UK TV broadcasters are attracting record audiences, meeting their public service remit, and keeping the lights on while working from home. In return, they are bracing for a precipitous drop in ad revenue these next few months.
First, ITV said it expected a 10% ad revenue drop in April. Just weeks later, Channel 4 announced business cuts and staff furloughs, blaming the pandemic's "severe effect" on demand and predicting that the current situation would burn a 50% hole in the TV market in April and May. ITV also said it was “taking measures to reduce costs and manage cash flow”.
At any other time, these audiences would be cause for celebration for the TV industry (ThinkBox says Easter weekend viewing in the UK was up 29% year on year). However, there are a difficult few months ahead as broadcasters look to ensure the flow of content keeps people informed and entertained at home, which balancing the books.
Barney Farmer, sales and marketing director at Nielsen Online, says its data shows that UK ad spend dropped 27% year-on-year across all media channels in March. Money coming in from from travel, transport and business utilities halved, while retail investments fell by a fifth. Some sectors saw the reverse. Among them was government advertising was up by 38%, food was up 16%, and tech/computing rose a massive 60% from an already high base.
Farmer explains: “The initial data for TV advertising in April does not paint a pretty picture, and it is expected that the numbers will drop significantly for the overall month.”
Many TV budgets have been frozen and broadcasters are unable to rely on tentpole events to prop them up. Brands looking to activate around the now delayed Euro 2020 (which ITV was expecting a particularly strong performance from) have been forced to shelve their best-laid plans. Other businesses are turning off the tap due to diminishing stock or demand.
“Broadcasters will be looking at all avenues for revenues, whether that is through different advertising sectors or ways to ensure money stays in their businesses via different digital channels," adds Farmer. "Out of a crisis often comes new ideas so we can potentially expect something emerging that doesn't exist today.”
The UK's major broadcasters are all reliant upon ad income, although to differing degrees. ITV is less vulnerable to the ad freeze than the likes of Channel 4 due to its diversification efforts in production, e-commerce and its stake in streaming service BritBox. Sky, meanwhile, has user-generated revenue to lean on — although without the draw of its sports properties it could be bleeding custom.
Which brands are still on TV?
Amid this bleak outlook, British broadcasters are forming battle plans.
Some advertisers are still spending, with many leaning on TV to communicate how they are adapting to the pandemic or driving home message for viewers to 'Stay At Home'. Though it's brought the economy to a grinding halt, there is an opportunity for usefulness and long-term goodwill from brands willing to embrace a higher purpose. Others TV spenders may still follow, be it retailers directing shoppers from their shuttered stores to online, or games and apps looking to grab the attention of a bored locked-down populace — also, prices for a premium ad slot have dropped significantly.
“It's looking like the cheapest TV pricing I've ever seen in my in my media career,” asserts Mihir Haria-Shah, head of broadcast at Total Media. Some audiences are down 50% year on year in terms of pricing. “I wasn’t working then, but it is comparable to the 2008 recession”.
The combination of larger audiences tuning into the TV at home and a reduction in demand for the inventory is to blame, argues Haria-Shah. “TV is really deflationary at the moment, and prices have really fallen kind of through the floor.”
Haria-Shah also notes some trepidation among brands that have been absent from TV for a while, a quick return may look “opportunistic”.
“Given the current circumstances, there's quite a fine balance between doing the right thing for your business and also maintaining your long-term brand reputation," he continues.
He adds its important to note that not every brand’s been fully hamstrung by the pandemic: “Some brands have actually reported their best sales in years, or for younger brands, the best in their existence.” FMCGs are among those seeing a bump from some of the early panic-buying of essential items, for which toilet paper will long be a visual metaphor for.
Right now, one of the biggest barriers to entry on TV, beyond falling ad budgets, is the lack of ability to produce big-ticket, sensitive creative. With most of ad land under lockdown, amendments will have to be made to existing films. Shots of friends and family out in the world having fun, or even in close contact, now carry negative connotations. The tone has to be right. The message can’t deviate too far from stay home. And the work can’t feel cynical, else long-term damage will be done in the name of short-term gains.
Some brands have been quick to adapt though. Apple is telling us that the lockdown doesn’t mean the end of creativity. Nike has been showing the home training routines of athletes. Toyota new creative was directed over Zoom. Mobile-footage and sweeping image slideshows driven by voiceover are the flavour of the day for brands limited in what in they can produce.
To woo brands among all this, broadcasters are looking to remove as much as the friction from buying and production as possible. Certain fees are being waived, and the best spots are more readily available than they've been.
On the production side, ITV’s in-house team is now being tooled to help clients where it can. There's a great effort to get the work over the line fashion in its keen to help and others will be doing the same.
The in-house creative teams have indeed been busy too, Channel 4 and the BBC’s PSA efforts both landed earlier this week with strikingly different tones but the same message – 'stay at home (and watch TV)'.
Further down the chain, according to Haria-Shah, TV ad clearance house Clearcast is reportedly working at an impressive rate – its new priority is to ensure no TV ads exploit the pandemic, spread misinformation, or offer advice contrary to that government guidance: “It's [clearance period] seems to be down from five to three working days.”
He believes demand in TV ads will rise these coming weeks.
“TVs always been seen as the best brand builder. And now consumption is through the roof, you can sit alongside record audiences on trusted news or alongside the escapism of comedy, soaps and drama. There’s a lot of longer-term positive associations, that brands that advertise correctly can build right now."
The aforementioned broadcaster budget cuts threaten this dynamic. Many productions have been frozen, few that were on the slate can be delivered under lockdown. As replacements, broadcasters have literal warehouses of archive content they can tap into.
ITV moved fast in releasing Euro 96 footage to its on-demand Hub as was requested by fans. BBC's current affairs panel show is going ahead with phoned-in floating heads in a virtual studio. Netflix released a series of calls between Joel McHale as a bonus Tiger King episode. A BBC weatherman stole headlines by entering a frenzied cover of the news theme after his delivering his forecasts.
Will these bold makeshift productions continue to draw high attention these next few months? Or will audiences get their heads turned by a wealth of entertainment content on many of the ad-free subscription video-on-demand services.
Concluding, Haria-Shah says: “You always believed that soaps like Coronation Street would always be on the TV. Its pause is a real symbol of how serious an impact this is having on the TV landscape.”