Media Forum: Is TV becoming a tougher sell?(television advertising revenues, World Cup)

Should the slowdown in TV ad budgets worry the industry, Alasdair Reid asks.

Strange things happen to the advertising market in the vicinity of a World Cup. In pure TV terms, it offers a unique festival of intense must-see events - and, consequently, it looms large in the minds of strategic planners.

The outcome is far from predictable, however. Some brands just have to be on air during the tournament and they funnel the whole year's budget towards this point; but equally, some brands you'd expect to be there just don't turn up at all, feeling they get better cut-through value by coming on air after the tournament is finished.

In general, a World Cup year is usually good for TV revenues but the picture on a month-by-month basis can be volatile, to say the least.

That, at least, is what TV sales bosses will point to as one of the factors underlying the market's current weakness. According to agency forecasts, revenue for the first quarter of 2006 is likely to be down by more than 6 per cent year on year. Predictably, given its poor audience performance, ITV1 is the worst casualty, down by more than 13 per cent year on year; but less predictable is the plight of Channel 4. Many had expected it to be the main beneficiary of ITV1's woes but it is likely to perform worse than the market average, slipping 8 per cent.

Is the slowdown attributable to budgets being kept back for the World Cup? Or are there more worrying underlying trends at work here?

Andy Barnes, the sales director at Channel 4, says the market is actually in fantastic shape when you appreciate the real underlying trends. He explains: 'Last year was phenomenal, up more than 20 per cent year on year, so even though the first quarter is down you can still argue we're showing double-digit growth across two years. That is a tremendous performance by any reckoning. Am I surprised about the first quarter being down? No, not at all. And the second quarter should see an improvement in performance.'