ITV’s target of increasing online revenue to £150m a year by 2010 is unachievable, according to media analysts, and ABN Amro forecasts a shortfall of £90m.
The analyst predicts that ITV will pull in just £60m of revenue from online in 2010, up from £33m in 2007. It attributes the slow growth to the delayed launch of on-demand joint venture Project Kangaroo, the removed subscription model for Friends Reunited and a softening of CPM (cost per thousand) on online ads.
Project Kangaroo, the internet on-demand joint venture between ITV, BBC Worldwide and Channel 4, was due to launch later this summer as a commercial rival to the BBC’s iPlayer. But last week, it was referred by the Office of Fair Trading to the Competition Commission, delaying the launch until 2009 at the earliest.
ITV executive chairman Michael Grade announced the broadcaster’s intention to bring in £150m in online revenue by 2010 in September last year, with at least 75percent of those coming from online display, video and local classified advertising.
But the City is dubious it will reach the figure. Lehman Brothers has cut its prediction that online revenues would grow 75percent this year to £58m, to 48percent, accounting for just £49m.
ABN Amro also suggests that advertising on flagship channel ITV1 will fall by 5percent in 2008, from a previous forecast of a 3percent decrease, with a further 3percent decline in 2009. It predicts a 1percent decline across the ITV family of channels in 2008, because of an overall “deteriorating” ad market.
Analyst Paul Richards of Numis Securities points to a negative macro economic outlook with key advertising sectors, such as retail (20percent of ITV net advertising revenue), automotive (8percent) and financial (10percent), “looking challenged”.