ITV saw no commercial impact from Google brand safety issues as it reveals gender makeup of leadership team

Love Island helped ITV2 record its highest ever overnight audience

ITV has said that it didn’t see a significant shift in advertising due to Google's brand safety issues just weeks after Channel 4 claims to have recorded an uptick in ad revenue, as it also disclosed the gender balance of its company in response to the BBC’s salary revelations.

In the six months to 30 June 2017, total external revenue at the broadcaster was down by 3%, pulled down by an 8% decline in net advertising revenue (NAR). The broadcaster blamed the slide in ad revenue as a result of “ongoing economic and political uncertainty”.

What’s more, Ian Griffiths, chief operating officer and group finance director, shed light on the reallocation of advertising budgets following the brand safety scandal rocking confidence in YouTube.

Channel 4’s sales director Jonathan Allan claimed earlier this month that it saw a temporary boost in ad revenue this spring as marketers retreated en masse from Google-owned YouTube following revelations that their ads were appearing next to extremist content.

Griffiths discounted such claims at ITV, saying that the broadcaster “hasn’t seen a significant shift in advertising from Google and other online advertising into TV or other media”, in response to a question asked by The Drum.

“But the point that has been raised around the environment of advertising is resonating with advertisers,” he said. “TV is robust in terms of viewing, it is very much a trusted measurement system we have with BARB, it is an environment where you know where your ad is being seen and placed, and an impact is very much an impact - it is a 30-second spot that people watch.

“What we are seeing at the moment however is uncertain times. That is why our ad revenue is performing as it is. But the fundamentals of the business remain in good shape and we think that TV is robust."

Interestingly, while ITV recorded double-digit growth in its online advertising and pay businesses, Griffiths said video on demand revenues are not growing in line with viewing. This, he believes, is an indicator that linear TV is still a strong medium for advertisers.

“If we were seeing the advertising on VOD growing at similar levels to our viewing, we would be seeing a shift in money happening. But we don't believe that is the case at all. When the confidence returns our job is to make sure the business is robust and healthy,” he said.

The decline in net ad revenue was partly offset by 6% growth in non-advertising revenues, which Peter Bazalgette, ITV executive chairman, believes is a “clear indication that our strategy of balancing the business is working”.

Bazalgette is referring to the transformation plan implemented by former chief executive Adam Crozier that looked to shift the broadcaster’s reliance on TV ad revenue to other revenue streams, including international production powerhouse ITV Studios.

ITV Studios revenues grew 7% at £697m including currency benefit. However, the adjusted profit was down 9% at £110m, impacted by its continuing investment in its US scripted business, and the fact the prior year includes the full benefit of the four-year licence deal for The Voice of China.

The makeup of ITV

When asked if ITV would be prepared to disclose what it pays its top earning talent, after public broadcaster BBC was forced to do so last week, Bazalgette said that it takes gender issues, employment and pay “very seriously as a company”, but at the end of the day it is a commercial broadcaster and would therefore never discuss confidential contracts for anyone working at ITV.

What he did reveal however was that over half (52%) of the entire ITV workforce was female, with 43% of female employees in its senior leadership team.

The broadcaster will be publishing its gender pay gap numbers next April, when all UK companies with 250 or more employees will have to publish their gender pay gaps under a new legal requirement.

Bazalgette did not reveal the gender makeup of its onscreen talent, but said that ITV is supportive of and subscribers to Project Diamond “where we are working very hard to both monitor and improve diversity in all productions both in front of and behind the camera”.

Love Island

Love Island was ITV’s hit show for the first half of the year, demonstrating that “young viewers engage in great TV”, said Bazalgette.

Monday’s final was watched by 2.6 million people, ITV2’s highest overnight audience ever. This has helped boost ITV2 viewing among 16 to 34 year-olds up by 50% so far this year.

What’s more, online viewing is up 34%. ITV Hub now has 20 million registered viewers including more than 75% of the UK’s 16-24 year olds. Bazalgette said the Hub has “undoubtedly benefitted from the phenomenal success of Love Island”, which averaged 1.5m online requests a day.

Elsewhere ITV had the biggest entertainment show in Britain’s Got Talent, most watched drama in Broadchurch, the most watched new drama in Little Boy Blue, and the biggest soaps in Coronation Street and Emmerdale.

Carolyn McCall

Speaking on the arrival of new chief executive Carolyn McCall on 8 January 2018, Bazalgette said the former easyJet boss brings “a strong track record in media, experience of an international operation, clear strategic acumen and a reputation for delivering value to shareholders”.

In the role McCall will be continuing to grow ITV’s production business, developing its advertising offer - which Bazalgette said is going to get more data rich - and growing its online offer both in terms of AVOD (advertiser supported video on demand) and SVOD (subscription supported video on demand).

“Every strategy of every company benefits from being refreshed and that is the job that we will be doing with Carolyn in the new year,” said Bazalgette.

Targeted TV ad offering

In May ITV’s deputy managing director for its commercial division Simon Dalglish told The Drum the broadcaster will launch in addressable TV solution within 12 months.

But today (26 July) Griffiths admitted that the broadcaster will in all likelihood be looking at partnerships with the likes of Sky AdSmart “because some of the new ways people will be looking to advertise are not skills that we currently have”.

“We continue to talk to Sky and other partners in this area, the important thing is keeping control of your inventory and data. The differentiator in this environment is going to be the quality of your data,” he said.

Bazalgette added that the broadcaster expects to have “several things” announced on targeted advertising next year.

He added: “Technology is allowing targeted advertising more and more rapidly, and in future we are going to have the best of both worlds in our company because we going to maintain our mass audience but we are also going to be able to offer more and more targeting.”

Netflix

Bazalgette described Netflix as a 'frenemy', the term often used by traditional businesses when referring to digital giants.

While the online streaming platform is viewed as a rival - one of the many companies that "competes for people’s attention with great content" - they are also a company for which ITV makes programmes for, as well as selling its programme catalogue on.

"Netflix is pumping a lot of money into content - we see that as a positive for our Studios business," Bazalgette said.

The streaming giant is also assisting a process which year-by-year is putting up the production value of drama "which is getting a better proposition for viewers", he added.

The chairman also claims that while ITV’s family share is just over 21%, Netflix if it was a channel in the UK would have 4% share: "It is doing very well but it has got the share of one of the healthier digital channels."

"So we welcome Netflix in the marketplace," Bazalgette concluded.

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Jessica Goodfellow

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

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