Ofcom today concluded its review of TV advertising trading. The review, which examined the way TV advertising is bought and sold, found no clear evidence of harm to consumers – whether TV viewers, advertisers or end users of products advertised on TV.
In light of the costs associated with a reference, we concluded that it would not be proportionate to refer the TV advertising market to the Competition Commission.
In June, Ofcom consulted on whether the way TV advertising is bought and sold could prevent, restrict and distort competition. We said that if we identified competition concerns, then we may exercise our discretion to refer the market to the Competition Commission for a full investigation.
No significant detriment to consumers
Having reviewed the evidence and submissions, we do not believe there is a strong case to suggest that there is significant detriment to consumers – whether TV viewers, advertisers or consumers of products advertised on TV. In light of the significant costs which would be imposed by a market investigation, and the potentially destabilising effects on industry, we conclude that it would not be proportionate to refer the TV advertising market to the Competition Commission.
Scope of our review
In our June consultation, we identified potential areas of competition concern, specifically: transparency of pricing; bundling of airtime combined with the possible market strength of different companies; and the limited evolution of the trading model and its possible impact on innovation. However, we also recognised that the current system may deliver benefits and could provide an effective way of managing some of the risks in planning and scheduling TV advertising.
In reaching our decision, we concluded:
- On price transparency, we found that media buyers and advertisers understand the terms of their deals with broadcasters and advertisers have access to detailed information about the performance of their media buyers. As a result, we do not believe that there is a basis for concern.
- Regarding bundling of airtime, while we are not able to dismiss completely that bundling of advertising across a broadcaster’s schedule could harm competition, we have not found any evidence or analysis to lead us to conclude that there was a detrimental effect.
- On innovation, we considered whether the apparently limited evolution of the trading model could inhibit innovation in the sector. We found that the trading model has evolved to some extent and has proved capable of adapting to significant changes in content distribution and consumption in recent years. Such developments include the growing number of TV channels, more advertising spots and audience fragmentation.
We received 21 written responses to our consultation. The vast majority of respondents did not believe it was proportionate to refer the market to the Competition Commission.
The quantity of advertising on TV
Separately, Ofcom has today published a statement on regulating the quantity of advertising on TV, which considers whether there is a case for consulting on the number of minutes of advertising allowed on TV.
This is regulated within a framework which is set at European level, and implemented in the UK by Ofcom’s Code on the Scheduling and Amount of Advertising Code (COSTA). The current UK rules allow less advertising than the maximum set by the European framework, and differ between Public Service Broadcasters and non-Public Service Broadcasters.
The aim of regulation in this area is the protection of the interests of viewers, in terms of their exposure to advertising, while helping to ensure that quality TV programming is available. We have decided that the current rules remain appropriate, and we did not find sufficient evidence to justify changing them at the present time. However, we could revisit this if the regulatory framework was to change.