Ofcom has launched a consultation on competition in the UK TV advertising trading market, in order to establish whether to refer the sector to the Competition Commission (CC) for detailed investigation. Ofcom’s principal concerns are that the bundling of advertising airtime may allow TV stations to achieve higher prices for advertising in off-peak slots than they would otherwise be able to achieve. Also, Ofcom is concerned that the market is insufficiently transparent thus preventing competitors from comparing advertising opportunities on alternative TV stations. However, Ofcom acknowledges that, amongst other efficiencies, the bundling of TV advertising increases flexibility to media buyers allowing them to schedule adverts more efficiently. Many market players are sophisticated companies who understand the complexities of the trading model and receive sufficient price signals for the market to operate competitively. It can be argued that they benefit from the reduced transaction costs of bundled advertising. It remains to be seen whether media buyers consider the benefits of bundling advertising and the current trading method outweigh a more transparent, unbundled market. Stakeholders are invited to make their views known by 22 July 2011.

For a link to OFCOM’s consultation questionnaire click here