ITV warns coronavirus will make a dent in ad revenue

ITV warns coronavirus will make a dent in ad revenue

ITV outperformed revenue expectations in the first quarter of 2020 but has warned that ad spend will likely drop significantly, namely from travel operators, as the coronavirus outbreak erodes international appetite for holidaying and business trips.

As a precaution the ad industry (and beyond) are cancelling non-essential work trips, in conjunction with some of the largest events like the at-risk Olympics and the cinematic release of James Bond: No Time To Die. For ITV, it has a big summer ahead of it with it using Euro 2020 as a platform to build a UK Super Bowl-style event which could be in jeopardy with some European football fixtures already being played behind closed doors to reduce risk of contagions to fans.

The UK's commercial broadcaster wanred that total ad revenue will be down by 10% year on year in April. At present this drop is coming from an apparent hesitancy in the travel sector to buy ads during a key season for holiday bookings as consumers exert caution.

Its report said: “In March and April, we have seen an impact from travel advertising deferments relating to the coronavirus,” adding, “At this stage it is too difficult to assess the further implications of the coronavirus.”

For the year, profit before tax was down to £530m year on year, a 7% drop which was boosted by its £62m sale the Television Centre.

Ad revenue was down 1.5% to £1.77bn however diversification efforts paid off with total revenue rising to £3.89bn.

Broadcast revenue slid by 2%. As audiences veer towards VOD options, ITV's online advertising operation was up 21%. In future earnings, the impact of Planet V, its programmatic addressable advertising platform and rival to Sky’s AdSmart, should start paying off.

Non-ad revenue was up 7% (£2.12bn) and ITV Studios up 9% (£1.82bn). It added: “Growth in sponsorship and creative partnerships, more than offset by the decline in spot advertising revenues.”

For the first quarter, ITV’s total advertising revenue was up 2%; January (-1%), February (8%), and March (1%).

And then there’s BritBox, the online joint operation with BBC to unlock their extensive back catalogues to paying audiences, and fund new originals like a return of Spitting Image. Luke Bozeat, chief operating officer at MediaCom, said uptake of the service has been "slow" and indicates it has a challenge on its hands reaching younger audiences.

“The end of 2019 marked three months since Britbox – ITV and BBC’s response to streaming giants such as Netflix, Disney+, Amazon Prime and Sky’s Now TV – launched. However, while the broadcaster aimed to retain loyal viewers and appeal to newer generations by combining exclusive and classic shows, research has indicated that uptake of Britbox has been slow.

“In order to turn its fortunes around, it will be important for ITV to invest in new, original content that supplements its long-standing legacy. Love Island is an example of a programme that is so much more than just a show. It has attracted the following of millions and, despite lower winter viewing figures, has created a sense of loyalty through its Aftersun spin-off, podcast series and mobile app. All of these added platforms create the opportunity for brands to partner with publishers and creative talent to build an ongoing narrative past each standalone episode. More innovative programming that can capture the imagination and interest of younger audiences will be key to ITV’s future.”

Carolyn McCall, ITV chief executive, said “Thanks to the hard work of our teams across the business, our full-year results have come in ahead of expectations helped by revenue growth in the second half of the year in ITV Studios, advertising and online. We are making good progress in each area of our strategy and our investments in data, technology, online and in streaming will enable ITV to be a sustainable, diversified and structurally sound digital media and entertainment business.”

Despite the adverse circumstances, not all brands are retracting. Food delivery service Mindful Chef reported a surge in sales of 165% in the last week, due to shoppers opting to stay at home. E-commerce and live-streaming are positioned to benefit from the conditions.

Brands have been reluctant to use the outbreak to profit however, in fears of the PR backlash they may face.

Join us, it's free.

Become a member to get access to:

  • Exclusive Content
  • Daily and specialised newsletters
  • Research and analysis

Join us, it’s free.

Want to read this article and others just like it? All you need to do is become a member of The Drum. Basic membership is quick, free and you will be able to receive daily news updates.