Revisited Sector Paper on: ISIC 7310 Advertising Matt Berger & Ian Richardson United Kingdom ONS...

Revisited Sector Paper on: ISIC 7310 Advertising

Matt Berger & Ian Richardson United Kingdom ONS

Jiří Šulc Czech Statistical Office

ISIC 7320 Market Research and Public Opinion Polling

Voorburg 2008 ONS/CSO Revisited Sector Paper on Advertising, Market Research & Opinion Polling 22-26 September 2008

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Why are we here?

• Substantial investment by VG in independent development of– SPPI’s– Turnover

for the Advertising industry

• Need to– Bring these together– Complete work on Turnover– Determine any recent changes in SPPI’s – Expand to Market Research and Public Opinion Polling


3

What we shall see

• Summary of earlier VG SPPI work on Advertising only

• Some details on Advertising Turnover

• … and a promise to complete this work


4

Overview

• History

• Status

• Classifications

• Turnover

• SPPI’s– And a discussion on quality


5

History

• 1993 –French paper on model survey for Advertising (Oslo)

• 2001 –Mini-papers on Advertising SPPI’s from France, Australia & UK (Örebro)

• 2002 –Advertising SPPI Principal paper from France (Nantes)

• 2004 –SPPI paper from Austria –Turnover paper from Spain (Ottawa)

• 2005 –OECD-Eurostat SPPI guide


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Status (SPPI)

ISIC 7310 Advertising

• OECD inventory – 26 of 38 have SPPI for at least part

• More detailed queries– Sales & Leasing

• 12 of 29 have SPPI for at least part

– Creative component• 9 of 29 have SPPI for at least part


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Classification - Industry

ISIC Rev 4 NACE Rev 2 NAICS 2007

7310 Advertising 73.11 Advertising agencies

541810 Advertising Agencies

73.12 Media representation

541830 Media Buying Agencies


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Classification – Products (CPA only)

Code Description

73.11.11 Full service advertising services

73.11.12 Direct marketing and direct mailing services

73.11.13 Advertising design and concept development services

73.11.19 Other advertising services

73.12.11 Sale of advertising space on a fee or contract basis in print media

73.12.12 Sale of TV/radio advertising space or time on a fee or contract basis

73.12.13 Sale of Internet advertising space or time on a fee or contract basis

73.12.14 Sale of events related advertising

73.12.19 Other sale of advertising space or time on a fee or contract basis

73.12.20 Resale of advertising space or time on a fee or contract basis


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Classification - Observation

• ISIC (& any direct derivatives) do not provide sufficient detail

• National & regional classifications split between two types of services– Sales & leasing– Creative

• Reflected in SPPI & turnover practices– Even for those countries that use ISIC-based


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Turnover statistics (ONS developments)

• Two key variables– Sales– Commission and fees (for services where title is not held)

• Sales delineated down by type of medium– Print, TV/radio, internet

• Advertising agency services delineated by activity– Full service– Direct marketing– Design and concept– Other


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Other turnover considerations

• Measurement from Advertising establishments– Miss all secondary activity

• Sales of time (and space) can follow two different models– Differ by country– Differ by establishment within country


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Two different sales activities

• Broker–Bring together customer and media

–No change of ownership

–Service is “bringing together buyer and seller”

• Distributive trade–Purchase time or space from media

• Change of ownership of time (or space)

–Sell to customer• Change of ownership

of time (or space)

–Service is like retail• Margin industry


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Entities

CustomerAdvertising agency(Creative)

Media Agency Media

Media Marketer(Sales House)


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Entity relationship – Model 1 (Part 1)


Media Agency Media


Ad campaign


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Media Agency Media

Media Marketer(Sales House)Negotiating

- buyer and seller


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Media Agency Media


Ad campaign


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Media Agency Media


Change of

ownership


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Service Producer Price Indices (SPPI’s)

• Separate indexes for creative and sales activity

• Further refinement by type of medium


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SPPI’s for creative advertising services

• Pricing methods usually methods based on working time

• Productivity issue acknowledged

• Labour activities grouped by medium, function and expertise

• US use model pricing– Future use in Netherlands


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SPPI’s for sales and leasing

• Different indexes for different media

• Typical methods:

– Pricing of repeated services• e.g. Price per ½ page

– Average unit values• e.g. Turnover divided by number of pages


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Typical specifications

• Single medium

• Allow for discounts– Transaction not list prices

• Incorporate “size of placed advertisement”– Length of commercial– Size of press advertisement– “Banner” size on WWW

• Incorporate “size of audience”– TV viewers– Radio listeners– Web page views– Media circulation


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Examples

• Germany – press

• Spain – radio

• Czech Republic – internet

• Many countries do this–US does not

figuresn Circulatio

discount - pressin page one of Price

Unit value

audience minutes

Turnover

eUnit valu

bannerinternet of Area

views1,000per Cost

ValueUnit


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Constant Quality & Size

• Size of the advertisement– Important to success of advertising campaign

– Limited resource for producer • And can be controlled or changed by the producer

– Need to be controlled when considering either the producer or the consumer perspective• Of the “space” or “time”


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Constant Quality & Audience

• Number of viewers, or readers, or listeners– Important to success of advertising campaign

– Important to producer• Valued by customers• Economic activity of producer aimed to increase audience

static– Or at least not decrease

» TV or Radio broadcaster» Newspaper publisher

– Need to be controlled when considering either the producer or the consumer perspective

• Of the broadcast or publication


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Sales and leasing of advertising

• Service is not the media production

• Advertising sales are a brokering or margin type service

• We are considering the service of “selling advertising space and time”– Not broadcasting or publishing

• So does this matter?


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Some non-advertising examples to consider first

• Bottle of beer

–750mL

–330mL

–Quality is not the same!


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And now some advertising examples

• 30 second time slot on TV

–13:00 Monday

–18:00 Friday

–21:00 Saturday

–03:00 Sunday

–Are the qualities of the products the same?

• Viewing time


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And now some advertising examples

• Viewers for a given time slot on TV

–15% audience share


–Are the qualities of the products the same?

• Viewing time


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But now look at some associated services

• Selling a bottle of beer (retail service)

–750mL

–330mL

–Are the qualities of the

service of selling the same?


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Service of selling advertising time

• 30 second time slot on TV

–13:00 Monday

–18:00 Friday

–21:00 Saturday

–03:00 Sunday

–Are the qualities of the Service of selling the same?


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Service of selling advertising time

• Viewers for a given time slot on TV



–Are the qualities of the Service of selling the same?


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Differences in quality – 5% vs. 15% viewers

• Different for the producer of the program

• Different for the media broadcaster

• Different for the customer

• But is selling the air-time a different service?–Compare “Is selling a 330mL beer different from a 750mL?”


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Regarding audience figures

• The audience figures are important to the customer and the media outlet– And clearly a quality indicator for each of them

• But of what relevance are they to the quality of the (third party) advertising sales & leasing agency?

• The advertising sales agency has no economic activity associated with changing the size of the audience– Different from “direct mail” advertising

• Question to VG – what shall we do?


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Questions?

• Thank you

Matt Berger

Ian Richardson

United Kingdom ONS

Jiří Šulc

Czech Statistical Office

Revisited Sector Paper on: ISIC 7310 Advertising Matt Berger & Ian Richardson United Kingdom ONS...

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