Looked at one way ITV, the UK’s biggest terrestrial broadcaster – or “linear” as they say these days – is well and truly stuck.
Ad revenue in the first six months of 2023 is down 11%, helping to slash first half profits from £219m in the same period of 2022 to £45m.
Yet ITV shares rose nearly 4% yesterday so what’s going on? Maybe it’s still a potential takeover target.
ITV Studios, its production arm, helped to make good the revenue shortfall (it now turns over more money than ads), leaving revenue 2% down over the period but it clearly isn’t as profitable as ads. Both businesses turned over about £1bn.
ITV ad revenue should recover in the second half because it always does. There are more big sporting events and Christmas still works its wonders. But linear media in the UK is still under ferocious pressure as the digital tide slows but still gains: according to this week’s AA/WARC survey it now accounts for 76.7% of all UK ad revenue.
ITV has its digital side too, as does Channel 4, but they’re minnows compared to Facebook, Google and now TikTok. Then you have the streamers (who may be looking to buy ITV content as theirs dries up with the Hollywood strikes.)
Is there anything CEO Carolyn McCall and her team can do to turn the tide?
You get the impression ITV is trying to manage decline in its ad business, grateful when things look up with big events but concentrating on other sources of income. Its prices reflect this: advertising on ITV at Christmas is still massively expensive; an increasing number of advertisers are making shorter films and running them less often, relying on social media and VOD to make up the slack.
Maybe it should revise its pricing policy to make longer campaigns more affordable throughout the year to bring in more advertisers? UK advertisers are well aware that a lot of digital advertising is wasted and most of it is pretty useless for brand building. But still they, with their media agency helpers, bung more money at it.
These days you never get fired for hiring TikTok.
Time for a rethink all round perhaps.