British broadcaster ITV predicted in its Q3 financial statement this morning that advertising revenues will return to year-on-year growth in the fourth quarter. ITV says that ad revenues in November so far are six percent higher than during the same period last year, and it expects this growth to continue into December. The forecast marks an impressive turnaround for a company which has in recent years been struggling to grow ad revenues even without the burden of the coronavirus pandemic.
Total advertising revenues in Q3 for ITV were down seven percent year-on-year, but this figure isn’t representative of the whole quarter. Total ad revenues were down 23 percent in July, but were actually up by three percent in August. September meanwhile was down two percent year-on-year. But ad revenues last September were boosted by the Rugby World Cup, which ITV held broadcasting rights for.
This projected return to growth is partly being driven by a number of advertiser sectors returning to TV, having paused or lowered their budgets during the worst of the pandemic. ITV says sectors including FMCGs, supermarkets, publishing and broadcasting, telecommunications, food, government, charities and household stores have all spent more in Q3 than they did in the same period last year.
And ad revenues may also have been boosted by the recent launch of Planet V, ITV’s new self-serve platform for brands and agencies. The broadcaster says that 75 percent of ITV video on-demand (VOD) orders are now transacted through Planet V. And the company expects this to rise to 100 percent by the end of the year.
This forecasted growth for Q4 does, however, assume that the current national lockdown in England ends on December 2nd as planned. If the restrictions continue beyond that date, ad revenues may suffer as a result.
Extended lockdown restrictions could also have negative impacts for ITV’s production business. CEO Carolyn McCall said that 85 percent of ITV productions which had been paused due to the pandemic have now either resumed or completed filming. But she added that “COVID restrictions and further national lockdowns have added production costs and are making it challenging to bring ITV Studios productions back to full capacity”.
Overall however, McCall said she’s confident that ITV is well placed for the next few years. This is due in part to a recent restructure, which will place more focus on ITV’s digital revenues. “We remain focused on executing our ‘More Than TV’ strategy as we accelerate our digital transformation,” she said. “We are restructuring the ‘Broadcast’ business to create a new ‘Media and Entertainment’ division to better reflect and serve changing viewing habits. The restructure will also drive improvements in efficiency and reduce costs. “