New Year Marked By Surge In Advertising Revenue
The turning of the new millennium looks set to be marked by a sharp increase in UK television advertising revenue, if early indications are anything to go by. Estimates for January so far show increases of up to 13% for the ITV network as a whole when compared to the same month last year. Preliminary average estimates for Channel 4 and Channel 5 also show a growth in revenue: C4 has an estimated 10% increase compared to the same period last year, whilst Channel 5 leapt around 24% during this period.
In previous years growth in ad revenue for January has been steady but relatively small. A 6% growth between 1998 and 1999 for the ITV network has more than doubled in this year’s estimates, with some agencies estimating a rise of up to 26% for January 2000.
Dot.com advertising seems to be the driving force behind the boom. Agency estimates predict that dot.com companies spent £100m on television advertising in the run-up to Christmas and media buyers are expecting revenue growths of up to five-fold in the coming year – a figure which greatly exceeds current inflationary growth rates. Estimates for radio, which as a passive medium is emerging as popular with Net advertisers, have been predicted to rise by 11%. Paul Brown, advertising executive at Arc Advertising, said that the January network estimates reflect the boost in the market at present and look set to continue through 2000.
The sharp upturn in technology-based advertising reflects the race to claim a position on the internet. Already the fastest-growing medium of all time, both traditional media companies and start-ups are driving the expansion as they establish themselves on the net. But as airtime prices rise with the increased demand, the newer, smaller companies are struggling to keep up. Many start-up businesses are still finding their feet in a fragile market and have little money to spend on marketing budgets. There is a danger that more traditional, established companies are in a position to promote their online products more easily, having the money and the marketing expertise to push brands, whilst newer companies are left behind.
Some TV groups are trying to redress this balance. This month Channel 5 announced that it has agreed to take equity stakes in internet companies in return for allowing them airtime to advertise their businesses (see Channel 5 Exchanges Airtime For Internet Stakes). Last year, when Granada and Carlton took stakes in internet search engine Ask Jeeves (see Carlton And Granada Bring Jeeves To The UK), the two broadcasters agreed to reinvest part of the stake in television advertisements.