04 March 2024 , 09:35
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Investors are eagerly awaiting ITV's annual results this Thursday, hoping for signs of recovery in the broadcaster's advertising revenues.
They will be keen to see if advertisers increased their spending towards the end of 2023, or if ITV provides any insight into how advertising fared in January and February. Last year, ITV struggled to attract advertisers, a crucial income source for broadcasters, as many businesses reduced their advertising budgets due to uncertainty about their performance in an unpredictable economy.
"ITV relies on companies paying to advertise on its traditional television channels," explained Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown. “Companies are snapping marketing purses shut as they buckle down for the unknown over the coming months, and that makes moving ITV’s top-line in the right direction a very difficult task.”
In November, ITV announced that it would reduce content spending by £10 million and predicted that ad revenue would fall by 8% in 2023. In the first nine months of the year, ad revenue fell by 7% to £1.45 billion, according to ITV.
However, other income from its studio and digital businesses managed to balance this out, with total revenue increasing by 1% to £2.98 billion. ITV has shared that while ad spending went up in the third quarter, they're bracing for a dip in November and December. This is because last year, advertising spend was boosted as millions of viewers tuned in to watch the Fifa World Cup.
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Ms Lund-Yates added: "Total advertising revenue is expected to fall 8% for the full year and next week, investors will find out if things have been worse than expected. The outlook statement for the studios business will be one to watch. The US writers' and actors' strike is seeing some revenue deferred to next year, and it will be important to assess the full effect of pent-up demand."