Ofcom to probe TV advertising sector
Britain’s £4bn television advertising sector will be scrutinised by Ofcom over worries that limited competition is harming consumers.
ITV, whose prime source of revenue is advertising, saw its shares fall by 1.6 per cent after Ofcom’s announcement.
The three main concerns about the TV advertising sector are how clear pricing is, the way airtime is sold in packages and the way TV advertising is currently bought and sold.
The way advertising is currently sold is only used in the UK and has not been altered for the past 20 years.
Advertisers currently find it hard to compare prices between channels, as a result of transparency in pricing.
Ofcom suggested the way advertising is bundled into packages could have a detrimental effect on competition.
A large TV station could use its market strength to gain higher prices by pricing across a schedule of both peak and off-peak viewing times.
Although, an advantage of these ‘bundles’ is the flexibility they offer as it allows them to schedule adverts more efficiently.
The watchdog is considering whether or not there are boundaries that could be preventing the way advertising is bought and sold from undergoing changes.
Ofcom’s consultation will close on 22 July 2011 and intends to publish a statement in the autumn.