Advertisers counting on Christmas TV campaigns to save a year blighted by the pandemic have fuelled a faster-than-expected recovery at ITV, which said ad revenues in the final three months of the year were on track to beat last year’s performance.
ITV, whose TV advertising slumped by almost half earlier in the pandemic – the biggest fall in the broadcaster’s history – has bounced back strongly, with TV ad revenues expected to rise 6% year on year in November and to be “slightly up” in the final, so-called golden quarter that businesses bank on for much of their annual sales.
Growth in fourth-quarter advertising revenue at ITV would beat expectations in the City, where analysts were previously expecting a fall of about 5%. The final three months of the year usually account for around 30% of ITV’s annual advertising take.
As the annual Christmas advertising battle kicks off in earnest this week with the unveiling of the latest John Lewis campaign, brands appear to be betting on the boom in TV viewing in the first wave of the pandemic to continue through the second wave and the festive season. ITV is expecting strong viewing for flagship shows such as I’m a Celebrity … Get Me Out of Here!, which has relocated from its traditional home in Australia to a castle in Wales and premieres on Sunday.
“With so many eyes due to be glued to the box over the long winter nights, it bodes well for advertising,” said Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown.
Last month a report by the Advertising Association/Warc said advertisers were expected to cut more than £700m from their marketing budgets in the run-up to Christmas this year.
However, TV was predicted to be the “least worst” medium, amid a decline across all media including ad spend on Google and Facebook. Spending on broadcasters’ streaming services such as ITV Hub and All4 expected to rise.
ITV’s third-quarter trading update was a mixed bag as ITV Studios, the production arm that makes shows ranging from Coronation Street to Come Dine With Me, continued to struggle to get back on track after the production shutdown during the first lockdown.
Carolyn McCall, ITV’s chief executive, said 85% of the 230 productions that were halted were now either back in production or had been delivered. “However, Covid restrictions and further national lockdowns have added production costs and are making it challenging to bring ITV Studios productions back to full capacity,” she said. Revenue a ITV Studios fell by 19% in the quarter.
ITV’s total viewing hours haven risen by 2% in the first nine months of the year, thanks to the pandemic, but its share of total TV viewing is down four percentage points, partly due to a significant increase in the volume of news output by the BBC, which has captured large audiences.
On ITV Hub, the broadcaster’s streaming and on-demand service, online viewing hours have fallen by 6% year on year owing to the cancellation of a summer edition of Love Island and the rationing of episodes of soaps such as Coronation Street and Emmerdale.
ITV said BritBox, its Netflix-style joint venture with the BBC, was on track to hit internal subscriber targets after the successful launch of Spitting Image, the streaming service’s first original commission.
“The pandemic has put ITV between a rock and hard place,” said Streeter. “Demand for new content is soaring and more viewers are switching back on their TVs to watch programmes live, bucking the trend of a drift toward on-demand. But its production arm, ITV Studios, can’t make shows fast enough to satisfy their need, with lockdown 2 delaying filming even further, adding to costs.”