Channel 4 says boost in ad spend due to Google brand safety fears is 'temporary' as it reports record revenue

Channel 4 sees record revenues

Channel 4 enjoyed a boost in ad revenue thanks to the brand safety scandal rocking confidence in YouTube – but admitted the benefit was short-lived because advertisers have now gone back to the platform.

The broadcaster saw a temporary jump in ad spend this spring as marketers retreated en masse from Google-owned YouTube following revelations that their ads were appearing next to extremist content.

But Channel 4 sales director Jonathan Allan admitted today (12 July) that it did not have a lasting impact and advertisers have now “gone back [to YouTube] to some degree”.

He said: “We did see a bit of money move out of YouTube particularly around April/May.

“It feels like they have made certain commitments to advertisers around whitelisting and getting rid of that content. There are some advertisers that still aren't on YouTube and it is a relatively reasonable number, but the majority have gone back on to some degree. It was a short-term benefit.”

Allen was speaking at Channel 4’s annual report event today (12 July), where the public service broadcaster announced just shy of £1bn in annual revenues (£995m in 2016, up from £979m in 2015).

This was boosted by a 24% growth in digital revenues (tipping it over £100m for the first time) from its video-on-demand product, All4, after pumping record investment into content to stave off competition from the "tough" online players. Overall it spent a total of £695m, 75% of which was spent on original programming.

By comparison, ITV's programme budget was £1bn in 2016, while Netflix’s predicted content budget is $6bn this year, and Amazon’s $4.5bn.

This growth in revenue is despite the TV ad market sliding by -4.2% in the 12 months following the UK’s vote to leave the European Union (July 2016 to June 2017) which has led many of TV’s biggest advertisers to reduce spend to the medium.

To offset such declines, the broadcaster dipped into £15m of its reserves to “manage spend in various scenarios”, its outgoing chief executive David Abraham said.

Allen elaborated: “The slight issue TV has had is not necessarily around its efficacy as a medium but post-Brexit because of the exchange rate devaluation, TV predominantly appeals to big multinational organisations, and the revenue coming out of the UK is challenged, so some of the big TV advertisers - the P&Gs and the Unilevers, as well as the supermarkets – have reduced their spend. That is impacting us and we need to work harder to get the big advertisers on to TV.”

The event marked both Abraham and creative chief Jay Hunt's last time to report Channel 4’s annual revenues before both depart the broadcaster in September (Hunt) and at the end of the year (Abraham).

Abraham said the broadcaster was “well positioned for the future” under new leadership and added that it was in a strong position for his successor Alex Mahon to “navigate through the challenges”.

Jessica Goodfellow

The Drum's media reporter covering everything from publishing, TV, social media, radio and technology.

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