ITV faces worst ever ad slump

ITV will this year suffer its worst slump in advertising since the start of commercial television 50 years ago, according a leading media forecaster.

Total UK advertising spending will drop 0.8% this year - the first annual downturn since the recession of the early 1990s - the newspaper said a survey by advertising planning and buying house Zenith Media.

Less than three months ago, Zenith had forecast 3.6% growth in advertising spending for this year.

It said newspaper advertising had since weakened and the picture was even grimmer for commercial television.

It said ITV would see revenue slip 8.9%.

Granada 'vulnerable'

Earlier this month, Granada, one of ITV's main owners, said it had experienced a 10% slump in ad revenue in the nine months to June.

One of the reasons behind the slump is the cutback in global ad spending by US multinationals in the face of economic slowdown.

In a leaked letter to Tony Blair, Granada chief executive Charles Allen recently warned that delays in legislation on cross-media ownership were making his company vulnerable to takeover approaches from foreign companies.

He also put a question mark over the future of ITV digital terrestrial channel OnDigital.

Granada and its partner in OnDigital Carlton Communications is calling on the government to get behind digital TV to prevent rival pay-TV operator BSkyB from controlling the market.

The ITV companies say the government should improve the allocation of frequencies and lobby the EU over a standard specification for TV sets, if it is serious about switching off the analogue signal by 2010.

Overall spend down

Total advertising spend rose by 10% in 2000, according to Zenith estimates, but there has been a sharp decline in the first half of 2001.

Growth has come to a juddering halt in 2001

Zenith Media

"This was largely caused by growth outside television, with national newspapers driving press revenue, the continued rapid growth in radio advertising and an exceptional year for outdoor.

"Growth has come to a juddering halt in 2001, which promises to see the first year-on-year decline in TV ad spend in 10 years and relative stagnation in the press market," Zenith said in its report.

Worse than expected

According to Zenith, which buys advertising space for some of the world's top companies, including Procter and Gamble, Sony and HSBC bank, 2001 will be the second year running that TV ad spend will underperform the advertising market as a whole.

Most observers expected a downturn following the end of the dot-com boom, but the correction has been more severe than expected, according to the survey, and hopes of a recovery in the second half of the year have faded.