Broadcaster expects ITVX will help it acquire £750m in digital ad income annually by 2026
ITV has cautioned that it expects an advertising slump in the months to come due to macroeconomic and geopolitical uncertainty” coupled with the lack of a major commercial event such as 2021’s European Football championship.
The broadcaster celebrated a “robust” start to the year, having lifted digital and TV advertising revenues by a strong 16% year-on-year to £468m in the first quarter.
It stays on track to launch its free, ad-funded service ITVX – its new streaming master brand that will substitute the ITV Hub and paid-for ITV Hub+ brands. The new brand will also rely on content from BritBox – in the final quarter.
ITV repeated that the streaming service would assist it to reach its goal of £750m in digital ad income annually by 2026, shrinking its reliance on traditional TV advertising.
The broadcaster’s total external revenues — including earnings from its in-house ITV Studios operation, which produces shows including Hell’s Kitchen, Love Island, and Coronation Street – jumped by 18% to £834m for the first quarter.
However, the company said it closely missed its estimate of 10% total advertising growth for April, hitting nine percent instead. May is expected to drop to 8% year-on-year, with June off 15%, with the second quarter overall sliding 6% year-on-year.
ITV hardly beat the consensus estimate from analysts of an 8% ad drop in the second quarter.
The broadcaster said the robust start to the year indicates that overall ad revenue in the first half will climb by 5% year-on-year, and 7% compared with the same period in pre-pandemic 2019.
The company stated:
“As expected, advertising comparatives get much tougher in the second quarter and third quarter against the Euro football championships in 2021 and we are mindful of the macroeconomic and geopolitical uncertainty.”
ITV’s share price, which has fallen more than 40% over the previous year, gained 1% after the announcement of the trading update.
The broadcaster said its total streaming hours went down by 7%, or 20m hours, to 247m hours in the first quarter. It stated further that while streaming on its platform rose eight percent, total streaming had been hit by a decision to make fewer of its shows accessible on other platforms. It explained:
“ITV has taken the strategic decision to reduce the availability of pre-transmission drama drops and box sets outside of its own streaming services, such as on Sky and Virgin, where we cannot serve and monetize dynamic advertising.”
“Therefore, this decision does not reduce existing revenues. Over time and with the launch of ITVX we anticipate that we will see this viewing move to ITV’s streaming services and be more effectively monetized.”