Olympic TV ad market to fizzle out

The TV ad market is not going to experience its expected spike in revenue over the Olympic period, with some advertisers pulling planned campaigns, according to industry forecasts.

Olympic torch

In July, the month of the opening ceremony and when both sponsors and non-sponsors were expected to spend to tap into the excitement of the forthcoming Games, the TV ad market is forecast to be down as much to 10% year-on-year, according to analysts at Liberum Capital.

During the Games in August, the market is predicted to be down about 5%.

Ian Whittaker, head of media research at Liberum Capital, says this is largely down to non-Olympics sponsors holding back on activity for fear of not achieving cut through, with some brands actually cancelling planned campaigns.

He adds: “It looks as though those advertisers not associated with the Olympics have looked at the macro environment, with the uncertainty with Greece and the Euro and decided it’s probably better to hold off spending.

“You could even argue that people won’t watch commercial TV [while the Games are on], so September will be a key month [for spend to return to the market].”

Audiences on commercial TV are predicted to drop as much as 20% in August, as viewers are expected to tune in to watch the Games on the BBC, the official Olympic broadcaster, according to Liam Mullins, director at media agency The7Stars.

“We think it’s more about the general economic outlook looking grim and I suspect the autumn will also see a level of decline, but not to the same degree as July and August,” he says.

ITV, the biggest commercial broadcaster by audience share, is expected to see its ad revenue drop 4% in the third quarter, against earlier indications of 4% growth in the period. In its full-year results for 2011, the broadcaster said it remained cautious on the economic outlook but expected to outperform the television advertising market for the full year.

Analysts at Investec have advised ITV shareholders to sell as the uncertain macro environment looks to “offset” the Euro 2012 and Olympics boost.

ITV said it would not comment on the analysts’ forecasts.

One senior marketer at a non-sponsor Olympic brand tells Marketing Week that his company would need to fork out “significant spend” during the Olympic period to achieve cut through, in months where prices are traditionally low.

He adds: “Other media [especially digital] can get you much better effectiveness of spend [at that time].”

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