ITV says advertising spend is 'improving' despite pandemic-hit Q3

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.