ITV Yearly Advertising Forecast Downgraded Thanks To Dotcom Slowdown
ITV’s full year advertising forecast has been downgraded by brokers ABN AMRO, in part because of the subdued dotcom spending expected during the second half of this year. The original forecast suggested revenues of around £2,093m, a rise of 7.8% on 1999, but this has been adjusted to a rise of just 4.7%, while ABN’s overall TV advertising market forecast has also been reduced from 10.6% to 7.9% growth.
The company’s research into the impact of dotcom advertising on the market as a whole has revealed its significant effect, especially in TV and Outdoor (see Dotcom Advertising Plays Increasing Role In Advertising Growth, Says Report). However, previous growth rates are unlikely to be sustainable, especially amongst the so-called “hotcoms” – pure internet start ups- and it is thought that the difficulties these companies have in securing second-round financing will begin to bite at ITV during the coming months.
The slowdown in dotcom advertising spend at ITV is expected to accelerate into the fourth quarter. The resulting year-on-year figures will show a particularly acute difference, as it was in the latter half of the third quarter 1999 that the positive effects of dotcom advertising on the market began to be felt.
ABN AMRO’s research points to some additional reasons for this poor second half performance. Some advertising spend was brought forward into May and June due to the Euro 2000 football tournament. Also, year-on-year comparisons with July and August were always going to be harsh, due to last year’s exceptionally good performance during those months.
October was also a strong month last year, thanks in part to the screening of the Rugby World Cup, which brought ITV to its first £200m month ever, as dotcom spending and extra activity from the automobile, financial services, telecoms, drinks and sports goods companies increased revenues by 14%. This October is expected to be a very different story.
Other factors aside, dotcoms are thought to have spent around £373m (or 3.5% of the total advertising market) in the year to July 2000, which means that their financial futures are a factor in ongoing advertising revenue growth which cannot be ignored.
ABN AMRO: 020 7678 0280
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