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ITV pins hopes on Christmas ads

Yet poor demand so far this year has sent revenue down
November 15, 2017

The first week in November is Christmas advert week: a time for retailers to reveal their carefully crafted marketing exploits for the festive season. From now until 25 December, our TV screens will be filled with catchy jingles, sparkles and cheery taglines.

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However irritating this may be for some, it's good news for ITV (ITV). The broadcaster is forecasting an uptick in advertising revenue in November and December, which it hopes will help offset big declines during the past few months. Annual net advertising revenue is now expected to fall by 5 per cent – although it still expects to outperform the wider TV ad market.

The group’s third quarter was certainly not a jolly time. Net advertising revenue (NAR) from traditional platforms fell 4 per cent as major corporations – under pressure to slash costs – continued to cut their advertising budgets. During the nine months to September, NAR fell 7 per cent to £1.1bn.

But ITV’s sensible diversification strategy has helped to soften the blow to the overall top line. Sales of non-traditional spot advertising, including those in the app and ITV Hub, rose 8 per cent to £1.4bn during the first nine months. This left total external revenue, which includes money made from sponsorship, down just 1 per cent at £2.1bn.

There was also good news from the group’s production arm, which surpassed the £1bn mark for the first time during any nine-month period. Chairman Peter Bazalgette – who is filling in the chief executive role before the arrival of Carolyn McCall from easyJet early next year – said the division was particularly strong in America. The ITV Hub, which allows users to watch content on demand, is also gaining momentum despite intense competition from streaming services such as Netflix and Amazon Prime. The Hub now has 21m registered viewers, including 75 per cent of the UK’s 16- to 24-year-olds. A 41 per cent increase in online viewing helped the online and pay division achieve double-digit revenue growth.