The impact of Contract Rights Renewal was significant but not as savage as many analysts at first feared. Yet, despite the confidence of its chief executive, Charles Allen, there are causes for concern.
ITV1's audience was down 6 per cent in 2004, a performance that looks set to be part of an ongoing pattern as multichannel grows. This is offset in part by growth at ITV2 and the launch of ITV3, but ITV is increasingly looking at other strategies to replace lost revenues from its flagship channel.
Last week, the broadcaster launched its Beyond the Spot initiative to target advertisers and agencies with the message that ITV is no longer about the 30-second ad in isolation. Sponsorship, branded content, interactive "red button" advertising and website and promotional opportunities are all part of the ITV package.
While there is pressure on ITV to perform, it is positioning the launch of Beyond the Spot in the context of a clamour from advertisers for deeper relationships with media owners, typified by the comments of Procter & Gamble's global marketing officer, Jim Stengel, that it is looking for ways to "go beyond the spot".
Justin Sampson, the director of customer relationship management at ITV Sales, says: "Our objective is to generate as much income from advertisers as possible, but we can't do that if we ignore customers and what they do."
1. ITV1's ad revenue is projected to fall from £1.67 billion in 2004 to £1.57 billion by 2010, according to ZenithOptimedia. Against this, multichannel ad revenue is predicted to almost double from £685 million to £1.27 billion.
2. ITV's revenue from other sources will therefore be vital to ensure its success as a plc. ITV2 and ITV3 will be central to this but so will sponsorship and other activities. ITV says sponsorship revenue for 2004 was £37 million (excluding Ulster TV and SMG) but refuses to give projections of how this, and other revenue streams, might grow.
3. Multichannel players such as Sky and ids have become known for a more innovative approach to content - pioneering interactive formats and branded-content initiatives. However, despite ITV's relatively late entry into initiatives such as interactive TV, agencies say it is showing signs of responding to customer demand. Chris Hayward, the head of TV at ZenithOptimedia, says: "It had a good look at itself before the merger and this process has been continuing. It used to be the bastion of the bully boy mentality but now it's very aware that it needs to change its attitude."
4. ITV argues that it has already provided ample examples of Beyond the Spot work. These include its Easter "advertainment" for Ford Focus, which featured a competition mechanic in ads and announced the winner "as live" during the final ad break. It even argues that traditional sponsorships, such as First Choice's I'm a Celebrity... involvement and Nokia's X-Factor work, have been enhanced by taking the activity outside of the idents through stores, online and via mobile phones.
5. Beyond the Spot involves sending 6,000 CD-Roms to advertisers and agencies. The package highlights 12 benefits of non-spot advertising - covering brand awareness, improving promotional activity, data capture and increasing staff motivation. Much of the argument links into ITV's previous Values of Fame initiative, arguing that the opportunities are so much greater for advertisers because of "famous" ITV brands such as Parkinson, Coronation Street and Hell's Kitchen.
6. The CD-Rom also includes examples of more cutting-edge work that has run on ITV.
Advertiser-funded programming makes an appearance with ITV's Orange Playlist deal, a TV version of Desert Island Discs, produced and paid for by Orange.
7. ITV hasn't lost all its hard-selling tendencies. Among performances from the likes of Phil Georgiadis, a partner at Walker Media, and marketing directors from big brands such as Nokia, the CD-Rom includes a section outlining currently available sponsorship opportunities. The Frank Skinner Show is one of many that is looking for support.
ITV
- Beyond the Spot is driven by necessity, as ITV attempts to plug the revenue gap left by falling audiences at ITV1.
- Its success will depend on a genuine commitment to cultural change at the broadcaster as well as the delivery of imaginative content.
- Agencies believe it is a sign that ITV is at least trying to be proactive.
Chris Hayward, the head of TV at ZenithOptimedia, says: "This is one of a number of genuine initiatives to keep the quality and amount of information to a high level."
ADVERTISERS/AGENCIES
- Will at least become more aware of some of the more innovative attempts by ITV to work with advertisers.
- ITV hopes that agency planners will become more involved in the process of identifying opportunities with ITV at an early stage.
- The message for ad agencies is clear - ITV wants to work with them on creative that moves beyond the spot ad. It claims that Ogilvy & Mather was excited about the Ford Focus campaign and was heavily involved alongside the media agency MindShare.
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