Timing is clearly not one of ITV's strengths. If there were awards
for being at the wrong place at the wrong time, the network would sweep
the boards consistently. We're obviously not talking about questionable
programme scheduling here - now and then ITV's programming people can
still hit seams of red hot form. But some scheduling issues certainly
can be called as evidence - the News at Ten scheduling debacle, for
instance, is just one recent incident in an accident-prone history
that's the product of either rotten luck or bad judgment.
You need look no further than the recent boom times in the ad
If you're going to have a poor run in terms of audience performance,
it's obviously best to have it when there's not so much inflationary
demand in the market.
But that's exactly what we saw. While the revenues rolled in, ITV's
viewing figures slipped and the network succeeded only in running up a
massive deficit in terms of goodwill. In particular, it managed to upset
some of its core long-term clients by paying extravagant court to
new-economy advertisers such as dotcoms and telecoms companies.
All of which makes the latest twist doubly ironic. ITV is in one of
those fine veins of programming form at exactly the wrong time - because
there's no revenue out there. ITV revenue for the first quarter of 2001
was down 7.7 per cent year on year; now it looks as if the second
quarter could be far worse, down by as much as 20 per cent year on year.
This at a time when share of commercial impacts (and of all viewing) is
very robust indeed.
And, having won recent concessions from the Independent Television
Commission, ITV not only has more airtime but better airtime too because
there are more centre breaks.
So there's tons more ITV inventory chasing dwindling revenues. It's
almost unbelievable, but there's massive deflation in the airtime market
these days. 'It's ironic isn't it?' Mick Perry, the vice-chairman of
Universal McCann, says. 'You want last year's revenues with this year's
audiences. We had horrific inflation last year, we've got deflation this
year. In an ideal world it would be more balanced.
But advertisers don't work on the basis that if there's good value
around they can just go out and take it. Their TV advertising takes
place in the context of their marketing plans and the economy as a
whole. They also tie up deals a long way in advance so negotiation for
2001 obviously took account of what had been happening during 2000.
So, yes, there is a time lag. But when people say 'wouldn't it be better
if advertisers could pile more money to take advantage of the situation
now', they tend to forget that, even now, despite significant deflation
on ITV, it's still by far the most expensive station.'
Mick Desmond, the chief executive of Granada Enterprises, says he hopes
the network will be given credit for addressing last year's advertiser
concerns. He states. 'We feel we have listened to our customers. We
admitted we had a problem with inflation and we put our money where our
mouth is by investing in the schedule and we overhauled it
Desmond says he can't feel aggrieved about the fact that the market is
soft. However, he is concerned that the industry is using planning
systems that are entirely focused on precedent and year-on-year
It's not something confined to the advertising industry by any means and
it is found on the sales as well as the agency side. He says it's time
to remind people of the power and excitement of the TV medium. Perhaps
ITV as a whole will be tempted to rediscover evangelical
He adds: 'The only thing we would have a right to be aggrieved about
would be if buyers are still motivated by a desire to come off ITV. We
have spent a lot of time and effort communicating the value of ITV and
we are now delivering. So I'd hope that, if money has been moved, it now
comes back and is taken off the stations that aren't performing. What we
would ask of clients is that if they are cutting budgets that they take
it from the periphery and keep their core investment - especially when
the core is delivering such fantastic value.'
Some observers believe that ITV tends to get sucked into a lose-lose
situation. It never gets the credit for good performance but is
absolutely savaged when inflation begins to kick in. They also imply
that buyers - and some advertisers - almost bear long-term grudges
against the network. On the other hand, the situation is nowhere near as
bad as some make out. Take all the lost dotcom business out of the
equation and the underlying revenue trend is more reassuring.
Paul Parashar, the broadcast director of New PHD, concedes that it
wouldn't do the network any harm if it managed to build up a greater
stock of goodwill.
But he agrees that the issue here is the TV market's trading mechanisms:
'The business is now so sophisticated that you have to trade at least
three months in advance. So perhaps the industry is not fleet of foot.
And television is tied in with so many other things like leaflet drops
of seasonal point of sale, the time of which is determined by TV lead
times. So it's difficult to change plans to take advantage of market
conditions. But the truth is that everybody is being hit. It might be
slightly worse for ITV - if FMCG is down, it has a disproportionate
effect because the absolute volumes of airtime involved are so huge. And
it certainly hasn't helped that the dotcom money has gone. There are two
or three factors coming together at the same time.'
During the big upfront trading season last autumn, for instance, there
were stories that planners and buyers were looking for any excuse to
pull money off the network this year. Is ITV actually being 'punished'
for aggravating so many advertisers last year?
Alan Doyle, the marketing communications manager at Volkswagen, doesn't
hold to that viewpoint. He says: 'As with all suppliers, the question is
about whether they deliver or not. Expenditure on television generally
follows audience delivery - as can be seen from the success of Sky and
Channel 5 in recent times. ITV audiences have fallen over the past few
years and prices have gone up. They've made a great start to 2001 but
because budget control is done on such a long-term basis, the task they
face will be a bit like turning a tanker around. However, if they
sustain recent successes, confidence will solidify and the coverage
building that the channel offers will become attractive to advertisers
again. But it still has to improve its programming in what is a very