TV advertising share deals

TV share audits 

The AA/WARC report found that TV advertising spend fell almost 9%, dropping from £5.3bn in 2022 to £4.9bn last year. Dame Carolyn McCall, the chief executive of ITV, last year said that the industry faced the “worst advertising recession since the global financial crisis”. 

ITV, which recently announced it was cutting up to 200 jobs, said in May that there had been signs of a recovery. Total advertising revenue rose by 3% in the first quarter of 2024, with the second quarter expected to be up about 12%. 

Since 2003 TV advertising has predominantly been traded via “share deals” between the media agencies and the TV sales houses (C4, ITV and Sky). The sales houses provide agencies a negotiated discount off their pricing in return for a guaranteed percentage of an agency’s TV spend. 

This trading landscape has massively evolved since 2003. Back then there was limited choice in where to advertise on TV beyond the 3 major sales houses.  

In 2003 ITV1 had over a 60% share of all commercial viewing and as such were regulated through CRR (post the Carlton and Granada merger) to police concerns over them having a monopoly over the TV marketplace and calls for transparency over how they set their pricing. Today with the prolification of digital channels and vastly more viewing choice ITV1’s share of commercial viewing is now closer to 20%. 

So arguably for broadcasters today getting their share of TV advertising has never been more important. 

The ‘grey’ market 

TV Share deals have long been audited. Their aim to make sure that broadcasters are getting their full contracted share of TV advertising spend from agencies. Broadcast revenue is clearly defined in the Broadcasters’ terms and conditions so why would there be any greyness over what’s captured and what’s not within broadcast revenue?

As with so many revenue share arrangements the complexity of inclusions and exclusions typically increases with time. New media types evolve, trading methods and pricing arrangements become more complex. The evolution of TV trading has only muddied the water of what should be in and out of TV share. Just some of the complexities as to what should be included within broadcast TV airtime include; 

Barter arrangements, Equity for airtime, Programme finance, Sponsorship, Video-on-demand, AdSmart, Bundled deals including TV and other multiple media forms, UK airtime within global contracts. The list goes on and is ever increasing as agencies seek new and more profitable ways to buy and sell media inventory. 

The future of TV share deals 

This has long been in question. Originally share deals were set up to ensure in a growing market broadcasters were getting their share of growing ad spend. Of course share is also very important in a declining market. However a volume based model where agencies commit to a minimum spend threshold with a broadcaster in lieu of pricing discounts (irrespective of share) is also appealing from a budgeting perspective. The use of volume based deals became increasingly prevalent through Covid.

With the growing complexity of TV trading there are an increasing number of parameters which are outside of share that broadcasters want to get their share of. VoD being an obvious one. So how long will TV share deals be around?...the jury is out on that one.