LONDON: Channel 4, the UK broadcaster, was forced to dip into its content reserves last year in order to protect creative programming as income from TV advertising declined in the wake of the EU referendum.
Announcing its annual results – a pre-tax loss of £15m on record corporate revenue of £995m – the broadcaster noted that the TV advertising market had grown 4.6% in the year to June 2016 but had declined 4.2% in the twelve months since.
“Channel 4 is now operating in a TV advertising market in recession,” said Charles Gurassa, Channel 4 chairman, adding that there was “no immediate end in sight”.
Sales director Jonathan Allan pointed to a fall in exchange after the Brexit vote that means “the big TV advertisers like P&G, Unilever and the supermarkets have strained budgets right now and need to work harder to generate value”.
He added that there had been a temporary uplift in ad sales following the brand safety scare that erupted after The Times revealed that brand advertising on YouTube was funding extremists.
“We saw a bit of money move out of YouTube and into Channel 4 around April and May, but it was only a short-term lift and it unfortunately doesn’t look like a long-term shift,” Allan said in response to an inquiry from Marketing Week.
That’s because YouTube has taken steps to address advertisers' concerns, making commitments on white listing and removing extremist content, so that most have now returned.
But Allan suggested that advertiser sentiment has started to tilt away from the online advertising duopoly. “It feels like the subsequent conversations around transparency and effectiveness online have shifted advertiser’s attitudes.
“There’s more questions being asked [of YouTube and Facebook] now, whereas five years ago they’d just spend 20% of their ad budget on those platforms without even asking a question,” he said.
“We think TV advertising is as effective as it always has been,” Allan declared as he stated Channel 4’s intention to “invest a lot of money over the coming months in communicating the value of broadcast advertising effectiveness, in online video, VoD and traditional TV, versus the less secure environment on YouTube and Facebook”.
Data sourced from Marketing Week, Campaign; additional content by WARC staff