The latest analysis from Screen Digest reveals a TV industry in a downward spiral of economic slowdown, advertising recession, deflated prices and audience fragmentation.
Three of the big markets are suffering the most. In the UK, despite outperforming a sluggish advertising market in the first six months of the year, ITV’s full year guidance points to a 3% drop in ad revenues.
French broadcaster TF1 has taken a double whammy of a 3.6% drop in revenues and a loss of its audience, in particular during the crucial prime-time slot. As a result the company is forecasting a 3% drop on full year revenues.
Leading Spanish broadcasters Telecinco and Antena3, having enjoyed many years of strong growth, have been brought down to earth by a deep advertising recession, the rapid rise of new competitors and concerns over the imminent introduction of more stringent advertising regulations.
In recent years ITV has been in a ‘tunnel’ of declining audience share and revenues but in 2007 the company appeared to have its turned fortunes around by halting the drop in both audience and ad revenues, said Screen Digest.
However the credit crunch, with its challenging economic conditions, has meant that just as ITV managed to get out of this tunnel it has fallen into another one – this time not of its own making. ITV is already experiencing a major advertising downturn this quarter and has said that revenue may shrink by 20% in September.
Vincent Létang, Screen Digest analyst for advertising, said: “It may seem paradoxical that as TV audiences are still growing, TV advertising revenues are falling. The reason is that the demand for TV advertising is flat – and so broadcasters have been forced to drop their prices.
“It is cheaper to advertise now on TV than at any point in the past 20 years. The fact that commercial TV viewing has been growing this year to reach all-time highs adds to the pains of the British broadcasters. In a period of low demand, over-supply of audience simply fuels the downward price spiral.”
GroupM’s 2008 UK ad growth forecast published earlier this year predicted that TV advertising will expected to fall 2% in both 2008 and 2009 (see GroupM Revises Down 2008 Ad Forecast).
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