Facebook ruled out of GroupM’s $1 billion TV negotiations

Paul McIntyre
By Paul McIntyre | 29 April 2015

Media Summit: Facebook will not get to play in GroupM’s annual TV rate negotiations for the next fiscal year as the clash between TV networks and the media buyer’s chief investment officer, Danny Bass, escalated this week.

Bass told the Financial Review last week that 2015-16 was the year the model “breaks” for broadcast TV. He said rising programming costs and declining CPMs meant the current TV network model was not sustainable and that alternative channels – ranging from online video to digital outdoor – would play a more prominent role in the allocation of GroupM’s $1 billion TV spend.  The TV networks struck back in The Australian on Monday and FreeTV chairman Harold Mitchell said he was “disturbed” by GroupM’s position and was “looking at an inquiry”.

But for all the war of words, one of the fast emerging online video rivals for TV ads, Facebook, will not get to bid for GroupM’s TV dollars.

“Everyone can play for that [TV] budget if you agree to play by the [TV] rules, so to speak,” Bass said. “So all of a sudden YouTube is going after TV dollars and Facebook will be coming in underneath them. Market forces are going against the networks because it’s costing them more money to produce content but the average yield and rates they have been receiving over the past few years has been decreasing as well. Their model has to change.”

Bass also said Facebook’s much-hailed video product was not in GroupM’s TV spread for the coming year.

In previous unpublished comments from last week, Bass said “the TV guys understand digital better than the digital guys understand TV.

“Facebook has a lot of inventory, so anyone who has the inventory that they have, with the data they have, has to be taken seriously. But the way Facebook operates is far more removed from the TV model than YouTube. So, you have to have four pieces of creative that have to be approved first by Facebook and the creative has to be built to fit the platform. That’s a lot of complexity that goes into the schedule. If they want growth they’re probably going to have to relax or change the way they see how video is run on their platform. We’re not negotiating with Facebook.”

Bass said GroupM was buying Facebook video as part of its broader digital budgets, but that it would not get to bid for the group’s traditional TV allocation in coming weeks.

Bass is a speaker in the “Screen Wars” session at this year’s AdNews Media Summit on May 22 along with Nine Entertainment Co sales and marketing director Peter Wiltshire, Seven West Media chief digital officer Clive Dickens, MCN sales boss Mark Frain and UM CEO Mat Baxter.

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