An upbeat ITV forecasts a 60-75% rise in advertising revenue next month, providing some much-needed good news after its full-year figures for 2020 laid bare the devastation wrought by the pandemic on its finances.
Total ad revenue was down 11% last year, despite a strong showing in video-on-demand, contributing to a 39% decline in pre-tax profits to £325m.
The broadcaster warns that the Q1 advertising market remains challenging, but it is taking heart from an improved outlook with the four months to the end of April expected to rise between 5% and 7%.
Key ad revenue figures
ITV ended 2020 on a high note with total advertising revenues jumping 3% in the fourth quarter versus a year earlier.
This change in mood music is expected to filter through into 2021, despite the broadcaster conceding that the first quarter will be challenging.
Crucial ad revenues are expected to slip 6%, despite a 14% leap in the video-on-demand segment, predicated on an assumption that present lockdown measures remain in place.
Looking further ahead, the picture brightens with ITV citing positive trends from the spring, with March expected to mark a turning point with a modest 8% rise before a barnstorming month in April when ad revenues are expected to leap by between 60% and 75%.
Taken as a whole, the four months to the end of April are expected to register growth of between 5% and 7%.
The advertising turnaround is built on strong foundations, with ITV reporting 1% growth in total viewers for 2020 despite the notable absence of Love Island, major sporting events and a deficit of soaps.
With event scheduling some way off, ITV is placing its bets on an increased programming budget of £1.1bn to fund new content such as The Pembrokeshire Murders, Finding Alice, The Bay and Dancing On Ice.
What does this mean for the company?
These shifts have convinced ITV to accelerate its More Than TV strategy to separate broadcast and on-demand divisions, with a far greater emphasis on digital output.
This has been achieved while reining in costs to the tune of £116m through 2020, far greater than the predicted £60m, with £21m of this classed as permanent.
One of the principal beneficiaries of this shift in priorities is ITV Hub, which has seen its user base expand 6% to reach 33 million on the back of increased content, personalization and an interface redesign.
ITV has also rollout out its Planet V advertising platform, which offers greater control to advertisers and broadcasters on the purchase, tracking and optimization of video campaigns.
An international rollout of subscription service Britbox continues apace in the background, with South Africa set to become the latest territory to receive the service this year.
What is ITV saying?
Captain of the ship Carolyn McCall has taken ownership of the challenges and successes of recent months, stating: “Our production teams were very innovative in restarting productions quickly and safely in the UK and internationally, while our commercial colleagues inspired advertisers to restart their marketing campaigns.
“While total revenues and profits were down, our financial performance was ahead of expectations driven by a strong end to Q4 and our firm control over costs.“
Pointing to an uptick in advertising, which is essential to the broadcasters financial health, McCall struck a note of guarded optimism by adding: “We are seeing more positive trends in the advertising market in March and April and the majority of our programs are now back in production. However, there remains uncertainty in all markets around the world with the potential risk of lockdowns – which, if they materialize, will affect revenues.“