RTÉ and TV3 need some love from advertisers

It has been a fortnight of television season launches, with a blitz of celebrity and executive smiles from the grass at Montrose (RTÉ) and the steps of the National Concert Hall (TV3). But away from the posing, the speeches and the preview videos, sober financial news reports depict less happy scenes.

It has not been the prettiest of years in the advertising market, and free-to-air broadcasters across Europe are feeling the fallout.

To recap: shares in WPP, the world's largest advertising group, fell sharply last week after it was obliged to cut its sales target for the second time in six months. The reason? Curbs on marketing spending by consumer goods giants such as Unilever, Nestlé and Procter & Gamble triggered by weak global economic growth and local nightmares such as Brexit.

This week it was the turn of German broadcaster ProSiebenSat.1, home of Germany's Next Top Model, to see its share price plunge (to a four-year low) after it warned that television advertising revenues would decline in the third quarter – it had already cut its advertising outlook twice this year.

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ITV, the owner of the UTV channel in Northern Ireland, is one of the larger companies exposed to both the cyclical winds and structural trends in the advertising market. Earlier this year, it was talking about a “marked decline”.

Likewise, TV3 Group secures almost all of its revenue from advertising with no public funding to prop it up. "If you think Brexit affects RTÉ, let me say Brexit is having twice the effect on TV3," said TV3 managing director Pat Kiely ahead of the broadcaster's season launch.

Luring an audience to big productions such as Ireland's Got Talent is only part of the battle – the other part involves persuading mass-market advertisers that this television audience is one worth chasing even when they're in general retrenchment mode.

Virgin Media-owned TV3 has noted the appearance of some “green shoots”, while some of the big household goods companies, notably Procter & Gamble, have pulled back on their enthusiasm for digital advertising.

But both Virgin’s welcome investment in TV3, and RTÉ’s cost-cutting voluntary exit scheme are taking place at a time when the sands are shifting. Broadcasters need the ad market to come good sooner rather than later to protect their content budgets and avoid succumbing to a vicious circle of decline.