Youtube adverts ‘far less valuable than traditional TV’

YOUTUBE adverts are far less valuable than traditional TV, broadcasters claim, as they battle to win over brands after a deep slump in advertising.

A study of almost £2bn in marketing spend, published by TV industry body Thinkbox, found that TV advertising accounts for almost 55pc of ad-generated profits over a two-year period, generating £5.61 for every pound spent.

That compares to online video – consisting mostly of Youtube – which accounts for just 3.4pc of profits and generates £3.86 for every pound spent.

While the study found that online ads offer the highest immediate payback for br a nds, TV c a mpaigns have a longer-lasting effect, accounting for nearly two thirds of all profits beyond the first week of advertising.

The research highlights efforts by traditional broadcasters to rekindle advertising after deep cutbacks in spending across the industry.

ITV’S ad revenues tumbled 15pc last year and the Love Island broadcaster has stepped up its cost-cutting plans. It has refused to rule out job cuts as it tries to reverse a slump in its share price.

Meanwhile, Channel 4 has embarked on the biggest round of job cuts in its history and outlined plans to sell its London headquarters. Alex Mahon, the chief executive, has warned the company may need to tap into an emergency £75m debt facility to help shore up its balance sheet.

The slowdown in advertising spend comes amid a broader economic downturn, as surging inflation and higher interest rates prompted many companies to tighten their belts.

But broadcasters are also trying to stem an exodus of viewers to deep-pocketed US streaming rivals such as Netflix and Disney, which have recently launched ad-funded tiers.

Younger audiences are also flocking to social media apps such as Tiktok and Snapchat, as well as Youtube.

The latest figures from the Advertising Association showed ad spend on search and online display grew by almost 25pc in the third quarter of 2023, compared to a 3pc decline for TV.

Broadcasters are now pinning their hopes on their own streaming services such as ITVX, which posted growth of more than 28pc in the third quarter.

Matt Hill, at Thinkbox, said: “The fundamentals of advertising effectiveness still apply. It’s great to see TV performing so strongly at whatever speed you want to drive profit, but this is about the strength of advertising as a business investment that grows the bottom line and grows the economy. I hope business acts on these findings.”