Beijing's move follows a disastrous brush with a pre-payment scheme introduced at the end of last year when the station was struggling to meet 2001 revenue targets. Discounts, based on the amount pre-paid, were extended for this year's inventory. In some instances, the discounts ran as high as 50 per cent.
But it emerges that Beijing's numerous brokers rather than bona fide advertisers were coughing up the payments upfront, then selling off the inventory in smaller chunks to make a buck. And when they couldn't sell off the inventory, the brokers cut their losses by dumping stock at steeper discounts.
In both instances, the station is paying the price for its ill-conceived strategy. In leveraging this year's inventory for last year's revenue, the station has set itself up for a revenue shortfall this year. Neither has it done its reputation any good by being the indirect source of much of the pricing instability that resulted from brokers dumping its inventory.
Clearly, the station cannot continue on this path of living on borrowed earnings so to speak. Consolidation will be a good thing for the station and the industry as a whole, if only to cut the hold of the brokers and inject greater price stability into the market. There are far too many brokers and fluctuations in their deals and inventory on offer for media agencies and advertisers to effectively keep track off.
Under its newly-appointed marketing chief and with the merger finally taking place, Beijing TV has a golden opportunity to get its house in order. It must capitalise on the economies of scale from the merger to inject greater professionalism to its advertising sales teams. Only then can Beijing TV hope to regain pricing control from the brokers.
