ERA Europe is working closely with industry members to establish self-regulation standards and identify areas for market growth. How does the United Kingdom play a key role?

By Marcel Avargues

The ERA Europe Conference is now the traditional place and opportunity for DRTV players from the 25 EU member states and beyond to share their observations and try to extract trends from the past 12 months of the industry’s evolution.

From a short-term perspective, the economic equation has been extremely favorable, especially in 2004 and 2005: media are largely available, the cost of a majority of products in the DRTV segment are in U.S. dollars and the sales (in the major markets) to consumers are in euros. Further, the 20- to 30-percent appreciation of the European currency versus the U.S. dollar has given purchasing and marketing teams reasons to rejoice.

This year, probably more than in the past three years, the DRTV landscape is geared to wider opportunities and success. But because of this higher visibility and with still limited understanding from institutions about DRTV, the industry is drawing attention from all segments including legislators and regulators.

This attention must be handled in a very complex regulatory and consumer environment. It’s still too early to determine whether Europe will be a single DRTV market. And, it is not quite at the point where product and technical specifications can be addressed at the EU level-although this is a benefit that all international product suppliers have experienced for years. Europe is still a mosaic of cultures, national administrations and media organizations. Consumer protection-although now largely enforced with common vision -greatly varies in its daily implications and impact.

Thousands of European policy makers meet, work and debate in Brussels, and at the European Parliament in Strasbourg, to draft, design, revise and approve EU directives. These are generally seen as well-thought out and balanced efforts toward a unified and level playing field in the European market. The implementation of a flexible time frame combined with a wide and diverse array of interpretations of the EU directives, makes the European market another maze to walk through, with however, a visible effort and mounting pressure toward convergence of regulations.

As with many industries, the DRTV and home shopping industry in Europe has the challenge of being more trans-frontier and “Euroglobal” in order to reach an economy of scale and some form of critical mass, while permanently dealing with diverse, sometime threatening, national or local situations.

ERA Europe and its institutional priorities have been and will continue to be dictated by the permanent challenges to the regulatory environment, which have been imposed on our young and still relatively unknown industry.

Individually, DRTV players in the major markets have successfully chosen the road of creative adaptation and constructive dialog with media and lawmakers to embrace a mainstream and consumer-friendly retailing model. Only the most offensive and rogue practitioners have been removed from the marketplace in the last 24 months. And in a very timely manner, the European DRTV industry is now seen as a full-scale and responsible trade group through ERA.

Furthermore, ERA Europe and ERA have taken serious and credible steps on the high road to self-regulation. The timing is key for the European regulatory environment and for our industry to join the mainstream advertising community approach, in a concerted effort to send a positive message to the consumers, media and regulators around Europe.

To reflect this dual dimension, we as an industry have created a sequence of regional or national tours of DRTV-home shopping markets-beginning with the one that has been historically the starting point for many international DRTV ventures: the United Kingdom.

DRTV IN THE U.K.: TRAVELING DOWN THE DIGITAL ROAD
In one single business environment, the U.K. market embodies the paradox, potential and challenges that will probably affect continental markets in the near future. Digital technology is now prevalent in more than 14 million British homes; while hundreds of channels on fully owned or shared frequencies are offered to viewers around the country.

Interactivity is expanding from early adopters’ user groups to an everyday larger public, with institutional public TV BBC embracing this technology to attract a younger audience. In February, MIP TV even hosted the 2nd Annual Interactive Television Awards.

Although experiencing a substantial increase, licences and transponder access on digital platforms stay at entrepreneurs’ reach, while opening a channel “only” requires an investment of £500.000 (before personal and content cost).

This media explosion comes with a growing need for additional funding by highly segmented channels-very often excluded from the advertising revenues distribution-yet highly concentrated on the “high-impact, high-audience” programs and channels. Compared to other mature markets in Europe, media costs in the U.K. appear low. According to a DRTV media specialist source, Mike De Vere, managing director of 2B on TV Media Ltd., it requires few hundred euros for an infomercial or half-hour segment in the U.K. versus a couple of thousand euros in Germany.

The specialty channels’ needs perfectly match the capacity of DRTV marketers to use highly segmented, fragmented media-and not surprisingly, DRTV players have permitted some specialty channels to survive and grow.

Ed Hall, chief executive of Canis Media, spoke about Performance Channel during the Teleshopping Conference on May 19, in Wiesbaden, Germany:

“A few years ago, Performance Channel, a highbrow arts and music channel, was only broadcasting on cable and was struggling due to low ad revenues. They had considered going onto Sky Digital Satellite platform but could not make the ad revenues work, so had shelved the idea,” recalls Hall.

Canis approached them and discussed utilizing their three hours of shopping airtime allowance in order to add additional revenue and allow them to launch the channel on Sky. “By partnering with us, not only were they able to launch, they were also able to generate significant revenues from the shopping we were running on their channel.

“Performance is still running on Sky several years later and is still running shopping in order to be able to generate revenue to keep up their high standard of programming.

In the past few years, several channels have included shopping as one of their revenue streams in order to create a justifiable business case to launch,” he says.

The easy channels’ set-up costs and the liberal approach to licensing displayed by the ITC and now Ofcom, have offered DRTV and television shopping entrepreneurs and corporations a very favorable environment. Because pioneers such as QVC established a starting benchmark in live television shopping a decade ago, all sorts of marketing models and positioning have burgeoned over the last three years-from travel channels to live auctions-providing the British electronic shopper with a variety of offers and products that are unique in Europe, and possibly in the world (see EPG Guide below).

According to the chart, the most active DRTV specialists are holding several EPG positions, including Ideal World, Simply Media, Canis Media & TV Networks, Best Direct, and Sit-Up & Bid-Up. New entrants have joined over the few last years and some even have joined within the last few months, such as Gems TV, eeZee TV and a few others.

The search for new products is intense and continues to attract and nurture active interest of U.S. product developers, and a small but increasing number of European ones as well. However, competing for the electronic consumer attention and monies raises the demand for excellence. Poor concepts, questionable quality and amateur presentation will not make the cut. From a reverse angle, the competition-although taking place behind the scene-is fierce between distributors to get the first access to ultimate DRTV products or shows from around the world.

With 41 “24-hour channels” and hundreds of daily DRTV spots on entertainment and sport channels, DRTV has begun, on a pure volume basis, to leave a few more visible traces on the regulators’ radar screens. Meanwhile, the U.K. market operated, in November 2004, an innovative move toward a Co-Regulated Advertising Standard model. Today, the Advertising Standards Authority (ASA), an independent body, has received from Ofcom (the TV licences administrator) the mandate to administrate and monitor the application of advertising standards in all type of media, including the new Television and Electronic Media.

In fact, in a couple of cases-with explicit support of the industry-the regulator has pulled players off the air that have damaged consumer confidence as well as the DRTV industry’s reputation.

IDENTIFYING THE ADVERTISING STANDARDS AUTHORITY
In 2003-2004, U.K. TV advertising, and the DRTV and home shopping industry had to quickly adjust to a completely new situation. On Nov. 1, 2004, the Advertising Standards Authority, which up to now had responsibility for standards in non-broadcast media only, assumed powers in respect of TV and radio advertisements, under contract from the communications regulator Ofcom. The ASA system works in a co-regulatory partnership with Ofcom, becoming a “one-stop shop” for all advertising issues and complaints, for consumers and for the TV/radio industry in all its components.

Since commercial TV began in 1955, broadcast advertisements have been subject to statutory standards codes managed by the ITC. Now day-to-day responsibility for the TV and radio advertising codes is being contracted out to the Broadcast Committee of Advertising Practice (BCAP), an industry body also known as CAP (broadcast). The DRTV industry, through BTSA efforts, has occupied a seat in this body, since its inception.

Ofcom’s licensees, the commercial TV channels and radio stations, must continue to observe the codes, but if advertisements mislead or cause harm or distress, the matter will be dealt with first by the ASA, and not Ofcom.

Ofcom only regulates TV and radio. It does not regulate non-broadcast media. For this reason, Ofcom’s contractual relationship is with the separate ad-hoc legal entities ASA (broadcast) and CAP (broadcast). The non-broadcast ASA and CAP remain independent of any relationship with Ofcom.

ASA has regulated non-broadcast advertisements against the CAP Code for 40 years. Now that model of self-regulation is being extended to TV and radio advertisements.

Diligent and quick action against non-compliant advertising is the trademark that ASA clearly wants to maintain and communicate to the public and consumer protection stakeholders to fulfill its self-/co-regulation duties.

The adjudications system, through the documented publication of ruling, intends to be an information resource to he public and a strong deterrent to repetitive code infringement.
To access the database of adjudications from ASA and ASA/Ofcom, visit www.asa.org.uk. The site provides abundant information regarding the specifics of the U.K. advertising codes and self-regulation process.

The DRTV industry, through the BTSA/ERA Europe governance in the U.K., has maintained a permanent presence and dialogue with ASA, to ensure that:

• Areas or products segments with potential advertising codes interpretation issues are subject to general discussions between ASA and the industry in a mutual education mode, as a preemptive balanced collaborative effort, aiming at limiting non-compliance by industry players, and non-adapted or excessive ruling by the ASA.
• Appeal and adaptation/changes procedures are activated by ASA with a full knowledge of its operational feasibility and impact for the companies involved, and with maximum diligence and operational attention and control by the same companies.

A COOPERATIVE EFFORT
Not surprisingly, we have seen in the U.K. a growing need for establishing and maintaining a balanced, cooperative approach of advertising standards for DRTV programs. International DRTV show producers must know that programs based on “old” U.S. standards will not make it in the U.K. without strong editing. Shooting two versions of the same program, during the same U.S. production and under specific guidance by U.K. standards specialists, may make economic sense today to avoid costly editing later, especially if the show will broadcast in Europe. This market was and still is the territory where our newly launched industry self-regulation program, in all its obligations, consequences and benefits will prove the only alternative to the potential stiffening of ruling by overwhelmed regulators. The U.K. experience should offer a replicable model of mutual education and training between the industry and advertising standards monitors.

Through the positive influence of the association’s British members, the ERA Europe Board has actively worked in 2005 at unifying and strengthening specific industry representation in the U.K., capitalizing on the British Television Shopping Association (BTSA) national initiatives conducted over the last three years. BTSA officially became an ERA Europe affiliate, the ERA Europe U.K. chapter for the DRTV-home shopping and electronic retailing industry at large.
Furthermore, the teleshopping and electronic retailing industry-through successful British case studies-will provide a stronger voice in the re-design of nationally enforced advertising standards in Europe that will be applicable to electronic media, and will help to strengthen this growing marketplace.

Marcel Avargues is the executive director of ERA Europe. He can be reached at +33 (0) 1 47 95 4372, or via e-mail at [email protected]. We would appreciate your feedback. To submit comments point your browser to europeaug.marketing-era.com