ITV says it is seeing "encouraging signs" that TV advertising spend is beginning to rebound despite the coronavirus crisis continuing to take a toll on the company's revenues.
The latest results from Britain's biggest commercial broadcaster show a 16% tumble in total external revenue for the year to date, down to £1.86bn. But a marked uptick in advertising throughout Q3 has given the broadcaster cause for optimism that it can finish the year strongly.
Why is ITV hopeful?
Total ad spend in Q3 was down 7% year-on-year, but a month by month analysis breakdown presents a steadily brightening picture. A 23% year-on-year plummet was followed by a 3% growth in August and only a 1% drop in September.
Putting this year's performance into context, September and October 2020 were up against the Rugby World Cup in 2019, a bumper advertising event last year.
A number of categories spent more year-on-year in Q3 including FMCG, supermarkets, publishing and broadcasting, telecommunications, food, government, charities and other, and household stores
This has given ITV the confidence to forecast that Q4 advertising will actually be "slightly up year-on-year".
Total advertising was down 1% in October and is forecast to be up around 6% in November compared to the same periods in 2019.
ITV needs every penny it can find after suffering the largest fall in advertising in its history following the imposition of the spring lockdown.
On the other hand, a housebound populace has delivered a boost to total viewing hours, which rose 2%, although ITV's market share ebbed 4%, which it says was "partly impacted by the volume of the BBC’s news output during the pandemic.
The fourth quarter is crucial to ITV as it typically contributes an outsize proportion of total revenues for the year, equivalent to 29% in 2019.
In a guardedly optimistic trading update chief executive Carolyn McCall welcomed the first sign of green shoots, stating: "Advertising trends are improving with Q4 forecast to be slightly up year on year."
ITV isn't out of the woods yet
Programme-making remains a logistical headache. "Covid restrictions and further national lockdowns have added production costs and are making it challenging to bring ITV Studios productions back to full capacity," acknowledged McCall.
ITV Studios has resumed the majority of its productions. However, the delay to productions, further national lockdowns, social distancing and other Covid-19 measures will "continue to impact revenue and margin in Q4, which is up against a strong delivery schedule in 2019, and into 2021," the trading statement warned.
And the projected turnaround is dependent on English lockdown restrictions ending as planned on 2 December, with all bets being off in the event of any further nasty surprises.
The turmoil has accelerated the neccesity of the network's More Than TV strategy which pivots the broadcaster away from traditional revenues and towards a broader, digitally influenced, portfolio.