After 18 months of uncertainty and upset across the advertising marketplace, we still managed to be surprised by the never-seen-before inflation levels that September brought to AV.
Understandably, advertisers have emerged from the slumps of 2020 to thankfully spend again and revive the marketing industry. Year-on-year figures have looked buoyant throughout recent months but in September, the huge revenue hikes sent everything off balance.
All three big players in AV saw excessive inflation, ITV and Sky with circa 20% year-on-year and C4 at circa 40% year-on-year which, having caught the industry off guard meant the need for the implementation of diverse solutions.
There are many reasons behind the unprecedented inflation, but three factors were key. The first being the relaxing of Advance Booking Deadlines across the industry, something which the7stars has always benefited from, but with large network agencies permitted this short-term perk, late money had entered the market at no penalty, skewing forecasted revenue figures.
Secondly, the number of brands advertising on TV was significantly higher than in 2019. Many advertisers had held back on spending until post lockdown, as well as choosing to avoid months when the Olympics and the Euros were on air, aiming to benefit from the more regular TV schedule (with programming such as Bake Off), and ultimately hoping for pricing to stabilise. Unfortunately, conversely, the additional market revenue together with impacts falling year on year, as more people are back at work and going on holiday, resulted in price inflation.
Thirdly, one of the main drivers behind the excessive Channel 4 inflation was the result of over-investment on ITV for Euros coverage and the return of the summer series of Love Island UK.
To alleviate these market pressures on campaigns, we identified solutions through our ability to be highly agile and flexible in the market; moving marketing spends into more lucrative environments, within sales houses for example, from linear into BVOD where pricing fluctuations do not occur and moving budgets from AV into other media channels where pricing is not impact and revenue adjusted.
Looking forward to Q4, we will no doubt see a bountiful period for advertising and may need to think fast with solutions for continuing year-on-year inflation, but we should view this in a positive light as brands have the overdue revival they have so desperately needed, after such punishing times.
Linear TV channels have an optimistic Autumn/Winter ahead with Channel 4 in particular showcasing an exciting programming slate, so we are anticipating favourable viewing figures which can hopefully stabilise any future revenue spikes.
With AV consumption and advertiser spending surely levelling out from here on in, we should see a more balanced 2022 with market changes based on trends from 2019.