±±¾©Èü³µpk10 reported last month that CRR, which allows agencies to proportionately change their commitment of clients' ad budgets according to ITV's audience performance, could cost ITV up to £100 million in lost advertising revenue.
But, in a presentation to analysts last week by senior ITV executives, Duff stressed that with more than 20 per cent of ad revenue traded outside of the CRR arrangement, he did not expect the loss of revenue to be £100 million. He would not say what he expected the final figure to be.
Duff added that CRR was a "fall-back" position for agencies and that the growth in ITV2's audience would counter the decline felt from the main ITV1 channel. ITV has set itself a target of £150 million in revenue from its multichannel operations ITV2 and the soon-to-launch channel ITV3.
After a rocky start, ITV2 has turned a corner, becoming the third most watched non-terrestrial channel, and ITV is doubling its programme budget to £48 million. At current growth rates, ITV2 will be bigger than Sky One by 2006.
So far this year, ITV1 ad revenue was up 3.7 per cent for the first six months of the year compared with the same period last year. When the ad revenues for ITV2 and ITV News are included, the increase was 4.9 per cent - this is one percentage point less than the total growth in the TV market.
Ian McCulloch, the operations director at ITV Broadcasting, revealed details of ITV3. Although it has not been decided whether the channel will be free to air, ITV plans to launch ITV3 in the last quarter of the year. ITV3 will be an up-market digital channel targeting an older audience with a schedule based on high-quality classic drama such as Cracker and Prime Suspect.
Charles Allen, the chief executive of ITV, presented a robust defence of his cost-cutting measures. Allen, whose job is under pressure, said the company was ahead of its targets to achieve post-merger efficiencies.
Justin Sampson, the director of customer relationship management at ITV Sales, has promised that, as the market leader, ITV would lead efforts to re-assert the power of television to advertisers.
As part of this drive, Sampson has commissioned an audit of agency views of the channel and its marketing efforts. He said that there would be a coherent communication programme with greater emphasis on research and face-to-face meetings with clients.
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