How TV advertising’s ‘perfect storm’ has given smaller firms a bite at the cherry

With the public told to stay at home, high streets shut and travel halted, many of the UK’s biggest advertisers from McDonald’s to Sky froze their marketing budgets during the coronavirus lockdown. TV advertising bookings were reduced to a trickle, forcing broadcasters to slash the price of airtime to levels not seen in three decades, opening the door for dozens of small firms to make their first ever TV commercials.

TV advertising in pre-Covid times was generally too expensive for companies with modest marketing budgets. A 30-second ad during primetime shows such as Coronation Street or The X Factor would have cost between £50,000 and £100,000. To run a decent national TV ad campaign an annual budget of £2m is usually a minimum.

The coronavirus pandemic, however, prompted TV ad spending to plummet by £500m between March and June. ITV reported an unprecedented fall of 43% in the second quarter, the steepest in the company’s 65-year history.

Broadcasters such as ITV and Channel 4 have responded by launching schemes to subsidise smaller advertisers to allow them to make the jump to TV for the first time. Well over 50 have taken advantage of the opportunity, including Naked Bacon, the disinfectant range Zoflora, the dogfood delivery service Butternut Box, the energy drink brand Tenzing and the home language learning company Duolingo.

“When I spotted the email from ITV in my inbox I jumped for joy to be honest. This is what the company needs right now,” said Bethany Heddle, the marketing manager for The Great British Porridge Co, whose first TV ad will be broadcast in September.

The Worthing-based company, which featured on Dragons’ Den last year but declined investment offers from the BBC Two show’s business stars, is looking to build its brand nationally after striking deals with Sainsbury’s, Waitrose and Ocado.

“Our ad budgets have been small and national coverage and awareness is the next step,” Heddle said. “Companies that are seen on TV are viewed by the public in a very different light than those that aren’t. It shows you are taking the next step of growth. TV has that brand-building ability.”

Bringing on board lots of lower-budget advertisers is not going to solve the revenue black hole that broadcasters face – ITV’s share price has fallen 60% since the start of the year – but a longer game is being played here. With many smaller brands turning to the low-cost attraction of digital marketing, where Facebook and Google hoover up nearly all of the spend, broadcasters want to prove that TV is still an option.

“There are a lot of companies who get to a certain size with paid search and social media ads but are at a point in their evolution where they need to make a step change to TV,” said Kelly Williams, the managing director of ITV’s commercial side. “We have had a number of schemes for attracting new advertisers under the umbrella ITV Backing Business; it is going to be our Get Brexit Done phrase for the next six months or so.”

The TV ad market is forecast to bounce back remarkably rapidly. Media industry sources expect it to be down only a few percentage points in September, which means prices are rising again, but there are still converts to be had.

Duolingo, a language learning app with 13 million UK users, seized the opportunity to get on TV, running its first ad campaign in June. “I’ve always been a big advocate for TV. My background is TV, I understand it and had wanted to start using it,” said Colin Watkins, its UK country manager, who has previously worked at the BBC, Channel 4 and Sky.

“Then came the perfect storm. Everyone was in lockdown, TV viewing was going up and TV [advertising] prices had depressed so much it was almost a no-brainer that it would work.”

He said although the TV ad market in June had been so extraordinary, a never-to-be-repeated bargain, his company could not use it to work out whether TV should be a permanent part of its marketing strategy. So Duolingo has another TV campaign scheduled to launch on Monday.

“September is not as cheap. We are not going to get the extraordinary return-on-investment results we got in June, but this one will give us a good benchmark for the future,” Watkins said. “We want quality users, and TV reaches a broad quality audience. We are planning for more TV in January, we are committed to TV advertising in the UK.”

Broadcasters will be hoping many more new advertisers attracted to the medium since the pandemic will take the same view.