Reacting to ITV’s peaks and troughs throughout 2018
It has been widely reported over the past few months that ITV have been suffering with a fall in profits. They experienced a 10% pre-tax profit fall to £500m last year, as their TV advertising revenue fell by 5%, their steepest fall since the recession in 2009. Of course, combining their terrestrial and digital portfolio, ITV remains the largest sales house in drawing viewers, so a drop-in revenue naturally poses an opportunity for cheaper pricing. Lower demand and greater inventory have led to some changes from ITV in recent months, including the news of them dropping their advanced booking deadlines for April and May, as well as some short-term opportunities across a handful of digital stations, and ITV London.
So, how long will this last? ITV house some flagship shows which still draw in significant viewing figures. Most recently, Dec rode solo for the first time on Ant and Dec’s Saturday Night Takeaway, which drove its highest viewership with 8.9m individuals watching. This was 10% higher than their season finale in Florida, and bigger than any episode that aired in 2017. Britain’s Got Talent continues to bring in a massive 11m viewers per episode, even though viewing is 3% down versus 2017. Recently, ITV also took the bold move to bring back Who Wants to be a Millionaire to celebrate its 20th anniversary, with controversial host Jeremy Clarkson. Millionaire’s launch night on Saturday 5th May brought in 4.8m viewers and even though this has come down over the past week to around 3.5m, ITV still claims the highest station share during the 9pm hour with the nostalgic quiz show.
And now, there are even bigger things on the way for ITV, the World Cup and Love Island for starters. So, will they boost their advertising revenues? Well, according to their latest figures, ITV are expecting ad revenues to rise by almost 3% in H1 2018, nearly entirely driven by the expected increase in June. Here, they expect revenues to increase by 17%, offsetting a drop in April and a relatively flat May which is expected to be caused by strong online growth as well as the World Cup.
All Response Media viewpoint
It is positive news for ITV that they are predicting an increase in their revenue in H1 2018 but as this is going to be almost completely driven by the World Cup, we are still in a period of uncertainty for the remainder of the year. As we enter late Q3 and Q4, it will be up to ITV to find the right content and opportunities to continue to bring in demand from advertisers to ensure, for their sake, they see the potentially higher revenue from summer continue.
In the meantime, we will continue to manipulate and exploit a deflated market and scour for short-term opportunities. The teams across the floor, as well as our trading team, are in constant dialogue with ITV and the wider market to identify where we can drive down pricing and improve value. We are already well placed, being able to book well beyond traditional advanced booking deadlines because ours and our clients’ businesses demand it. This means we are always in a stronger position to act on any market changes, but with an even closer eye on ITV given its recent revenue news.
Potential short-term buys can manifest themselves through traditional spot advertising, where our clients will have greater opportunity to access ITV’s larger impacting station portfolio (not just terrestrial, but their digital stations too) at cheaper pricing. For many brands, the high impacting nature of these stations can be off-putting to include on a schedule as they can drive up cost per acquisition figures, but a reduction in pricing can make them all the more appealing to test. This means we are able to bring down cost per acquisition, driving potentially cheap incremental volume and reach for our advertisers allowing for greater scale and growth. Opportunity can also manifest itself through TV sponsorship which can be a next step for more established brands. We have been known to buy relevant, high quality sponsorship properties up to six to eight times cheaper than market rates which can demonstrate sizable value, with the ability to drive significantly stronger cost per acquisitions and business growth over time.
Time will most definitely tell with ITV and we will as always, be keeping a close eye on their developments.