Last week there was yet more rationalisation over at ITV. Sadly, this didn't relate to the new Sunday night show Britannia High, but to the merger of its digital business, ITV Consumer, with its main production arm under the director of television, Peter Fincham.
The move will result in the departure of a key executive, Jeff Henry, the managing director of ITV Consumer, who has steered ITV's investment in online and other interactive services since his arrival at the broadcaster in 2005.
Michael Grade, the executive chairman of ITV, said that the restructure, which will involve the merger of digital properties such as ITV.com and Friends Reunited into Fincham's programming domain, will help to drive revenue. "Now is the time to integrate our online video sites editorially with our broadcast business as mass- market channels in their own right and drive the advertising opportunity from that proven consumer demand," Grade argues.
However, there also came the admission, alongside ITV's interim results for the first nine months of the year, that "online revenues for the full year and into 2009 (are) impacted by the advertising slowdown, with profitability being further impacted by investment in Kangaroo".
This was something that observers of ITV already knew. In September 2007, Grade had outlined ambitious plans to grow online revenues to £150 million by the end of 2010. The bulk of this was to come through advertising. At the time, advertisers suggested that this would be a tall order and ITV has not been subsequently helped by wider economic difficulties. In August, the company announced that it was pushing the £150 million online revenue target back to 2012.
1. ITV Consumer was launched in 2005 to house ITV's online, telephony and other interactive services. Henry joined in September 2005 to run the new division, having previously been the chief executive at the digital channel Hallmark. With Henry promising to achieve online revenue growth via acquisition, early activity included a deal to buy Friends Reunited in December 2005 for £170 million and the launch of ITV Play, the ill-fated games channel that was to take centre stage in Ofcom's investigations into revenues generated from calls to quiz shows. The division also houses ITV Mobile and the online local service ITV Local.
2. In December 2006, ITV Consumer acquires Scoot, the business directory service for around £3 million. The broadcaster sees a role for Scoot in providing online business directory services to support ITV Local. It also announces details of ad formats which will make up the ITV Local model: ranging from online directory listings through to video broadband ads and full national broadcast advertising.
3. Into 2007, and ITV launches ITV.com, complete with a video-on-demand catch-up service that involves pre-roll ads around content as well as other bespoke formats. It also announces plans to make its channels available via mobile phone. Grade then announces the ITV.com revenue target of £150 million by 2010.
4. Despite being forced to revise the online advertising revenue target, and the news that Friends Reunited is dropping its subscription charges, ITV begins to attract record audience numbers online. In October 2008, it has 8.3 million unique visitors, viewing 12.5 million videos, a 550 per cent increase year on year. The viewer numbers for ITV Local also rose, up by 164 per cent to 1.1 million unique visitors.
5. However, ITV's interim statement shows that online revenues grew by just 6 per cent year on year to £25 million despite an increase in video viewing of 472 per cent, a total of 82 million videos, across the first nine months of the year. While ITV's commercial arm has been offering an integrated sell of online alongside broadcast channels, ITV hopes that closer editorial co-operation will result in better content being commissioned across channels.
6. Following the restructure and Henry's departure, Ben McOwen Wilson, the chief operating officer of ITV Consumer, is appointed as the director of online, reporting to Fincham. Dominic Cameron, the acting managing director of ITV.com, takes on the role on a permanent basis.
WHAT IT MEANS FOR ...
- ITV hopes that the restructure will deliver both efficiencies and a more integrated service for consumers.
- However, some observers argue that it is not pushing the value of its online material hard enough. One agency broadcast director says: "At the moment, ITV is giving you loads of value if you put it on ITV.com. It's the sales policy of a six-year-old."
- Advertisers are hoping for a greater integration of online into ITV's overall sales strategy. While many agencies seem to agree that ITV.com is offering good product, they would like to see more evidence of integrated sales packages.
- They are willing to concede that ITV's recent commercial restructure offers the possibility of this through hubs that also sell across the ITV sites. The consensus seems to be that ITV has moved on enormously in recent years but still has some way to go.
- Greater integration of online content with programming may bring opportunities such as ad-funded programming and sponsorship alive online.