NewsLine Feature: Are Advertisers Turning Off Television?
Television has long been regarded as the holy grail of big-brand advertising with the majority of marketers needing little persuasion to commit their budgets to expensive on-air campaigns. However, the downturn has hit the industry hard and as revenue continues to slide, analysts suggest that advertisers are looking elsewhere to get more bang for their buck.
Figures from the Advertising Association show that television, whilst still the largest of the UK’s media sectors, has seen advertising revenue fall significantly over the last year, slipping from £4.6 billion in 2000 to £3.5 billion in 2001. The sector still generates more revenue than radio, consumer magazines and the internet combined, but the decline has prompted a profound sense of unease amongst broadcast executives and advertisers alike.
John Billet, chairman of the Billet Consultancy, argues that advertisers have been growing disillusioned with the television industry for some time. He says: “TV is great at attracting new advertisers but is not so good at keeping them. Faced with rising costs brands are flirting with other mediums and they’re not coming back to TV.”
ITV has seen revenues fall proportionately faster than the rest of the sector and over the last two years the network has suffered from a lack of funding, a sharp downturn in revenue and the collapse of its pay-TV platform, ITV Digital. In addition to this, Mark Howe, managing director of Flextech, argues that ITV has driven advertisers away with its ‘arrogant’ approach to airtime sales and claims that the network needs a fundamental change in attitude if it is to win advertisers back.
The latest data from the Independent Television Commission shows that ITV has seen its audience share fall by more than 5 percentage points over the last year, down from 28.3% in June 2001 to 23% in June 2002. Jim Marshal, chief executive of media buying agency MediaVest, claims this is due to ITV losing sight of its core terrestrial business. He says: “When ITV produces quality programmes and we can put ads into them, we know they have a massive impact, but the trouble is they’ve strayed from this into mergers and acquisitions. They need to concentrate on making quality programmes that deliver decent sized audiences.”
Mick Desmond, joint managing director of ITV, acknowledges that the network has been operating with a “perceived amount of arrogance” and insists that he will concentrate on improving ITV1’s schedule to provide advertisers with a better product. He says: “We will put better post 9pm programmes back into the schedule. We will also strengthen our peak-time offering and our daytime output. At the end of the day advertising is our core business and now that’s all we have.”
Billet predicts that revenue will continue to revenue fall over the coming months and like WPP’s Sir Martin Sorrell, expects recovery to be bath-shaped rather than v-shaped. He says: “It’s going to be very hard for the TV industry to see a full recovery in terms of advertising revenue. There are many things that TV is doing well, but at the moment I can’t see where the additional money will come from.”
On a more positive note, Pam Hyde, advertising manager for Standard Life, which is a heavy TV advertiser, says: “I haven’t withdrawn significant amounts of money from TV and I think there’s good news around the corner for the industry. TV delivers a huge amount of impact and the possibility to communicate effectively with mass audiences.”
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