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How the TV market is shaping up for 2016

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In 2015, UK TV ad revenue hit an all-time high, exceeding the 5 billion mark for the first time at £5.27 billion spend across linear, sponsorship, and broadcaster VOD and product placement. This figure is up 7.4% year-on-year (YoY), despite viewing remaining fairly stable with adult impacts on terrestrial stations down just 4% and +1.3% on multichannel.

Advertising research body, WARC, predicts the TV market will be up +5% across 2016. ITV are currently estimating their revenue to be up just 2% across the first half of 2016, pinning hopes on their coverage of Euro 2016 to pick up ad revenue and ensure that it outperforms its estimate of the UK TV ad market. After a really strong start to the year (up +10% in January and +16% in February) Channel 4 predicts their revenue to be up by 5.4% for H1 and are predicting an increase of 4.4% for 2016. Satellite has seen consistently large growth across Q1.

2016 looks set to break some of the traditional marketplace seasonal patterns, starting with Easter’s move from April to March causing an increase in ad spend YoY in March with ITV seeing revenues up 7% and C4 up 16%. April on the flip side experienced falling revenue YoY with C4 down 11% and ITV down 9%. Brexit has been blamed for fall in revenue in April the back half of H1.

ITV Chief Executive, Adam Crozier, has said the impact has been on short-term ‘late money’, rather than advertisers ripping up long-term plans and that the fundamentals of TV advertising remained strong. “In any given month, there’s an amount of late advertising money. Because of the uncertainty through Brexit, that’s the bit of money that disappeared. That would be the same for Channel 4 and Sky. All of us experienced the same thing.”

ITV’s revenues were lower than expected in April, and flat in May However, June looks stronger, with ITV expecting a +15% rise in revenue because of the Euro 2016 football tournament. The Euros are expected to prompt an increase in investment from gambling and alcohol brands across June and July. July, traditionally one of the cheapest months of the year is expected to be inflationary across ITV as increased revenues outstrips the increased viewing, estimated at c.+19 % inflation YoY.

The Euros aren’t the only sporting event likely to impact the marketplace this summer, as the world gears up for the 2016 Olympics in Rio. The time difference between Rio and the UK is just 4 hours. The BBC’s coverage of the games is expected to impact on peak commercial viewing, although not to the extent witnessed for the home games in 2012 where adult viewing was down 19% across commercial TV stations. August is also predicted to see some fall in revenue across ITV which will go towards balancing out the potential decrease in viewing across the games, keeping the predicted inflation marginal.

euro-16

C4 will be hoping to see an increase in both viewing and revenue in September when they broadcast the Paralympic games. In 2012 viewing was up 15% during the games; C4 are currently predicting revenue to be up flat in September 2016, maintaining their big increase in revenue YoY in 2015. However, I predict we will see some further increase here as we approach booking deadlines.

All Response Media Viewpoint
One of the big unknowns this year is around the fact that the Brexit vote could have a significant impact on what happens in the market generally. ITV’s Adam Crozier has expressed concerns about how uncertainty over how the referendum is impacting their late money market now….but it will be interesting to see how the votes impacts expenditure post 23rd June. Will we see an increase in ad spend if the referendum results in Britain staying in the EU?

We have seen significant signs this year that playing the late market is a great way of accessing cheaper CPTs for our clients. There is an air of unpredictability in the market fuelled by the sporting and economic landscape that is causing advertisers to put the brakes on somewhat. The TV market is as strong as ever with some great products and the brands that are now using it consistently (such as Google and Facebook) are testament to the fact that it still delivers to client’s KPIs.

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