It is 6pm on the trading floor of a mid-market national newspaper and the advertising manager is getting agitated.
A travel company has just pulled out of taking a full-page ad against the bridge and Sudoku puzzles on page 74 and the paper is going to press in three hours.
At such short notice, the ad manager knows the chances of one of his major clients filling the space are slim, so instead he turns to one of the UK's little-known "late-space" agencies, which specialise in snapping up the distressed inventory that more mainstream advertisers don't want - often at far cheaper rates.
In this instance, the ad manager offloads the page for £2,000 less than its usual yield to Discovery Media, purveyor of commemorative World War II memorabilia, but it could just have easily been sold to Cosyfeet, mobility bath manufacturer Aquability, or any of the other non-premium shoe, clothing, vitamin and conservatory companies that use the press as their mail-order-driven shop window.
Late-space advertising - known as "remnant space" in the US - is a thriving subculture of the media market, where individual advertisers have been quietly contributing anything from £300,000 to £800, 000 a year to newspapers' coffers for decades.
Because media owners give the specialist agencies a more favourable rate than their West End counterparts, late-space trading is not a subject for discussion in polite media circles. Nigel Rowe, managing director of leading late-space agency Lavery Rowe, compares the practice to a supermarket dropping prices to shift stock at the end of the day, and claims his clients get up to 75% off ad space.
"It is a taboo subject," he says. "Newspapers have a value on their product and when they get less than their yield, they are not happy. It's known that late-space deals happen but, understandably, newspapers want to keep quiet about it."
Rowe has 100-plus advertisers on his books, who spend about £20m per year between them across press, direct response television (DRTV) and online, although he estimates they would spend £50m without the benefit of reduced rates.
David Attinger, managing director of press specialist Attinger Jack, estimates that late-space agencies contribute £5m to £10m per month to national press advertising revenues, with his 20 clients jointly contributing about £1m per month.
Attinger describes the late-space agencies as pilot fish chasing the media sharks for scraps or, less politely, "bottom feeders". He comments: "We contribute a tiny proportion of media owners' revenues, but the late-space agencies are an important feeder for them - the sector is like a little nursery. But newspapers are obviously very sensitive to anything suggesting there are cheaper rates available."
Direct response advertising
The late-space agency world is dominated by four firms based primarily in the provinces - Lavery Rowe (London and Birmingham), Attinger Jack (London and Bath), Mediability (Stockport) and UKams (Dartford).
Their business models are a world apart from the network, West End agencies. Clients are interested in selling as many china plates/dresses/kitchen units as possible, primarily via mail order, so the agencies base their business plans on generating leads through direct response advertising rather than strategic brand-building.
Another difference is that the agencies make up the creatives for the ads in-house, so that they can be sent over to the media owners at short notice. Attinger says: "Most of our clients couldn't go to a mainstream media agency because their budgets are not big enough. We are not about brand building, we are about selling as many products as possible - we are coming from a completely different place."
The natural home for late-space advertisers is "all national newspapers", according to both Attinger and Rowe, with a bias towards the middle-market and downmarket titles and the newspaper supplements. TV listings magazines are a good home for mobile and ringtone companies, according to Attinger, while advertisers such as Klaus Kobek watches and Dialaphone "can't go wrong" with Skymag.
He says: "Newspapers still deliver a wonderfully affluent audience; all my clients want a newspaper reader on their database. The Telegraph delivers a high-quality 55+ audience, the Star does a cracking job of reaching builders on their way to work, the Sunday Times is good for homes developers and the Mail reaches the whole of Middle England - put any damn thing you like in the Mail and it will sell."
Direct Response Television is another breeding ground for non-premium advertisers, who typically run 60-second ads on multichannel TV, reaching smaller, but highly relevant audiences. Lavery Rowe is happy to take "antisocial airtime" between 2am and 4am with a product aimed at insomniacs, or to sponsor Brazil football games on ESPN, or reruns of Sex and the City on Living.
Meanwhile, Attinger advocates advertising mobility products on Welsh language channel S4C because it is "great for reaching a 65+ audience", and claims that the cost-per-thousand (CPM) on Turner Classic Movies can be as low as £3. Based on an audience of 15,000, this means clients can book a TV ad for just £45.
The agencies will not reveal specific rates because of client confidentiality, saying only that negotiations are based on trading relationships, with each deal priced on its individual merits. With reference to press, Attinger says: "The rates vary like crazy depending on demand - costs depend on position, category and size."
Furthermore, the agencies believe that they benefit the industry by introducing new advertisers. Alan Grundy, managing director of Mediability, says: "Many media campaigns, often producing smaller volumes of response, can only deliver profitable results if they are bought at short-term rates."
He explains: "The media owner sells inventory they might not otherwise have been able to shift (albeit at a lower yield), enabling an advertiser to buy space they might not otherwise have been able to afford. The advertiser is then more likely to achieve a profitable cost per acquisition, which in turn leads to repeat incremental business for the media owner - and so the reciprocal benefits go on."
However, the media owners are - unsurprisingly - keen to downplay their dependence on short-selling. Group sales director at the Telegraph Mathew Watkins, who started his career at The Sun working with direct response agencies such as Lavery Rowe and UKams, says that late-space activity contributes only a small part of the paper's display revenues and is confined mainly to the classified section and the magazine supplements.
Lee Gibson, senior trading manager for The Times and The Sunday Times, News International Commercial, says that late-space agencies are "useful because they fill space that may not otherwise have been sold", but that the deal is always struck on the paper's terms. He says: "Other media owners may choose to drop their rates, but our policy is not to drop our yield as we are a quality publication."
Even more damningly for Cosyfeet and its chums, the News of the World's Fabulous magazine banned direct response ads when it relaunched and went more upmarket in January. And while distressed inventory was "normal" for The Sun 10 years ago, according to senior trading manager Steve O'Mara, the paper now monitors its book so tightly that it has not run any late-space ads for two to three years.
Liam Reynolds, head of trading at News International Commercial, suggests that late-space activity hit its heyday about seven years ago and that the market has been in decline for the past five years. He says: "Direct response advertisers are having a hard time. This is because people have moved more upmarket in their tastes - they are more aspirational."
On the surface, it seems the late-space agencies need the high-reach shop windows of the national press more than the national press needs them.
But with Bank of England governor Mervyn King confirming the start of the recession last month, national newspapers may not be able to afford to turn their noses up at that mobility bath advertiser for much longer - and the direct response agencies could have the last laugh after all. Reynolds says: "With the credit crunch, direct response advertising could come back in vogue."