ITV surfs buoyant UK ad economy

There is still plenty of evidence that the UK adland boom is motoring on: figures from the Advertising Association and WARC show that adspend hit a record £4.7bn in the first quarter of 2015 – up 8.2 per cent on Q1 2014 – while biggest ad broadcaster ITV has just announced profits up 25 per cent in the first half of 2015 despite a four per cent fall in viewing figures. Ad revenue increased by five per cent.

Which shows that ITV is an advertising business in decline, albeit a very slow one; growth in ad revenue lagging the market as a whole. But the broadcaster now gets over a third of its money from TV production although there is still no real evidence that its much-heralded move into online and pay-TV is ever likely to measure up to ads and production in the revenue stakes. ITV ad revenue should improve in the second half when it has exclusive rights to the Rugby World Cup.

It doesn’t matter all that much if ITV viewing figures continue their fall, so long as it isn’t too dramatic. It remains by far the biggest UK advertising medium, well ahead of Channel 4, 5 and Sky. It still has the heft to put the squeeze on the likes of Omnicom, which has shifted most of its TV business to ITV to compensate for backfiring deals that left it owing the broadcaster millions.

The strength of the UK ad economy is a poser for the big marcoms groups, particularly WPP. The UK and US have outperformed all other regions for the past couple of years even though the marcoms giants have spent most of their money expanding their operations in Asia and, to an extent, Latin America.

Latin America, especially Brazil, has been in the doldrums as currencies have weakened and corruption remains rife. Asia, particularly the huge Chinese market, looks to be in the process of a fundamental rebalancing. Chinese consumers are spending more but the company’s banks and other state-backed businesses look heavily over-valued, leading to fears of a “hard landing” – otherwise known as a crash.

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