TV ad spend down despite increase in viewers
TV ad spend is predicted to fall from £3.46 billion in 2007 to £2.81 billion in 2010, despite record numbers of TV viewers, according to new research by Enders Analysis.
The findings show that the first three months of this year could be down by as much as 20%, with ITV performing in line with the market average, Five well below and Channel 4 well above it thanks to two-year deals signed in 2007/2008.
“In real terms, analysts doubt advertising for the main broadcasters will ever regain 2007 levels,” a report in the FT said.
However, while Enders forecasts a 10% annual decline in TV ad spend, Thinkbox’s new report shows that viewing figures are at an all-time high (see TV viewing reaches a record high).
Growth in TV viewing was “largely driven by commercial TV channels, which now account for 63% of all broadcast TV viewing – an increase of one hour, 20 minutes a week in the last ten years,” according to Thinkbox.
The report also found that the total number of TV ads watched at normal speed reached a record high in 2008, up 6.3% year on year, with 2.4 billion ads watched a day.
Tess Alps, Thinkbox’s chief executive, said: “The figures are great news for advertisers. TV is proven to be the most effective ad medium and advertisers have a growing audience to engage with – as well as new audiences on other TV platforms like the web.”
However, Enders predicts that advertisers will hold-back on spending until the economy shows real signs of recovery, which is unlikely to happen until 2010.
The main commercial broadcasters – ITV, Channel 4 and RTL-owned Five – will go into loss this year as a result, according to Enders.
Toby Syfret, Enders analyst, said: “The real issue is that the only way they can rescue themselves is by cutting programme budgets, which is obviously going to reduce public service broadcasting quality in the medium to long term.”
This topic has been heavily discussed over recent weeks following the release Ofcom’s PSB blueprint and the forthcoming publication of Lord Carter’s Digital Britain report (see Ofcom rejects top-slicing the BBC’s funding).
Ofcom is keen for all of the main broadcasters to continue to invest in content and new platforms, such as digital and HD services, which Sky has vowed to do by reducing HD costs (see Sky booms in the economic downturn).
Deloitte’s 2009 global trends report also recommends that television companies look to invest in content and update infrastructure, such as increasing their offer of high-definition programmes.
Enders suggests that if broadcasters are to compete with multi-media competition and rise above the struggling economy, they will need to push for more relaxation of regulations in the areas of product placement and flexibility on how much airtime in any given hour can be devoted to advertising, according to the FT’s report.
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