The return of must-watch TV such as football’s pandemic-delayed European Championship and guilty pleasure Love Island is set to fuel a £1bn advertising bonanza this summer as spending bounces back to pre-coronavirus levels.
Streaming services such as Netflix and Disney+ have enjoyed record-setting subscriber growth during the coronavirus pandemic, with the public stuck at home. But for broadcasters with advertising-dependent models, such as ITV, Channel 4 and Channel 5, the closure of businesses and leisure activities resulted in unprecedented cuts to marketing budgets.
In the second quarter of 2020, spending on TV advertising plunged by more than 40% to £600m, while ITV, a bellwether for the health of the industry, accounting for almost half of all TV ad budgets, experienced the steepest decline in its 66-year history.
However, TV bosses are calling the end of the pandemic for broadcasters, with ad spend expected to bounce back to just over £1bn in the second quarter of this year.
Boris Johnson’s “cautious but irreversible” roadmap for reopening the country is paying off for them as advertisers target audiences of millions tuning in together to catch must-watch, scheduled programming.
“We only had four new dramas last autumn because of the disruptions to production; this year we will have 13,” says Kelly Williams, the managing director of ITV’s commercial operations. “After each lockdown we have seen a big advertising bounce. This time we are really encouraged it has come back so quickly. I don’t think we thought at the beginning of the year we would get back to 2019 advertising spend levels but there is a possibility we could.”
This summer will end an almost 18-month wait for fans to get a new hit of Love Island, one of the biggest and most lucrative franchises on British TV.
Avoiding Covid disruption will be top of the priority list for programme-makers.
The benefit of reality shows “is you can produce in a bubble, there are no big locations or film studios, they can be very Covid-proof”, says Lucas Green, the head of content operations at Banijay, which makes shows including Big Brother, Survivor and MasterChef. “But of course you have backups [for contestants]. One adjustment we have made [during Covid] is having extra standbys, reserves for the reserves.”
However, the big drawcard of the summer is set to be football’s European Championship, the first major tournament to air since the Rugby World Cup in Japan in 2019.
The cost of a 30-second ad slot could go for as much as £200,000 in a match such as the group game between England and Scotland, or more if one of those countries reach the semi-finals or final.
Dubbed a “home” competition because so many of the games are to be hosted at Wembley, ITV will be hoping at some point to eclipse the 17m audience that tuned in to watch England play Iceland, making it the biggest match of the 2016 tournament.
“The Euros look really strong for us [in early ad sales],” Williams said. “Depending on how the home nations do, it can only get stronger.”
By the middle of the year, £2bn will have been spent by brands on TV advertising, up on the £1.75bn in the first six months of last year, the same level as in 2019. However, there are those that have doubts the recovery will continue to maintain that momentum through the rest of the year.
The industry body the Advertising Association has forecast it will take until next year for the TV ad market to recover fully. As cinemas reopen and more people return to commuting and visiting cities, advertisers will look to use a wider range of media to target consumers – from billboards and buses to trains stations, airports and the London Underground.
Analysts at Berenberg believe next year will remain buoyant for the TV ad market, given the advertiser gold rush surrounding the football World Cup qualifiers and tournament, but believe the post-pandemic bubble will pop in 2023 as TV resumes losing audiences and ad spend to digital media.
“For me, what I’ve learned over the last 10 years is that TV has been written off how many times now?,” Williams said. “Advertisers want to get back to growth. As long as TV remains effective in declaring big audiences and is effective in driving business, it is valuable.”