A TV ad boom is on the way but long-term trends look troubling for broadcasters

It’s TV advertising boom time. 

That was the takeaway from ITV’s results last week, with the return of Love Island on the way and the Uefa European Championships arriving just as advertisers are preparing to open their wallets in an attempt to capitalise on a vaccine-protected (hopefully) reopening and recovery. 

But what about the longer term? 

That’s where things look murkier. A recent report by analysts at Enders commissioned by advertisers’ trade body ISBA contained some fairly unpleasant-looking numbers for the company, for Channel 4 and other ad-funded broadcasters as well. 

It forecast that by 2027 broadcasters will only account for 61 per cent of total video viewing across all platforms, down from 72 per cent, and just two-thirds of all commercial video, down from 74 per cent. 

In terms of time spent in front of the gogglebox, it predicted that the average person will watch just 1 hour 49 minutes of commercial TV per day on any screen, down from 2 hours 14 minutes in 2019 (the lockdown-affected 2020 and 2021 are obviously going to be outliers). 

Even more alarming, to traditional broadcasters, is that it expected the split to be the other way around among the elusive under-35s, with two-thirds of their commercial viewing in 2027 going to digital video and just one third to broadcasters (1 hour per day).

This, the report’s authors say, could have a huge impact on total advertising revenues, which they think could be £364m lower. And it may be worse than that. 

Now, it’s worth remembering that the report was commissioned by advertisers, which would like broadcasters to move in a direction of their choosing (the authors have recommendations). 

It’s also worth point out that ITV, which disputes the conclusions, has been defying both sceptics and scary looking trends for some time now. 

It’s an oft repeated cliche, but it does still have the capacity to deliver a mass audience, something that’s becoming harder and harder to find and offers considerable value to advertisers. 

Another report, this time by Thinkbox, covering the oddity that was 2020, meanwhile had ITV dominating the list of most-watched programmes. Netflix barely figured, despite its dominance of subscription video on demand and the noise it is apt to make.

ITV is hoping this year’s slate will help it to report some gaudy numbers, and the omens look good. There was a 68 per cent increase in ad buys booked in April compared with the same month in 2020, while a leap of 85 per cent is forecast in May and 90 per cent in June. 

However, the more meaningful comparison is arguably with 2019. ITV should be ahead of that year too, but given the Euros, an economic rebound, and, yes, Love Island, it really ought to be showing it a clean pair of football-boot wearing heels. 

The trends are the trends, and they are lining up against linear broadcasting and in favour of streaming. The figures for the YouTube- and TikTok-obsessed younger generation should be particularly concerning. 

They pose a huge challenge for broadcasters of all stripes, whether commercial or state owned, linear or streaming focussed. They’re the head scratchers who may completely reshape the market. 

In the meantime, it pays to have your fingers in as many pies as possible. ITV has its hub, which offers advertising and a subscription funded options and the subscription funded BritBox. Channel 4 has its own streaming service, with ad funded and subscription options too. It also supplies content to BritBox and others (as does ITV Studios). So they’re well covered on that front. 

Video on demand currently adds bells and whistles for advertisers and allows them to more tightly target their offerings (the report wants a change to the way its results are measured and advertising is sold). 

It’s where the future ultimately lies but while analysts can extrapolate the truth is nobody can be entirely sure what that future will look like.