Channel 4 banks on innovation to boost 2013 revenue

Channel 4 has put investing in innovation around advertising and new programme formats at the heart of its growth strategy for 2013 as it looks to improve on the flat advertising revenue and missed targets for its share of viewing versus rivals it reported last year.

Channel 4 Grand National
Channel 4 will be hoping programmes such as The Grand National and new ad formats will boost revenues in 2013, after a

The broadcaster reported “flat” advertising revenue in 2012 of £844m, down from £845m as it was impacted by major events such as the Queen’s Diamond Jubilee and The Olympics being broadcast on rival channels and a weaker ad market compared with previous years. Total revenue dropped 1.7 per cent year on year to £925m.

Non-traditional spot revenue grew 50 per cent year on year to £36m. It attributed this growth to strong take-up of its new advertising format fuelled by initiatives such as its scheme to partner with brands and media agencies to merge their databases with its own to target specific individuals via 4oD . Advertisers including O2, Microsoft and Unilever are some of the first brands taking part in beta trials of the new demographic targeting format.

The Channel 4 sales house, which trades adverting and sponsorship deals for its own portfolio as well as UKTV and the soon to launch BT Sport, beat its target of driving £1bn in revenue for the second consecutive year. Channel 4 claims its sales house now has a 27.4 percentage share of the total TV ad market.

Channel 4 reported an operating loss of £29m in 2012, down from a profit of £22m the previous year. It said this “planned deficit” was due to deploying funds from a cash surplus built up in 2010 and 2011 to invest in its broadcast of the Paralympic Games, creative renewal, the launch of new channel 4Seven and its data strategy.

In Channel 4’s annual report, chief executive David Abraham says to operate “safely and effectively” the broadcaster needs average cash reserves of £200m to manage working capital requirements and to provide a “safe buffer against shocks to the advertising market”.

It plans to draw on current reserves of £261m in 2013 to support a return to break-even in 2014, providing TV market conditions remain close to flat. It expects improved performance to come from a focus on innovation in trading approaches, continuing efficiency improvements and success with new programme titles such as the forthcoming comedy from Shameless writer Paul Abbott, “No Offence” and a tweet-to-play-along-gameshow called “Was It Something I Said”, starring David Mitchell.

The broadcaster will also be introducing a new second screen app next year, which will allow viewers to connect with a number of its programmes on their mobile and tablet devices, rather than having to download individual apps. The app will also have a number of slots for advertising and sponsorship.

Speaking at the annual report presentation at Channel 4’s London headquarters today (14 May), Abraham described the reinvestment of cash into content and ad formats as a “dividend to viewers”.

The broadcaster claims one in three of all 16-24 year olds in the UK are now registered with Channel 4 – of more than 6.3 million registrations in total – underlying its “long-term” commitment to becoming a “pioneer” in viewer engagement to enhance its commercial and creative offering. This week the broadcaster informed its registered users it was making an adjustment to its privacy policy in order to obtain more information at the point of registration, which it says will help it deliver a more personalised advertising experience.

Channel 4 had aimed to achieve a main channel viewing share of between 6.8 and 7.1 per cent but only achieved 6.6 per cent, while its total portfolio share was targeted at 11.6 to 11.9 per cent but only registered 11.5 per cent.

Abraham claims the total erosion of its viewing figures is at its lowest for five years and that public perceptions of the brand as “taking the lead”, “experimenting” and “challenging prejudices” are higher than its rivals. Much of these metrics were boosted by its broadcast of the Paralympics, which 64 per cent of people said they felt more positive towards disabled people as a result of watching its coverage, according to a Bournemouth University Media School study.

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