Kate Bulkley, Media Analyst.

Focus on local can pull in viewers

By Kate Bulkley

Broadcast News

Share |

For Broadcast September 11, 2019

By playing to its strengths, STV is winning over audiences and advertisers, says Kate Bulkley

ITV2’s Love Island and BBC1’s EastEnders are getting a run for their money from an unlikely Scottish competitor – a show about local beauty spots presented by amiable STV weatherman Seán Batty.

Sean’s Scotland is a prime-time hit on Scottish national broadcaster STV, achieving a 27% share at 8pm on Monday nights, beating its rivals in local ratings.

The show’s success is a fillip for STV and helps prove a wider point: a local topic presented by local talent can help change the fortunes of a domestic broadcaster.

As broadcasters adjust to new consumption habits and the data might of the FAANGs, STV is focusing on its local strengths to win both audiences and advertising. It is ramping up commissioning to find hits that work in Scotland – and can travel, too.

For example, it’s using its ITV opt-out slots to pilot new shows like quiz format The Cash Machine, hosted by Lorraine Kelly, which took a 19% share in its 7pm slot on Sunday night, representing a 30% lift on the slot average.

STV chief executive Simon Pitts is using John de Mol as the blueprint: the Dutch formats master has long been piloting shows on local channels in Holland, proving their potential and then selling them globally. Scotland and the Netherlands are a similar size, so Pitts sees the opportunity.

Scots watch 10-12% more television than the average UK viewer, according to Ofcom, and STV is capitalising on that with a new approach to attracting advertisers. Taking a leaf out of the playbook of German broadcaster ProSiebenSat.1, STV is offering discounted airtime to regional advertisers who can’t afford TV ad prices.

Additionally, small start-up companies can receive airtime discounts in return for a share of their future revenues. Since launching an advertising growth fund in May 2018, STV has agreed 216 discounted advertising deals and more than 60% are with companies new to TV.

Most of the STV Growth Fund deals are ‘match-funded’, so STV covers 50% of the campaign’s cost by using its advertising trading surplus, which is healthy because of its strong ratings performance. Therefore, the ‘discounts’ don’t hit the bottom line.

“A whopping 70% of STV’s new advertisers see television as the most effective marketing tool they’ve used – and its bottom line is benefiting too”

The ads can be made in-house at STV, which provides audience research data outlining their effectiveness using a 25,000-strong panel, Scot-Pulse. Pitts knows local TV advertising works and told me that the rebooking rate is nearly 50%, with 90% saying their footfall has increased and many reporting profits are up.

Those new advertisers can see TV advertising works – STV has found that a whopping 70% of new advertisers see the medium as the most effective marketing tool they’ve used – and the broadcaster has found its bottom line is benefiting too.

STV’s recent half-year financials showed improvements in revenues from digital and regional ads, offsetting a 6% fall in national ad sales and keeping overall ad revenues essentially flat.

Even as anxiety over Brexit continues, STV is still drawing in advertisers. To date this year, leisure and automotive advertising are each up more than 100% and retail is up 52%. Pitts says this is because TV advertising offers affordability other avenues can’t.

He knows that making TV advertising accessible is key, but he is also counting on the growth of STV Player, which now has 3 million registered users. STV sells all advertising on the VoD player, including for third-party shows, which now represent a third of its programming.

STV’s margin on digital ad sales is now 53% and one equity analyst, Alasdair Young of Panmure Gordon, has forecast that STV Player’s launch on Sky later this year may add £1m of pre-tax earnings to STV’s bottom line.

By playing up local and Scottish, STV has delivered its best viewing share in a decade. That’s an encouraging figure and proves that acting local can have an outsized impact. Cue Seán for more.

Columns Menu