How Mexico Buys and Sells TV

Two Networks Open for Business in the Fall, Split Half of Country's Ad Spending

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NEW YORK ( -- With so much talk in the U.S. of changing the annual TV marketplace known as the upfront, Advertising Age decided to look into how TV ad time is bought and sold in key markets around the world. This week: Mexico.
Televisa's 'La Fea Mas Bella.'
Televisa's 'La Fea Mas Bella.'

Imagine a market -- right next to the U.S. -- where two national TV broadcasters split at least half of all the country's ad dollars, and marketers aren't moving their budgets out of TV.

Bienvenido a Mexico.

In Mexico's version of the upfront, Grupo Televisa and TV Azteca announce in early fall that they are open for business for the following year. By the end of the year, most of their airtime for the following year is sold.

Grupo Televisa does about 85% of its ad sales in advance, and advertisers must pay when they sign the deals in December or else lose part of their discounts, said Alejandro Quintero, Televisa's corporate VP-sales and marketing. Last year the figure was a little lower, about 70%-75%, because of an unusually large rate hike of about 12%, he said.

Mass-market spending
Most Mexicans get only six TV channels at home -- four from Televisa and two from Azteca. With half the population living in poverty, only the relatively affluent can afford luxuries such as cable TV and the Internet, so the bulk of Mexico's $4 billion advertising dollars have stayed with the mass market.

The networks usually negotiate directly with advertisers. "We close the deals with the client, not the media or creative agencies," Mr. Quintero said. "In some cases we negotiate with the CMO or the president of the company. Televisa has an importance beyond its commercial operation. The relationship [marketers] want to have with us is also social and political."

Mr. Quintero said space can be negotiated in three ways: cost per rating point, per thousand or per spot. The per-spot method is the most popular among buyers.

Once spots are purchased, advertisers turn to ad shops to plan reach and frequency. But within upfront negotiations themselves, agencies are noticeably absent.

One-by-one negotiations
"Our culture is that media sits with advertisers and does negotiations one-by-one," said Federico Moctezuma, TV Azteca's strategy-planning director. "Advertisers feel they're going to have more control if they handle negotiations themselves. If media agencies didn't exist, only the clients would notice."

But media shops are gaining importance in the country. Media Planning Group was the first media agency to enter Mexico about 11 years ago, and the company was boycotted by creative agencies for the first two years. Now MPG is the leading media shop, with about 25% of the market, followed by Starcom and then MindShare, both with shares around 20%, he estimated.

"We are always in the background at least," said Eric Morganthaler, CEO of MPG for Mexico and North Latin America. "We can do three things -- either negotiate on clients' behalf, or along with the client, or we prepare the client and they go out and negotiate."

The French plan
Before TV Azteca started in 1993 (and turned Televisa's TV monopoly into a duopoly), Televisa had a system called the Plan frances (French plan) in which advertisers reserved and paid for the next year's airtime. They were rewarded for upfront payment with protection against inflation, and lots of bonus spots were handed out.

Discounts have replaced the bonus spots, Mr. Quintero said. And although Televisa still wants the money upfront, Azteca is more flexible, letting advertisers pay during the first half of the year. "The sooner you close negotiations and pay, the easier it is to get a good rate and guarantee space," Azteca's Mr. Moctezuma said.

Televisa doesn't hold upfront events because client negotiations are "a very personalized exercise," Mr. Quintero said. Azteca hosts a gathering to announce the season is open. That started when Ricardo Salinas Pliego, the Mexican billionaire who created TV Azteca, attended Azteca America's presentation at the U.S. Hispanic upfront a few years ago in New York and returned to Mexico with the idea that there should be some kind of event.

Although both broadcasters have sizable Web sites -- for Televisa and at Azteca -- users will see few, if any, Web ads there. And online is not yet part of an integrated sales strategy for the networks.

One of the fastest-growing media is satellite TV, he said. But Mr. Quintero isn't concerned about competition since Televisa owns Mexico's only satellite TV operation.

"There was another one," he said. "But they went bankrupt."

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Why a U.S. network might envy the Mexicans:
  • Mexico's only two TV broadcasters -- Grupo Televisa and TV Azteca -- take in at least half the country's ad spending.
  • Ad dollars aren't fleeing network TV for cable because only about 25% of Mexican households have cable.
  • Advertisers aren't yet diverting budgets from traditional media, such as TV, to online.
  • With presidential elections coming up July 2, Mexico's seven political parties will pour several hundred million dollars into campaign advertising.
And why it might not:

  • Ad rates are relatively low, and were driven down even further by Televisa's ownership in the 1990s to boost network volume.
  • Discounts are high -- 30% to 60% for TV and up to 95% for radio.
  • Mexico's total ad market is only worth about $4 billion, compared to over $260 billion in the U.S.
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