ITV warns of another golden quarter ad revenue drop
For the second year in a row, ITV has warned total ad revenue would decline by high-single digits in Q4.
“UK macro data is showing a softening economy, with increased uncertainty in the lead up to the UK budget, which is impacting the wider advertising market, and we are adjusting our costs to match this current reduction in demand,” ITV CEO Carolyn McCall said in a statement accompanying the broadcaster’s Q3 trading update on Thursday.
ITV now expects ad revenue to decline 9% in Q4. In response, the broadcaster has “identified £35m of additional temporary savings” in its Media & Entertainment division that it expects to make in Q4.
The savings will align with the division’s cost base with the softer advertising demand. £20m of savings will come from content, with some programming moved into 2026 and thus financed out of existing 2026 content spending plans. £15m of non-content savings will come from a reduction in discretionary and marketing spend, aligned with the adjusted content slate.
The £35m is believed to be able to “offset the expected reduction in [total ad revenues]”.
The broadcaster is now forecasting a 6% decline in total ad revenues for full year 2025.
Q4 redux
If McCall’s statement sounds familiar, it’s because it echoes the very same language used in last year’s Q3 trading update, when she commented that Q4 ad bookings were similarly “impacted by the uncertainty in the lead-up to the UK budget”.
That year, ITV predicted a 6-7% decline in Q4 ad revenues, though total ad revenue in full year 2024 ultimately grew 2% year on year to £1.8bn.
Through Q3 this year, total ad revenue is down 5% year-to-date against what ITV described as “strong advertising performance in 2024”. Much of the difference in performance is due to increased advertiser interest in the Men’s Euros last summer. 2025 total ad revenue is flat when compared to 2023, the broadcaster noted.
Despite the warning on Q4 ad revenue, McCall nevertheless expects ITV to “outperform the broadcaster advertising market in Q4”.
Meanwhile, ITV Studios, the broadcaster’s production and distribution arm, grew revenue 11% year on year to £1.35bn in Q3. Growth was driven by a 20% increase in external revenue, “reflecting strong demand from, and the timing of programmes for global streaming platforms”. Internal revenue declined 7% in comparison, due in part to the absence of programming like Ant & Dec’s Saturday Night Takeaway and the Men’s Euros.
McCall expressed optimism in the wider overall business despite the predicted decline in total ad revenue, writing that ITV “has delivered a good performance in a tough advertising market.
“Both our businesses are performing well, reflecting the significant transformation we have delivered. Our strategic initiatives continue to progress well, and we remain confident in delivering good growth in ITV Studios revenue and digital revenue for the full year.”
Analysis: A fragile market
The latest trading update is a stark reminder of the weakening TV ad market — one that has become increasingly reliant on major international sporting events.
As demonstrated by ITV’s trading update, annual ad revenue growth is getting periodically buoyed by events like the Euros and World Cup, but is otherwise practically flat.
Treading water leaves TV companies increasingly susceptible to market downturns. The macroeconomy has been in an uneasy state all year amid global trade disputes caused by US President Donald Trump’s scattergun approach to tariff policy. Meanwhile, Chancellor Rachel Reeves declined to rule out tax rises in her pre-budget speech this week.
While McCall warned that macro uncertainty is “impacting the wider advertising market”, it appears to be doing so unevenly.
According to the latest AA/Warc forecast, the total UK ad market is still set to grow 7.3% year on year to £12bn in Q4. For the full year, total adspend is predicted to rise 8.2% in 2025 to reach £46bn.
The concern for TV companies is the vast majority of that growth is being captured by tech platforms like Meta, Google and Amazon, with advertisers, particularly small- and medium-sized enterprises (SMEs), flocking to search and online display formats.
AA/Warc forecast that total TV adspend would fall 5.2% year on year in Q4, even as video-on-demand ad revenues are set to increase 17.2%.
That market shift is behind broadcasters’ collaborative moves this year to go after performance budgets and attract greater investment from the “fat end of the long tail“.
At the Future of Media London this week, ITV’s commercial MD Kelly Williams, sitting alongside Channel 4 chief commercial officer Rak Patel and Sky Media MD Brett Aumuller — praised the TV industry’s joint progress on appealing to smaller businesses via a forthcoming SME marketplace and new outcomes-based measurement panel Lantern.
ITV also launched a new generative AI production service in October that allows SMEs to create TV ads in under thirty seconds. In tandem, these developments should give the likes of ITV greater ammunition to expand the TV market pie.
Acknowledging the ongoing growth in adspend to platforms, Williams laid out ITV’s go-to-market strategy for attracting new-to-TV advertisers, noting that working with small, local businesses is something broadcasters have always done.
But he also asked that advertisers and their agencies test what would happen if they decreased their investment in social media by 30%. He argued that if marketers “turn[ed] down the toxic”, it would likely be better for ad effectiveness — and their conscience.