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It’s difficult to overstate just how significant the past year has been for the UK commercial TV industry.

Consider how many firsts there were: the first major joint marketing campaign by the four major free-to-air broadcasters (BBC, ITV, Channel 4 and Channel 5); the first commercial ad break to feature only supermarket brands, which united to reject racism (it ran in November on Channel 4); the first woman appointed to run Channel 4’s sales house (Veriça Djurdjevic from PHD); and ITV restructuring its broadcast business to put linear broadcast and video-on-demand on an equal footing.

The Covid-19 pandemic has sparked much of this change, as millions work from home, global supply chains are disrupted and filming production schedules are wrecked. But much of it is also a response to longer-terms trends in viewing behaviours and tech, sped up by the health crisis.

So, now that millions are being vaccinated and the end of the Covid nightmare is potentially in sight, the time is right to survey the state of the TV market, the forces driving supply and demand for TV advertising and how well the key sales teams are performing.

Survey

At this crucial juncture for the TV industry, ��������pk10 surveyed the industry’s leading media agency buyers, asking them to rate the current performance of the broadcasters’ UK sales houses and their smaller independent cohorts.

We approached all of the UK’s major buying groups and independent shops, and the confidential survey is based on responses from 14 out of the top 25 media agencies, according to Nielsen billings.

��������pk10 last carried out this survey in 2014 at another pivotal moment, just as Channel 5’s sales house, the fourth largest at the time, was being squeezed after Omnicom pulled its clients’ spend. The market went on to shrink to three main players in 2015: ITV, Channel 4 and Sky.

Channel 4 comes top of the 2021 survey when adding up the combined scores but it is worth noting that there is not a huge gulf between its sales house, 4Sales, and ITV Commercial and Sky Media (or even that of ITV’s Scottish counterpart, STV).

There is a significant gap, however, between the “big three”, plus STV, and niche players such as Axiom Media and 360 Media (a new TV sales house, launched by out-of-home video specialists GPM360).

The UK’s biggest commercial broadcaster has the highest-rated leadership team – fronted by “Kelly and Dags”, the self-styled “Ant and Dec of UK media” . However, it received the lowest score of the big three sales houses.

ITV performed less well on diversity, creativity and its digital proposition. Several agency buyers credited ITV Commercial with delivering a credible and promising digital product, namely its addressable TV marketplace, Planet V. One said it shows ITV is going “in the right direction”. However, the same buyer warned Planet V had yet to prove to the market it has what it takes – a sentiment shared by others as a rationale for why digital was marked down.

Another said: “They make much fanfare of projects such as their integration with [ad tech company] Sorensen Media (which vanished), Planet V and their integration with [NBC Universal’s ad metric] C-Flight but are then slow to roll out to market in a collaborative way and just offer their template of working, which isn’t malleable to client or agency needs.”

Meanwhile, buyers identified other issues that stopped ITV from hitting the mark. “We understand they have to protect their revenue, however this has led to some unexpected premiums being charged without context and detrimental to our clients,” one buyer said.

ITV’s decision last year to relax advanced booking charges, from nine-week to four-week minimum deadlines, was well received, although one buyer warned: “The flexibility around AB deadlines has caused some confusion as it is not in line with the rest of the market.”

Kelly Williams, managing director, commercial, ITV, says:

As a broadcaster, ITV helps advertisers connect with the nation, as viewers unite and share in powerful storytelling, trusted information and cultural moments. As a producer, we’re uniquely able to bring brands closer to content and place them at the heart of emotional connections. ITV Hub gives viewers control in where, when and how they watch, and Planet V – our self-service, addressable platform – gives advertisers control over how they buy, track, and optimise their TV video campaigns – always in a brand-safe, premium environment.

4Sales is the “star baker” among this year’s TV sales houses after scoring particularly highly for diversity and creativity. Despite 2020 emulating The End of the F***ing World at times, Channel 4 was still able to generate a series of famous commercial work that sought to inspire and reinforce the broadcaster’s values, such as the “#ClapForCarers” ad break and the “Black and proud” campaign to support Black History Month.

Last year 4Sales began making it easier to buy spots on linear and video-on-demand. It led the way in moving to a permanent four-week advanced booking deadlines policy, while for All 4 it created a Programmatic Guarantee product that enables advertisers to buy inventory on a fixed cost per mille via Adobe and The Trade Desk.

All of this bodes well for 4Sales’ new recruit, ex-PHD UK chief executive Veriça Djurdjevic, who joined last November as chief revenue officer, effectively replacing Jonathan Allan, who was promoted to chief operating officer last year. Her appointment as the first female leader of 4Sales is significant, although she is not the first woman to head a major sales house; Fru Hazlitt previously led ITV. Djurdjevic’s arrival “brings an air of optimism and a fresh approach that will hopefully build better strategic engagement with agencies and their clients”, according to one survey respondent.

Chief among Djurdevic’s duties will be to implement Channel 4’s new Future 4 strategy, which includes plans to double viewing impressions on All 4 and deliver 30% of total revenues from digital advertising and 10% from non-advertising by 2025.

One fly in the ointment, though: the survey threw up mixed responses to how 4Sales delivers what it promises. While one said: “[4Sales] have been more flexible and understanding around our clients’ requirements…” another warned: “[Creativity has] declined in recent years with briefs not being fully answered unless the investment is incremental to existing trading arrangements.”

Veriça Djurdjevic, chief revenue officer, 4Sales, says:

Channel 4 stands up for inclusivity and aims to create positive change through entertainment. This is embedded in 4Sales, evolving our commercial proposition to changing viewing habits and responding quickly to advertiser needs. We provide easy access to highly effective, brand-safe video ad opportunities that reach millions of young and upmarket viewers across our platforms. Last year, driven by shows such as Gogglebox and Bake Off, All 4 views grew by a third and C4’s linear growth broke records, far exceeding our competitors.

Two years after Comcast’s acquisition of Sky, executives have suddenly started exiting the pay-TV giant faster than banner-men fleeing a Red Wedding. Jeremy Darroch is leaving after 13 years as group chief executive. The long-standing Sky Media duo of John Litster and Duncan Wynn are also being replaced by two well-known agency leaders, OMD Group UK’s Tim Pearson and Dentsu Aegis Network’s Ruth Cartwright.

One buyer noted Sky Media has “[Comcast’s] external leadership bolstering the trusted operators” and that they were seeing “a new intent” to capitalise on last year’s BT Sport contract win and including Amazon Prime Video on its Sky Q platform alongside Netflix.

This sentiment was reflected in above-average scores for leadership and delivering what it promises, but it’s particularly notable that Sky scores highest for its digital proposition, despite ITV and Channel 4 talking a lot about their digital-first strategies last year.

One buyer said: “Sky has a fully integrated AV proposition from rights and production (drama as well as sport) to the distribution and actual point of viewing with their physical tech in people’s homes in the form of their Sky box. No other sales house has this.”

And yet, despite this advantage, the survey revealed a general frustration that Sky Media does not seem able to optimise this advantage in digital. The same buyer went on: “[Sky] struggles to pull all the elements of their offerings together when responding to briefs with linear, VOD, digital and sponsorships and partnerships responding in silo.”

Another said: “Sky’s digital proposition is excellent, but the advertising part of it is behind the sector which is probably as much a business decision as a capabilities issue.”

Sky Media says:

At Sky Media, we bring together world-class premium content and channels; market-leading products like AdSmart and our unique customer relationship to connect advertisers with millions of consumers in the UK, Europe and globally, as part of Comcast. As the TV and media landscape evolves, we are focusing on keeping it simple with one campaign; demonstrating effectiveness with our end-to-end measurement capability and continuing to help brands engage with their audiences around brand safe, premium content they love.

The survey showed just how anonymous the smaller sales houses are in the eyes of most agency buyers. Responses relating to Axiom and 360 Media showed many agencies are simply not knowledgeable about their operations and/or do not work with them. Even the buyers that showed some insight said these small sales houses were difficult to justify putting on their media plans compared with the major players.

STV ranked almost as highly as its London-based ITV counterpart, scoring 34.6 out of 50, and had no significant weaknesses. Axiom and 360 Media scored respectably, with similar overall marks of about 25 out of 50 each. 360 Media was marginally ahead but both were marked down in the same two areas: digital proposition and creativity.

This underscores how scale still matters in TV buying, despite all of the changes in viewing habits and technology since our last survey. ITV has about 45% of the market, Sky 30% and 4Sales 25%. Indeed, it is remarkable that all of the sales leaders at ITV, Channel 4 and Sky in 2014 were still in place at the start of 2021, when John Litster stepped down at Sky Media. Jonathan Allan was promoted from 4Sales last year but kept oversight of ad sales.

TikTok is among the brands to have made their TV ad debut in the past year

The market

The pandemic blew a hole in TV ad sales last year, as large swathes of advertisers – including entire sectors such as travel, sports gambling and hospitality – paused spend, contributing to a 50% collapse in the £4bn-a-year TV ad sales market in April and May.

It’s therefore extraordinary that by December, Group M forecast TV ad revenue would fall by only 10% in 2020 (down from the 15% drop it predicted six months earlier). In comparison, the expected decline in cinema and outdoor rose to 80% and 45% respectively, while the market for newsbrands (down 28%), radio (down 16%) and magazines (down 12%) maintained their earlier forecasts.

The TV fillip was driven by a stronger-than-expected fourth quarter, when ITV and Channel 4 were, remarkably, reporting a revenue pipeline that was up on 2019. Some of the reasons for this are short term. By last summer, spot prices had become very cheap, due to high audience volumes and low advertiser demand. In addition, by the end of the year many marketers felt compelled to “use it or lose it” when it came to their marketing budgets.

"The TV fillip was driven by a stronger-than-expected fourth quarter, when ITV and Channel 4 were, remarkably, reporting a revenue pipeline that was up on 2019"

��������pk10 revealed in November that hundreds of new advertisers – many of them tech and ecommerce brands – had made their debut on TV in 2020. Channel 4 and ITV’s decision to move to four-week advanced-booking deadlines, ditching a long-standing policy of charging penalties for booking campaigns with fewer than two months’ notice, has also been generally well received.

However, 2021 is set to be another difficult year for the TV market, particularly in the second half. It is unlikely to fully claw back the hundreds of millions of pounds of lost ad revenue. Independent agency Walk-In Media forecasts that TV ad revenue will grow this year by between 5% and 7%. Some months, such as March and April, will show significant year-on-year increases, but only because the same months were disastrous in 2020. It also expects audience volumes (impacts) to be down by about 7-8% this year, which, it says, in effect, means that TV spot prices will become about 15% more expensive.

This drop in impact assumes that social distancing will ease in the latter part of 2021 and people will spend less time at home watching TV, but also that there will be a poor programming pipeline due to production problems as a result of the pandemic.

Disney+ launched in the UK in March 2020 [Getty Images]

The ad revenue challenges come at a time when traditional broadcasters are fighting a content war against the new breed of ad-free subscription video-on-demand platforms.

According to Kantar, 16.7 million British households had at least one SVOD subscription by the end of 2020. Disney+, which launched in the UK in March 2020, added nearly five million subscribers, a 39% share of the 12.9 million SVOD sign-ups last year. This was followed by Amazon (25% share) and Netflix (19%). Sky’s contract-free SVOD alternative, Now TV, garnered about 6% of new sign-ups, while original content platform Apple TV+ claimed 4%.

That is not to say that people are turning off their TV sets en masse. While 2020 audience data are expected to show a significant increase in TV viewing on all platforms, Barb figures show average total viewing has remained remarkably stable at about three hours and 45 minutes per day for UK individuals over the past 10 years.

However, a clear change has come in the proportion of live TV viewing, which has fallen by about a quarter, down to just two-and-a-half hours in 2019, as viewers increasingly opt for time-shifted viewing (via Sky Go or Virgin Media TiVo) broadcaster VOD (BBC iPlayer, ITV Hub and All 4) or SVOD.

As may be expected, this trend is more marked for younger people. The same Barb figures, when broken down for 16- to 34-year-olds, shows daily live TV viewing down to just an hour a day, but total viewing is stable at about two hours and 45 minutes.

Marketers keep faith

Despite the shift, big brand marketers are not turning away from TV. The medium remained a go-to for many of the biggest spenders – such as packaged-goods companies – as people consume more household items while working from home. Last summer Unilever pledged to “invest heavily” in media, particularly brand campaigns; while Procter & Gamble revealed a $240m splurge in paid media in the final quarter of 2020, after cost-cutting in other areas of its marketing budget. Last month, Mr Kipling owner Premier Foods singled out its Christmas TV advertising as a driver for a 12% uplift in sales over the final quarter of 2020.

Steve Axe, chief marketing officer of frozen-food giant Nomad Foods, which owns Birds Eye, told ��������pk10 TV is so vital to his marketing strategy that he does not expect digital to exceed more than 35% of his media budget. “Everybody’s got a freezer and pretty much everybody buys frozen foods, so reach is incredibly important to us,” Axe said. “Our brands are mainstream brands and TV is still incredibly effective for us to get the reach that we need.”

In fact, effectiveness thought leaders Les Binet and Peter Field have argued that there is a general crisis in advertising effectiveness because not enough money is going into TV advertising, as well as other mass-reach media. Binet and Field claim this is due to
too many advertisers resorting to short-term, performance-driven marketing tactics, such as running direct-response campaigns on social media and online display.

"Our brands are mainstream brands and TV is still incredibly effective for us to get the reach that we need"

This resonates with the theme of media planning expert Justin Gibbons’ book, P[squared] + C - 5: the New Formula for Media Planning Post-Covid, published last year. In it, he argued that performance marketing works best when created alongside a “halo of public exposure”, because public channels give consumers a layer of trust that private, digital channels fail to achieve.

“Brands that live in public are not only grabbing attention, they are also putting themselves in the context of people’s community,” Gibbons says.

Clearly, tech presents an opportunity for television to achieve both: brands can create big marketing campaigns and targeted ads for distinct audiences watching on-demand platforms. ITV and Channel 4, in particular, made significant moves to make their respective streaming platforms, ITV Hub and All 4, a priority focus. While viewing numbers have grown on these broadcaster video-on-demand services, spots remain relatively expensive because of a lack of ad inventory. Now, through ITV’s Planet V addressable platform and Channel 4’s Programmatic Guarantee, the traditional broadcasters are ramping up their digital ad sales, not just through more content, but also by offering more advertising to buy per show.

Enders Analysis founder Claire Enders is bullish about the future of commercial public-service broadcasters. Speaking at ��������pk10’s Year Ahead Breakfast Briefing in January, she predicted that TV broadcasters, including the BBC, would still account for 62% of total video in the UK by 2027. She said: “The broadcasters themselves are really largely now under the tent of Sky and Virgin Media in terms of [being] protected from actual technology risk. I think that we will see continued, very strong growth in the video-on-demand offerings of broadcasters.”

As Thinkbox has long argued, the structural shifts might not be the existential threat to TV that they first appeared. As Procter & Gamble’s chief brand officer, Marc Pritchard, told last month’s Consumer Electronics Show: “The advent of connected TV opens up this vast opportunity to ensure that we can reach the people we want, where we want, when we want in a safe environment, and it will be good for the entire industry.”

��������pk10’s TV Advertising Summit will take place on 21 February. For more information, visit��www.campaignlive.co.uk/tv-advertising-summit