With revenues and profitability under pressure at its core ITV1 business, rapid online growth is vital for the nation's largest commercial broadcaster to ensure its growth continues. But, looking at recent financial results, ITV's aim of more than quadrupling its annual online revenues by 2010 seems a big ask.
ITV lifted online revenues by just £10m between 2006 and 2007 to £33m, and the division slid into a £12m loss. For the first quarter of 2008, online revenues were up just £1m year on year to £9m.
Gary Cole, ITV head of online revenue, says: "We have a new working culture in looking at where we need to be and adjusting, monitoring things every quarter. There is no single silver bullet that will take us to the £150m target. It is a multi-pronged approach."
Some are sceptical of ITV's online aims. Numis analyst Lorna Tilbian says: "This target is very challenging, not least because the environment is challenging and there are others much more at the heart of the online space, such as Google, MySpace and Bebo."
But, surprisingly perhaps, ITV.com now has more unique users than MySpace. ITV.com's unique users for April amounted to 6.2 million, while Nielsen Online says MySpace had just 4.7 million.
Line of attack
ITV's online strategy has four main areas of attack - increasing viewing of on-demand content; building programme community sites; improving online ad sales; and new online businesses.
ITV has made its biggest online moves around video content. Last year, ITV.com received a complete overhaul, adding streaming, made-for-online content, catch-up and archive material, which helped boost ITV.com's revenues by 57% to £11m in 2007. Video views for ITV.com and regional news and weather site ITV Local were up 76% to 9.9 million between January and April.
Michael Beecroft, broadcast group account director at Mediaedge:cia, says: "The negativity around broadcasters' online content when compared with the BBC's iPlayer is short-sighted. What iPlayer has done is illustrate to people that accessing content is simple, and people will see that, if it is easy on the BBC, it will be easy on ITV, Channel 4 and Kangaroo."
Jeff Henry, managing director of ITV Consumer, describes Project Kangaroo as "the missing piece" in its online business. Cole agrees: "Kangaroo is a big part of our on-demand focus, as consumers will increasingly buy into video online. Advertisers know it will be a high-quality service with premium content."
ITV has been heavily promoting ITV.com on air to promote its catch-up service, which was revamped in March. It has also been driving traffic online to sponsored microsites for soap, entertainment and drama shows such as Britain's Got Talent and Gossip Girl. ITV is promoting the second series of Secret Diary of a Call Girl ahead of ITV2's broadcast, with video clips and blogs on ITV.com.
But, while ITV's moves to boost online content are apparent, its plans for new online businesses are less clear. The broadcaster refuses to go into details about new ventures such as Priceterrier, a price-comparison website in development. ITV is also reportedly planning to buy an online ad network.
Cole says: "We are looking at how to extend our audience reach. If we could form a joint venture with an ad network or other media owner, we could build on that. But it would need to have a strategic fit."
ITV claims that, by 2010, there will be a £2bn online advertising opportunity to seize upon and is currently ramping up its online sales team.
Hitting the target
But it will have some work to do if it intends to hit the £150m target by 2010. In dropping subscription charges around social networking site Friends Reunited, ITV is taking a significant hit to its online revenues.
Friends Reunited accounted for £22m of ITV's online revenues last year, but the site makes less than a quarter of its revenues from advertising. To lead the changes, Andy Baker has been appointed managing director of Friends Reunited, joining this summer from Trinity Mirror.
Henry says: "Nearly 90% of people were stopping at the payment level. It is the right time to change the access model as we are opening the tap and can monetise that with advertising.
Genes Reunited and our dating business will be a major contributor of pay. And in less than two years, we will replace the subscriptions revenue lost from Friends Reunited with ad revenue."
But Beecroft says: "In terms of going head to head with social network sites, it has had its day." Friends Reunited has dropped out of Nielsen Online's top 10 social media sites with fewer than two million unique users.
Henry insists: "It is having its strongest period of growth since we bought it. There is a massive opportunity in the 30-plus age group who haven't taken on social networking yet. Online is a new route to market and our online businesses are taking off in a way we had never imagined. The £150m target is absolutely achievable."
ITV'S ONLINE MOVES
- May 2008 Andy Baker appointed managing director of Friends Reunited; website's subscription fee dropped
- April 2008 ITV puts programming on iTunes online video store
- March 2008 ITV.com catch-up area revamped
- November 2007 BBC Worldwide, ITV and Channel 4 announce Project Kangaroo
- September 2007 ITV unveils online strategy
- May 2007 New ITV.com unveiled, led by new on-demand content
- December 2005 ITV buys Friends Reunited for £120m