ITV Advertising Outlook From Merrill Lynch
There will be 4% growth in UK television advertising in 2004, with ITV set to take 50.2% of the commercial market, according to forecasts from Merrill Lynch. Judging from recent comments by Mick Desmond, Chief Executive Designate of the network, the year is shaping up to be an eventful one for TV executives.
Because the ITV share is market-weighted, it is estimated that ITV market share will be 50.2% for 2004 (50.0% based on adults only).
Like ZenithOptimedia, Merrill Lynch is projecting TV market growth of 4% for 2004. OMD is predicting a 4.5% increase. Based on the more conservative estimate and taking into account the forecast for ITV market share, the network should see advertising grow by 2.4% this year.
| 2004 ITV Growth Forecasts Based On UK TV Growth & Market Share (%) | |||||
| ITV Market Share (%) | UK TV Growth (%) | ||||
| 2.0 | 3.0 | 4.0 | 5.0 | 6.0 | |
| 51.0 | 2.0 | 3.0 | 4.0 | 5.0 | 6.0 |
| 50.5 | 1.0 | 2.0 | 3.0 | 4.0 | 5.0 |
| 50.2 | 0.4 | 1.4 | 2.4 | 3.4 | 4.3 |
| 50.0 | 0.0 | 1.0 | 2.0 | 2.9 | 3.9 |
| 49.5 | -1.0 | 0.0 | 0.9 | 1.9 | 2.9 |
| Source: Merrill Lynch, January 2004 | |||||
Developments in 2003 As well as offering its own prognosis for 2004, Merrill Lynch provides a report from the recent ‘OMD Predicts’ conference where Mick Desmond was the chief speaker.
It has been confirmed that Desmond will take up the position of chief executive of ITV broadcasting and enterprises when the merger of Carlton and Granada is completed next month (see ITV Unveils New Board).
In his speech, Desmond reflected on a turbulent 2003, admitting that the merger had caused huge distractions to the core ITV business. Total TV advertising grew by 1% and CPTs are back at 1998 levels but terrestrial channels face rising competition from multichannel television and digital penetration breached 50% for the first time last year.
Desmond took comfort from the fact that ITV ratings stabilised with peak share of commercial impacts at 58.7%. Meanwhile, the growth of Freeview helped to boost impacts at ITV (including ITV2 and ITV News) by 8%.
Trends for 2004 Desmond predicts that total TV viewing will remain stable this year but Freeview will continue to attract viewers and represents a genuine threat to the likes of Sky and E4. He believes that BSkyB will shift focus from volume to yield, basing this opinion on the promotion of Sky+ as an “ARPU generator”.
Analysts anticipate that census changes will impact at BARB and force advertisers into a reappraisal of the grey market. Desmond claims that more importance will be given to the 45+ market at the expense of 16-34 year olds. ITV3 is expected to launch in 2004 and will be aimed at the older generation with an ABC1 slant.
The ITV chief said he hoped that 2004 would see better relations between broadcasters and advertisers. Both parties a vested interest in ensuring that commercial viewing figures are maintained and the BBC refocuses on public services commitments ahead of its 2006 charter review. Desmond welcomed the appointment of Justin Sampson, previously managing director of the Radio Advertising Bureau (RAB), as director of customer relationship management at ITV.
Desmond estimated that TV would grow globally by 4% this year, adding that he thought the UK market would be similar. He did not announce any ITV targets but feels that the broadcaster has taken steps to engage with viewers and the the brand is more readily acknowledged than before.
While admitting that ITV faces challenges this year, Desmond said that the picture is no clearer at other terrestrial stations. Channel 4 is likely to feel the impact of demographic shifts and its programming director Kevin Lygo has some difficult decision to make about the schedule.
Five had a good year in 2003 and its share of commercial impacts is hovering around the 11.5% mark. However, the station is felt to lack “break out hits” to compete with C4 and ITV and programming investment is hampered by the station’s dual ownership status.