, loud and clash with the broadcasters brand. They often have to use extravagant production values to grab the audience, instead of the normal elegant simplicity that broadcasters use to reach peoples hearts.

AFP carries inherent risk

The inherent risk comes directly from the different points of view of the two parties.

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How the advertiser sees it

The advertiser looks at audience backwards.

Lets see what this means. The advertiser is looking for a specific market. He will define this in terms of language, gender, age, LSM, and perhaps even education, interests, attitude. The advertiser now uses audience research tools like Telmar, IMS, Nielsen Arianna or others to find out where he can reach the largest target market at the lowest cost. This gives him a cost per one thousand target viewers (CPM). Usually he does not get this CPM in one slot he has to spread his placement of a range of slots during any one day, and over a number of channels, to achieve this optimum CPM. He relies on the broadcaster delivering this target audience to him in the future based on the past performance. Usually the delivery of the audience by the broadcaster is reasonably accurate, so the advertiser continues placing ads in slots based on past performance. Also neither the broadcaster nor the advertiser has to worry that the slot may irritate the audience. It is only thirty seconds in a one hour period. Besides the audience watches so that they can watch a programme; not the advertising slots. So, the advertiser plans his revenue (from increased sales) based on past performance.

How the broadcaster sees it

The broadcaster looks at the audience forwards

The broadcaster also tracks past performance, but his focus is not on that past performance. His focus is on the future. He may have to maintain that past performance. On the other hand, he may: 1. Decide to give up a slot and just put low cost programming into it because competitor channels are both battling it out with high cost programmes that have taken most of the market share any way. This is a trade-off between trying to get all the remaining audience at a certain cost, or broadcasting something really cheap and being happy with whatever advertising he attracts. 2. Decide to change the focus and demographic of a slot because competitors have also aimed towards niche programming. 3. Have to change the focus of the slot for regulatory reasons. The broadcaster takes a long time to manufacture (commission or license) a programme, at enormous cost. He must hope that audiences still want this type of programme in six months or a years time. He will also want the programme to be so well liked that it can be repeated, often the so-called long tail. He may even want to licence it to other foreign broadcasters at a high return.
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He also never knows for sure what the competitors will be planning in a years time. It is a complex mixture of guesswork, intuition, experience, and intelligence gained from other channels. (Broadcasters follow each other around at markets and try desperately to find out from suppliers what their competitors have bought. They also carefully listen to rumours in the independent producer sector to find out what has been commissioned and for which dates.) Therefore even though the past performance is one of the factors, it is in fact one of the many factors in making future programme decisions. Therefore, in the big picture, it actually plays a small role in making future programme decisions. So the broadcaster plans his future revenue based on predictions into the short, medium and long term future. The broadcaster is always looking forwards. Furthermore, it is a serious stretch of the imagination to envisage an AFP being sold abroad internationally as a product. It may sell as a format3, but not in the original form products differ in all sorts of characteristics from one country to another. This is exactly the opposite view to that taken by the advertiser.

Different focus
The advertiser focuses on short term sales. He plans to get the audience to react fast, and buy products. He also looks for long term loyalty, but that is a by product to immediate sales. The broadcaster relies heavily on long term loyalty. If he doesnt keep his audience in a slot, or over a series of slots, then he will not be able to plan for the future and may end up over-budgeting on future programmes in which case his costs will exceed his revenue. Broadcasters are not very flexible. Advertisers are. Broadcasters are used to being inflexible. Advertisers are used to being flexible. A broadcaster, who has total control over, and has financed his own programme, can look forward to steady growth in the slots audience. If however, a programme fails, and the share drops, the programme that follows does NOT inherit the high audience the slot used to have. It inherits the last audience of the last episode of the flop. This proves the old show business adage, You are only as good as your last show. If a programme inherits an average AR of 6 in the slot, and it grows to an AR of 8, it will pass that AR of * to the successor programme series. If however, the audience falls to an AR of 4, then that slot will pass on an AR of 4 to the succeeding series. Theres not much in broadcasting that is certain, but this is one of them.

The reputed sale of the format of Thumb Wars is an example of a format sold abroad. There is not enough detail and evidence to evaluate if this sale is of any value to anyone at all. All information is based only on press releases.

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Flops
If a programme's viewing data clearly shows after five or six showings that it is a disaster, the broadcaster will hurriedly take it off, write off the cost and consign it to the dustbin. He will also hastily reschedule so that the replacement programme tried to bring back the disappointed and injured audience. But what happens if an AFP flops? Who makes that decision? Who writes off the investment? This is never discussed, despite the fact that only a minority of programmes broadcast can be evaluated as successful. The rest, at best, break even.

Editorial independence
In Advertiser Funded Programming, who owns the programme? Who has the final say into what is seen and heard on the screen? After all, dont we accept that whoever pays the piper, calls the tune. AFPs are subject to the same ICASA and BCC broadcasting code rules as conventional sponsored programmes. But this covers only a small part of what is called editorial control. Theoretically, the advertiser pays for a programme that makes a product statement, but does not interfere with the broadcasters control. However, if you look at it in practice, this spells out only one word: conflict. When discussions start, when the advertiser presents the broadcaster (sometimes its the other way round), both parties must agree the ground rules on control. They must discuss and agree: The concept The programme treatment and the script. The performers How the advertiser makes his mark in product placement, exposure to the product and the brand How the audience will accept the intrusion of the product into the programming.

Scenario
Imagine this scenario. The programme executive (or commissioning editor) at the broadcaster sees the advance script of the links. He sees an obvious product plug in the lines and action, and assesses this to be over the top. He phones the advertiser to veto the script and suggest alternative lines and action. What happens if the advertiser disagrees? They are now in conflict. It is neither the broadcasters programme, nor the broadcasters money involved. Which one is going to win the argument? (Dont think that the broadcaster will win the argument just because the contract stipulates that the broadcaster has editorial control. These words are far too vague, and the dispute can only be settled under mediation or in court. When content is in production, and broadcast dates are the deadline,

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no one can afford the time delays involved in litigation. It most likely the advertiser will have his way, and the broadcaster will just pretend it never happened.) There is also the matter of ownership of the copyright or intellectual property. Copyright always extends to time, place and medium. It can become complex when the programme agreement also includes foreign distribution, other media such as comics, cellphones and the Web, licensing to others, and a host of complications. AFP is not easy exposure for the advertiser and easy money for the broadcaster. Misplaced and badly conceived AFP can backfire so that neither of the parties has an audience at all, and has to spend a lot of money in wooing back the audience and other damage control.

Financial value
The cost of an AFP to the advertiser from the point of view of the broadcaster is easy. The price must be greater than the normal cost of content, PLUS the rate card value of all saleable spots during ad breaks. How much more depends on what the market will bear. This is another way of saying, what the advertiser is prepared to pay on the basis on how he perceives the value of the investment. This is another way of saying, How long is a piece of string? But what value is it to the advertiser? The answer is always nonsense, in the same way as calculating the value of a published PR press release in terms of equivalent cost of ad space. The advertiser has to make up his own mind what is fair value. There are so many varying factors: Does the advertiser get the right to fill all the advertising slots normally positioned in that time slot? Or has the broadcaster retained the right to sell those slots to advertisers, not in competition, and probably vetted by the main advertiser? Has he naming rights? How does he value these naming rights? To what extent does the product name in the title add value to the marketing, or does it put people off? Where are the billboards, how long are they, do they fall seamlessly into the programme content, or do they in fact look like ad breaks? If the cost of the entire series is say R5-million, how much product will he sell for this R5-million, compared to R5-million in conventional advertising spots?

Only the advertiser has answers to these questions. However, broadcasters normally hype it up and use equivalents in order to sell the concept to the advertiser.

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Who is the best judge? Any seasoned and experienced advertiser will say that the Wanamaker rule still applies.4

Evaluation
Every single programme has to be evaluated against its precise objectives. The means of evaluation depends on the accounting method adopted by the broadcaster. Some broadcasters cost and evaluate return on the basis of a daily schedule, others on the basis of the slot. What is important is that the return on investment must take into account the cross subsidisation of the loss making slots. These loss-making slots are usually mandated slots which as we saw applies also to commercial broadcasters. In the same way as all other programmes are evaluated for their Return on Investment (ROI), so AFPs must be evaluated. However there is another crucial evaluation exercise that should be undertaken after each AFP. What was the average audience profile in that slot over the three months preceding the AFP, and how does it compare to the audience profile of the entire run of the AFP. You are looking for how the AFP has altered the viewing habits of the slot. For all the warnings and difficulties described up to now in this section, every broadcaster is concerned to evaluate the impact on the loyalty to the slot. This is vital for long term viewing. This analysis will go beyond the normal demographics, and will require drilling down to specific niche groups, as well as comparing the Appreciation Indices.

John Wanamaker, American pioneer in department stores in the opening decades of the 20th century said, "Half the money I spend on advertising is wasted; the trouble is I don't know which half."

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