Dame Carolyn McCall says she wouldn’t have taken on the top job at ITV if she thought TV was dead – as the tired conversation so often goes. But she knows the landscape has changed and that ITV is going to have to change too if it is going to successfully capture viewers’ attention and the advertising dollars that are being lost to digital platforms and services like Netflix, Amazon and YouTube.
It’s a very different narrative than in the past, McCall tells Marketing Week. “Much more front foot, all about the things we can do for advertisers.”
McCall, who was talking following her headline appearance at The Festival of Marketing earlier this month, sat client side for seven years as the boss of easyJet before she became the first ever female chief executive of ITV at the beginning of 2018. That means she knows all too well the challenges broadcasters face when it comes to convincing brands to part with their cash, in spite of TV’s proven effectiveness.
While McCall doesn’t have a background in TV (prior to easyJet she worked various roles at the Guardian, from planning to CEO of Guardian News and Media) she has an impressive track record in media and advertising and believes coming to ITV with a fresh pair of eyes gives her an advantage.
“I can be much more fresh about thinking about the future than if I had a lot of baggage and I was thinking ‘oh we did this and it didn’t work’,” she says. “Having a fresh view and looking at the future from a consumer perspective, which is what I would bring – I would always start with the consumer rather than what we do.”
ITV is certainly thinking differently about how it works with brands. Over the last 10 months it has signed landmark product placement deals with Costa and Co-op to appear on the set of Coronation Street, joined forces with charity CALM to support Project 84 (a campaign to try and prevent male suicide) and signed up 11 commercial partners for the latest series of Love Island on ITV2.
Creative agencies work and think differently. We can do a lot to engage them in what the future potential is for them to do things with us.
Carolyn McCall, ITV
Many of ITV’s sponsorship deals are moving away from traditional advertisers to digital players, which McCall uses to bolster the argument that TV works, otherwise “they wouldn’t be there”.
For example, Missguided increased sales of its clothes, which contestants wore on Love Island as part of a product placement deal, by 40% during the evenings the show aired, while Just Eat sold 500,000 meals during the X Factor final. (The proposed stricter rules around junk food advertising will undoubtedly have an impact on these prime time spots, however.)
“Advertising on TV is still the most effective way of advertising; the ROI is very strong and underindexed and underinvested,” McCall says. “But there are many other things you can do – and I don’t just mean sponsoring idents. It’s about really getting under the skin of programmes.
“We need to work with [brands] to demonstrate effectiveness and ROI, which then persuades the CFO and CEO that it’s the right thing to do at scale and meaningful levels.”
Shifting to targeted advertising
Despite all this talk of change, ITV’s business model does appear to still be working. During the first six months of the year, advertising revenues were up by 2% year on year, fuelled by a 48% rise in online advertising. Total revenues were up 8% to £1.59bn and non-advertising revenues up 14%.
But McCall notes there is “a lot more” to be done, especially around targeted advertising, which ITV will “accelerate dramatically” over the coming months on its on-demand platform, ITV Hub. With 26 million users, Hub is growing by roughly 40% year on year.
“Our aim is to get that to critical mass so we can start to do really targeted advertising at scale,” McCall says. “Don’t ever underestimate the important of mass simultaneous reach, which is quality reach, highly accurate, very transparent, verifiable. None of the problems that Facebook and Google have.”
The increased focus on and investment in the Hub is clearly a reaction to the growth of SVOD services like Netflix, which reported record subscriber growth this month, and Amazon Prime, which alongside Facebook is moving into the live sports rights sphere.
But McCall maintains the ‘threat’ is purely competitive and not existential.
“Of course it’s a competitor but they’re competitors for people’s time; it’s not ‘will TV survive that?’,” she says. “One reason we’re doing streaming is to give ourselves lots of options about how viewers view. It’s really important for us to keep our viewers so that total viewing doesn’t go down.”
McCall says ITV has to fight, compete and market, which explains the £40m ITV is injecting into media, marketing and the Hub over the next three years.
“It’s a bit like saying ‘does easyJet compete with Ryanair?’,” she adds. “Of course it does, it’s just much more directly competitive, it’s not complementary. You can be watching Netflix and ITV. One after the next.”
A modern, contemporary brand?
ITV wants to lose its “cosy and traditional” image and be seen as “contemporary, modern, relevant and digital”. It believes repositioning the brand to try and appeal to a wider audience and engage ‘light’ viewers could boost viewing figures by up to 15 million.
ITV currently ranks sixth out of 55 in YouGov’s BrandIndex rankings for the TV and radio sector with a score of 24.1 (based on a combination of metrics including quality, value and recommendation). This has remained relatively stable over the last year, showing a brand that is in good health.
However, by comparison, Netflix’s score has increased from 23.5 to 29.5 – the only player in the top 10 to see any growth, and substantial growth at that – putting it in fourth position behind BBC One, Two and Channel 4.
When it comes to quality, ITV slips down to 10th place (22.8) while Netflix remains in fourth with 30.9. For value and reputation, ITV scores 20.4 and 21.8, and Netflix 23.8 and 26.7. Both score 30.1 for satisfaction.
McCall is aware that shifting the perception among both advertisers and consumers from “TV is dead to TV is alive and well” is going to be a “constant communication job”. There will be a “very big difference” in how ITV talks about itself both on screen (to current loyal viewers) and off-screen, she promises. Off-screen in particular is where it is looking to get ‘light’ viewers to watch more ITV.
To do this ITV has created a new direct-to-consumer division to help it communicate in a much more personalised way. For example, if ITV knows somebody watches The Chase on the Hub, it will be able to recommend they play the game through the app or attend a live quiz event.
It has also appointed a new chief technology officer – Mark Smith who launched the iPlayer and who has spearheaded the Hub – and hired its first chief data officer, Karine Serfaty.
Externally, McCall wants to work closer with creative agencies. Not to the exclusion of media agencies, she says, “but creative agencies work and think differently and we can do a lot to engage them in what the future potential is for them to do things with us. They know what they can do with TV but they probably don’t know what else they can do with Hub.”
She wants to be more “visible” to clients too (ITV is in the process of setting up a new client development and strategy team) and give chief marketing officers the “ammunition” and “confidence” to speak up about what they think is right for their budgets.
“The CMOs are really important because they can change conversations in their companies; they don’t drive that quarterly thinking, that comes from pressure from the board,” she says.
“At the end of the day it is about effectiveness; if you stop being effective and pull back your marketing budget, you’re not communicating with your consumers and you go off the radar. Just doing it for the quarter, you run out of steam. But we all know while marketing will go through difficult times, it absolutely wins in the end. That’s been proven.”
There is no doubt Carolyn McCall believes in ITV’s future and her willingness to adapt, evolve and open doors to commercial partners in a way that ITV hasn’t done before will undoubtedly turn the heads of advertisers across the UK.
But changing perceptions doesn’t happen overnight and ITV has more than six decades of ‘cosiness’ to shake off. It is going to take a lot of time, effort and money (which its 2018 Palooza showed it definitely isn’t short of) to prove to viewers and brands that ITV is, as it keeps saying, “more than TV”.