Media Forum: Can ITV be an online power?

Will the new management team at ITV 'get' digital, Alasdair Reid asks.

In retrospect, Greg Dyke will probably feel he's had the last laugh. In an article in The Times of 7 March 2009, he launched a scathing attack on his former colleague Michael Grade, who was at that point still the executive chairman of ITV.

The occasion was a set of poor ITV results for 2008 - and the inevitable conclusion that programming budgets might have to be pared back and redundancies made.

In January 2007, Grade had embarked, to great acclaim, on an almost Messianic mission to turn around the fortunes of Britain's leading commercial broadcaster. Dyke's conclusion was that the mission had to be judged a failure - and one of the prime reasons for this, he argued, was that Grade just didn't get the internet.

Such was the intemperate nature of Dyke's attack, however, that it was easy to assume he'd overstated his case. And, after all, ITV had been attracting praise in some quarters for the way it had been developing advertising opportunities within the video players embedded at ITV.com.

It has also managed to jettison its, again in hindsight, ill-judged acquisition of Friends Reunited. But Grade has now gone, replaced as chairman by the former Asda boss Archie Norman. At last week's broadly encouraging results presentation, Norman revealed that the broadcaster's online operation, primarily ITV.com, had increased revenues from £18 million to £24 million year on year.

Total online revenues for the ITV online operation were up 3 per cent year on year to £37 million. But despite posting an increase in key metrics - for instance, video views rose from 85 million to 215 million - Norman admitted that the division was significantly underperforming. He said: "We are well short of our potential and well short of where the market will be."

He clearly aims to fix this. And yet there will be those who worry that Norman's new chief executive, Adam Crozier, is not noticeably more insightful, in online terms, than Grade was. Should we be optimistic about ITV's prospects in this vitally important sector?

Yes we should, Will Smyth, the head of digital at OMD UK, maintains. He explains: "It's important for ITV to focus not just on ITV.com but it should have a presence on video content aggregator sites such as SeeSaw. It should go down both avenues - as the BBC and Channel 4 have done. ITV managers have also failed to make the most of major successes such as The X Factor. They have to take that success into the digital space. The big thing affecting how people deploy budgets these days is social media and the likes of Facebook are developing innovative technical solutions that are of great interest to advertisers. ITV has to look at that - and I'm confident it will."

That optimism is partially shared by John Davidson, the group AV trading director at Starcom MediaVest. But he argues that ITV has to maintain a canny approach where online aspirations are concerned. Online revenues will not, he argues, be a shortor even a medium-term panacea. Meanwhile, it needs to keep its options open while placing itself nearer the forefront of the video aggregation business.

He adds: "A smart joint venture move or an acquisition would help it to gain volume. Hulu has been mentioned consistently as a suitable partner but there may be issues there about revenue share and control. ITV must be aiming to be at the forefront both technologically and culturally."

Absolutely, Dave Katz, the head of digital trading at MPG Media Contacts, agrees. And though he says he's basically optimistic about ITV's ability to deliver, he does confess to having reservations. He says: "For far too long, my perception was that ITV's web properties offered nothing new or interesting. They seemed to offer similar content to a host of other, arguably better, websites, and thus offered no specific reason for audiences to visit or return to them. It does look as if ITV has begun to take the necessary steps - if it is able to continue pushing in that direction, it has a decent chance of succeeding."

But Ross Jenkins, the managing director of Profero Performance, argues that its online strategy has to be judged within a wider debate about whether it now chooses, as many have urged, to go down the subscription TV channel route. But he concludes: "In terms of ITV.com's broader role, I think it's fair to say it has been underperforming. It isn't, for instance, as compelling a presence as channel4.com, either in terms of the depth of what's on offer or in terms of navigation - which in ITV.com's case isn't great. Fixing that would be a start."

YES - Will Smyth, head of digital, OMD UK

"The X Factor already brings people together and Coronation Street has a hugely loyal following. The challenge is about getting that audience to gather online and extending the viewer experience into the social media space."

MAYBE - John Davidson, group AV trading director, Starcom MediaVest

"ITV will need to develop a different online sales culture and a differentiation between broadcast and online trading strategy. Developing market-leading online video expertise and addressable advertising will be critical."

MAYBE - Dave Katz, head of digital trading, MPG

"ITV's potential to succeed relies on its ability to use digital to extend its offline brands. If it can create unique digital content, then it will have created a reason for loyal offline viewers to become loyal digital users too."

MAYBE - Ross Jenkins, managing director, Profero Performance

"The crossover relationship between programmes and related online content could be better. With Channel 4, say, there's a feeling digital is at the heart of things. With ITV, you always feel that it's adjacent to the core proposition."

- Got a view? E-mail us at campaign@haymarket.com

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Digital marketing executives oversee the online marketing strategy for their organisation. They plan and execute digital (including email) marketing campaigns and design, maintain and supply content for the organisation's website(s).