They usually say that the brash, marketing-spiel world of advertising is a sound early indicator of good or bad economic times.
That’s because when tougher times are sensed around the corner the first thing businesses cut back on is advertising, and when an upturn is viewed in prospect it is one of the first increases in business investment we see.
That’s why television broadcaster ITV’s warning of a slump in TV advertising amid recent “political and economic uncertainty” is a concern.
Quite simply, Trump, Brexit and sluggish global economic growth are not likely to disappear any time soon. ITV, whose host of shows includes the X Factor, said in its trading statement yesterday that advertisement revenues slid 4 per cent in the third quarter and are expected to tumble 7 per cent in the final three months of the year.
Because of a better performance earlier in 2016 it means annual revenues will fall 3 per cent over the full year, hardly disastrous but still creating concern that, against the volatile political backdrop, future performance may be patchy.
ITV chief executive Adam Crozier said yesterday: “In recent weeks the political and economic uncertainty has increased and we are currently seeing more cautious behaviour by advertisers.”
The company revealed that net advertising revenues fell as much as 11 per cent in October. On the plus side, ITV under Crozier has been no slouch in costcutting and seeking alternative revenue streams, not least its successful production business. Non-advertising revenues jumped 15 per cent to £1.3 bilion in the first nine months of 2016. We may see ITV’s caution voiced in other parts of the advertising industry, but it seems reasonably well placed to weather the current uncertainty.
Bovis Brexit ‘bump’ temporary
Bovis Homes has become the latest housebuilder to say that June’s Brexit vote caused only a temporary bump in its smooth progress.
Just like some of its competitors have also said, that macro uncertainty is clearly outweighed by a decent housing market, with demand outstripping supply, and sales, prices and margins showing steady improvement.