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Why Most Distress Rates & Last-Minute Media Deals Suck!

Jonathan Rolley
Jonathan Rolley Posted on Jun 26, 2016, 9:00:00 AM

There are dozens of clients and media agencies in Australia who buy distress rates and last minute media deals. Some of these deals represent tremendous value, with 70% discount positions and beyond. While everyone loves a deal, be warned: many last minute deals or perceived distress rates can deliver little to no ROI, especially if you don't have the right data analytics tools in place to measure response rates and performance. 
a finger pressing a button on the tv remote control

What is a Distress rate?

Media outlets, networks and media publications have inventory that if left unsold, they have a choice what to do with it. They can either give this airtime away to existing advertisers as a bonus or they can sell this unsold inventory at a further reduced cost or 'distress rate'. Some clients, who are out for a deal, often buy this inventory and feel that they are getting amazing value. On some occasions, this is true, especially for several Outdoor formats or to a lesser extent, selected radio networks. 

This however is not true for other formats, particularly TV advertising. If you are looking for ROI from TV advertising, then buying late and on distress can often deliver the worst possible result. With most of the efficient TV spots typically selling out weeks in advance, buying late means that you are buying spots and programs which no other advertiser wanted. This means buying spots with high CPMs (Cost per thousands), higher CPTs (Cost per TARPS) and lower efficiencies.

We recently ran several tests for a client who wanted to buy distress rates, the results were disappointing to say the least. The client had secured the majority of their optimised TV schedule months in advance, however they decided to top up their media investment late, due to previous strong performance. This media was secured on 'distress rates' only days out from going live. The rates for the late buy did come with a significant incentive, which was over and above the leading market rate. At first glance, this seemed like great value. However, on closer inspection, the CPM and media efficiencies were 40% more expensive than the original optimised schedule. The airtime was purchased as a test, as the client wanted to increase investment and exposure. After the campaign had concluded, the team ran the ROI in our custom TV data analytics platform, which revealed the shocking truth. The cost to acquire a new customer, with late buying and 'distress rates', was more than double when compared to the original optimised TV schedule. 

 

Summary 

In our experience, clients who consistently achieve the highest ROI from their media investment, buy inventory that they know will deliver a return based on performance and response rate data analytics. If you are looking to leverage distress rates, it can be a powerful way of maximising limited budgets. However, in our experience, it has only proved valuable for select formats and networks. High performing advertisers measure the ROI of every dollar and monitor the performance that each and every spot delivers, to then optimise their media schedule for results. In most cases, they are happy to pay a slight premium for inventory they know delivers the gratest response rates.  

Everyone likes a deal and buying distress on some occasions makes sense. It doesn't matter if it's the deal of the century, if your media doesn't deliver a result, you paid too much.  

If you would like to know more about the benefits that optimised TV advertising can do for your business, contact us for more information.

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Image credit: ABC

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Jonathan Rolley
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