ITV slightly outperformed a buoyant UK TV advertising market in 2010. We currently estimate that the total market grew 14 to 15 per cent last year. This was mostly due to impact inflation: adspend increased by 15 per cent while commercial impacts (actual time spent viewing ads on commercial channels) increased by six per cent. ITV1 share of viewing decreased to 16.0 per cent from 16.7 per cent (by comparison the French leader TF1 fell to 24.5 per cent) but this decline was counterbalanced by the success of ITV digital channels, so that the share of viewing of ITV family remained almost flat at 22.9 per cent in 2010 compared to 23.1 per cent in 2009. ITV family share of commercial impacts (SOCI, excluding BBC channels) remained about flat at 39.8 per cent (2009: 40 per cent), but the overall increase in TV viewing last year (see our analyst commentary of 16 February) means that the volume of impacts increased from last year. ITV family now includes HD feeds and the ITV1+1 feed launched in 2010.

The online performance was disappointing, by ITV management's own admission. ITV.com online video metrics are at a similar level to Channel 4's whereas, given the brand's strength and the programme lineup, it should be closer to the BBC's. Total video views increased nine per cent to 234m and long-form views (typically soap episodes) increased 79 per cent to 129m, but these results remain low compared with the BBC's 700m views in 2010. ITV management called the performance 'subscale' and blamed the poor technical quality and capacity of the current platform, as well as the fact that not enough content was put online. The online coverage of the FIFA World Cup for instance, was poor and a missed opportunity for ITV. ITV.com also suffered from the lack of reality TV boosts in 2010, compared with the previous year where short-form views and - to certain extent - long-form views were driven by the huge buzz around high-profile contestants (esp. Susan Boyle in The X Factor). ITV is now restructuring its online team and platform. Online is mentioned as a key priority among the £25m of operating investment and the £80m of capital expenditure for 2011.

In terms of 2011 outlook, ITV management forecasts ITV family NAR to be up 12 per cent in Q1, and initial outlook for the month of April is between eight per cent and 12 per cent rise. However ITV management remains cautious about full year growth forecasts as comparatives with 2010 performance become less favourable later in the year (2010 growth was significant in Q2 and Q3, June alone was up 40 per cent). It can also be expected that certain categories, such as Retail (number one category in 2010 with £341m, up 24 per cent), will particularly suffer in 2011 due to a combination of factors: VAT rise, unemployment rise, food inflation, fuel price rise, stagnant purchasing power and possibly higher interest rates. The Retail and Household Stores (sixth biggest) categories represented 28 per cent of ITV NAR in 2010, compared to 26 per cent in 2009. Home Retail Group, the owner of Argos and Home Base revealed that Q1 sales were approximately five per cent down year-on-year. John Lewis (department store) and Primark (budget clothing chain) reported declining sales, and even low-cost supermarket chain Asda reported flat sales. The only other category to outperform was Publishing and Broadcasting (which includes Sky, Virgin and internet services like Microsoft or Comparethemarket.com). IHS Screen Digest is currently expecting ITV Plc broadcast TV revenues to be up 2.4 per cent in 2011 in a market growing by 3.0 per cent.

In terms of regulation, ITV was the first broadcaster to take advantage of the relaxation of product placement rules that came into effect on 28 February (see our analyst commentary of 16 March 2011). ITV Plc management also noted with satisfaction that a House of Lords Committee recommended both CRR abolition and minutage reduction on digital channels, although no effective change is expected for the next two years.