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TV ad market to withstand Brexit uncertainty

Although Brexit has undeniably affected the 2016 TV advertising market, we are still unsure of its potential impact in 2017. The referendum again dominated the news recently with the high court ruling that the government must consult MPs before triggering article 50. In addition to Brexit, the summer of sport also had its influence.

Looking forward to 2017, ITV predicts revenues will increase 3-4% year-on-year (YoY) and C4 just 1-3% YoY. Despite ITV’s bold estimates for 2017, 2016’s declining revenue led 120 jobs cuts last week to reduce costs and prepare for the year ahead. However, C4 expects less of an audience decline compared to other forecasts. They hold steady YoY with some potential growth for young audiences.

All Response Media Viewpoint

We predict that TV ad revenue will be up by 2-3% compared to 2016, an improvement on the new forecast of +1% for this year. But, this is lower than in previous years – in 2015 the TV ad market grew by 7.4%. We anticipate 2017 to be a less volatile year for seasonal shifts in revenue and audience impacts as there are no major sporting events driving significant spikes. Easter also moves back to April, impacting the market in the opposite way to 2016.

The TV market works on a simple supply and demand model and if revenue (demand) falls then price in most cases will follow suit. The revenue decreases in 2017 may balance out some of the inflation caused by naturally declining linear TV viewers (supply). Although it is unlikely that we will see an overall fall in price from 2016 to 2017, the influence of Brexit may present some short-term opportunities in the shape of lower YoY inflation in 2017.

The uncertainty of the economic landscape prompted some advertisers to reduce spends in the latter half of 2016. Yet, the TV market is still going strong with many big brands including Proctor & Gamble, BT, Samsung and Apple spending more YoY post-referendum (June – Aug 2016, source: Mediatel). These increases in spend are a testament to the fact that TV still delivers effectiveness for advertisers, however they measure or determine it. We must be flexible and agile to make the most of the unpredictable market in 2017. This includes closely monitoring both market and client results to take advantage of softer conditions as well as changes in response and consumer behaviour.