Advertisers ‘caught by surprise’ by September TV ad market surge

TV market is set to end 2021 well ahead of 2019.

Channel 4: Paralympics ad promotes the broadcaster's coverage of the games
Channel 4: Paralympics ad promotes the broadcaster's coverage of the games

The TV ad market is surging in September as strong demand and shorter booking deadlines are set to push revenues up by as much as 25% compared with the same month a year ago and about 20% compared with pre-pandemic levels in 2019.

Industry sources told Campaign that Channel 4 is on course to be up as much as 40% year on year in September. The other two main ad sales houses, ITV and Sky, are both likely to up about 20%. None of the broadcasters would comment on the numbers.

Media buyers said broadcasters, agencies and advertisers have been “caught by surprise” by the scale of the inflation in TV ad revenues, which are widely seen as a bellwether for the wider ad market.

A senior industry figure said he knew of at least one major client who has already been “clobbered” by the rising prices because it can afford to buy fewer TV spots for a new campaign.

Some buyers had expected TV ad growth of only 5% in September 2021 because this month last year had returned a decent performance – the TV ad market was down only about 2% as the UK had ended its first lockdown, when ad sales plunged, and was not yet facing a new wave of restrictions.

September is regarded as a key month as brands look to launch new products and drive sales after the summer holidays in the run-up to the Christmas period.

October is also likely to see significant inflation – up as much as 10%, according to one TV insider – even though the market was flat in that month in 2020.

Agency and broadcasting sources said they are now confident that the TV ad market will end 2021 significantly ahead of 2019 levels, more than recovering the losses from last year’s pandemic slump.

Sources estimated TV ad sales across broadcast and on-demand could be up between 16% and 18% this year, compared with a decline of about 11% last year.

'Massively buoyant'

Simon Bevan, chief investment officer at Havas Media Group, said: “The current market has caught broadcasters, agencies and clients by surprise. September is historically a strong programming month for broadcasters after a quieter summer period.

“I think brands may have taken stock and waited for a window to ‘go again’ – after the Euros football tournament, the Olympics and the UK finally coming out of lockdown and ahead of Q4.

“We’re seeing strong growth from the travel sector, finance and ecommerce retail brands. After a slow start to the year and wider macro-environmental influences, some advertisers will have re-flighted activity to make the most of the opportunity of the growth we are seeing in the wider economy.”

Steve Ballinger, president of Amplifi, the trading arm of Dentsu International, described the market as “massively buoyant” and ahead of expectations, citing new entrants such as second-hand car websites Cazoo, Cinch and Motorway, which want to build their brands, as well as resurgent sectors such as travel.

“The unexpected growth in the September market shows that both new and returning advertisers do see TV is incredibly good value [in delivering a return on investment],” Ballinger said.

Henry Daglish, chief executive of Bicycle London, said: “We’re looking at a bumper autumn season ahead for TV. Eighteen months of pent-up demand combined with the continued explosion of scale-up growth [from digital disruptor brands] can only mean one thing for what remains the UK’s most powerful channel for growth: expect to see at least 20% more demand than 2019.” 

A 'perfect storm' in favour of TV

Some senior figures admitted privately that they were astonished by the surge in demand for TV and suggested a range of factors may be contributing to a “perfect storm” in favour of the medium.

UK commercial broadcasters used to sell TV air-time on an eight-week advance booking (AB) deadline but have reduced that to four weeks in recent years to give more flexibility to marketers and agencies.

Shorter AB deadlines have made it harder to predict prices in advance and plan ahead.

But Andrew Stephens, founding partner of Goodstuff Communications, said it has helped some advertisers, especially direct-to-consumer brands, because it “makes it easier to approve late money based on the latest digital performance marketing insight”.

Free-to-air TV may also be benefitting from continued pressure on other media owners, such as outdoor, free commuter newspapers and cinemas, which are still in recovery mode, as many people continue to work from home and avoid city centres – a factor cited by Carolyn McCall, chief executive of ITV, at its half-year results in July.

“Marketers’ choices are more limited than they were [in terms of audience reach] and advertisers have got to make up lost ground [in terms of driving growth after previous lockdowns],” a TV ad sales executive said.

A significant proportion of the population still working from home has helped TV in other ways because daytime viewing has been strong, which one broadcasting source said was helping Channel 4.

The estimated 40% surge at Channel 4 during September may also be down to “some rebalancing of investments” by agencies, which spent heavily with ITV during Euro 2020 and Love Island and may have share deals that commit them to spend a certain amount with each of the major broadcasters during the course of the year.

Channel 4’s strong performance comes as the UK government prepares to end a 10-week consultation on a potential sale of the state-owned broadcaster.

Among the reasons cited by ministers for privatisation have been “the challenges to the future of linear TV broadcasting”.

Paradoxically, the rise of streaming and decline in linear viewing have fuelled TV ad inflation because it is harder to reach some audiences.

Simon Davis, chief executive of Walk-In Media, cited falling commercial impacts – the number of times a viewer sees an ad – in recent months.

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