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  • Writer's pictureLucas Bergmans

ITV's 'media-for-equity' proposition: the right approach for you?

Updated: Jan 4

Big commercial TV stations are only interested in big established advertisers, right?


In the UK, the leading commercial TV media companies have dedicated teams to help scale-ups take their first steps into this new channel (for them) and offer a range of solutions tailored to their needs. This includes discounted rates on media, support on creative development and production, measurement and insight. One key part of the offering is ‘media-for-equity’ whereby the TV company takes a stake in the business in return for media value that can be used to drive growth for a scale-up. The likes of Channel 4, Sky and ITV have been running media-for-equity programmes successfully for a number of years now and see it as a key part of their commercial strategy as it brings in new advertisers and new categories to TV.

In this second part of my ‘Adventures in TV’ series, I spoke to Sheena Amin, Director of ITV’s media-for-equity division - ITV AdVentures - about media-for-equity and the key role it plays for ITV and the scale-ups that they support.

Sheena Amin, ITV AdVentures

Sheena, thank you very much for joining. Why don't you start by giving us a bit of an overview of your career highlights to date, and then your current role at ITV AdVentures?

I've had a pretty unique and varied career, I would say. I've worked across both venture investing and in TV media. I was at Summit Partners, which is an American growth equity investment firm, and I worked across both their venture and private equity teams. And that was an incredible experience in terms of being able to partner with, support and learn from some really inspiring founders, entrepreneurs and businesses.

I also worked at Virgin Media for a number of years, where I did a variety of roles across everything from strategy to commercial to business development. I got to launch some cool and exciting products, propositions and joint ventures. Probably the highlight there was launching our partnership with Netflix back in 2013 which at the time was a global first, the first time a pay-TV operator partnered with a streaming service back when the jury was still out as to whether they were a friend or foe. I think it was a pretty pioneering and bold thing to do at the time but something that definitely paid off in the long run. A definite career highlight, I would say.

And then I was approached about an opportunity to join UKTV, which is a channels business, now owned by BBC studios. That was an opportunity to launch and grow a media-for-equity fund that they wanted to embark upon. For me, it was a perfect role in terms of blending my investment and my TV media experience. I've started businesses of my own in the past and I really liked the idea of being able to grow and build something with the autonomy that that involves, albeit with all the de-risking that having a big corporate backing you gives. It ticked a lot of boxes for me and it married all of the experience I'd had in my career to date perfectly. I did that for almost five years.

And then I got a call from ITV saying that they'd recently also launched their own media-for-equity fund and they were looking for someone to come in and really grow and scale it. Naturally I gave it considerable thought, but fundamentally from my perspective, if I'm going to run a media-for-equity fund in the UK, there is no bigger or better place to do it than here at ITV. So, yes, I leapt at the opportunity. And I think I would definitely say that what I'm doing now - running ITV AdVentures - is probably the highlight of my career to date. I think the scale of ambition that we have here is just unparalleled. ITV is the largest commercial broadcaster in the UK and therefore I'm in a very unique position to be able to help game-changing category-defining consumer start-ups to become brand famous and grow and scale their companies to new heights. And that's something that I'm just über-passionate about. I love what I do.

Sounds fascinating. I'd love to hear more about where the idea of ITV AdVentures came from and how it works, particularly the media-for-equity side of it.

"The hope is that (...) we will enable these businesses to acquire new customers to build their brands and get to breakeven much faster than they would have been able to do otherwise."

I think there are three drivers behind why we set up our media-for-equity fund. The first is that it's a really important part of the wider revenue diversification story at ITV. One of the main drivers - probably the primary driver - of why we launched the fund is around diversifying our revenues, creating a new revenue stream and ultimately making some smart bets in companies that are going to deliver a financial return on exit. So the financial return and creating a new revenue stream is an important part of why we are doing what we're doing.

There's another one, which I'd say is a more strategic rationale, and that is around bringing digitally native direct-to-consumer brands into the world of TV advertising. Either much earlier than they would have been able to do, or companies that never would have had TV on their radar and proving the case as to how ITV can be an important scaling channel for them. And the hope is that having proven the case for ITV and TV more broadly, we will enable these businesses to acquire new customers to build their brands and get to breakeven much faster than they would have been able to do otherwise. And once they get to a position where they are cash generative, they then hopefully become cash advertisers with ITV and therefore there's a real strategic driver around growing the overall advertising market and bringing new-to-TV brands into market.

And then the final one is a learning one in terms of building our own expertise and experience in direct-to-consumer. The more media-for-equity deals we do in this space, the more we develop our own knowledge and expertise, particularly around D2C and how our media can really help to drive the growth of consumer businesses. And that learning will definitely apply to future deals and in future partnerships and really build out our expertise even more deeply.

From the point of view of a scale-up or a DTC (direct to consumer), what are the benefits of a media-for-equity deal as part of their journey to scaling up versus any other approach they might choose?

"We see ourselves as a very experienced partner which brings a high degree of expertise and knowledge and, crucially, skin in the game."

I'd say the benefits are multifaceted. I think there's a definite benefit around capital allocation: the fact that you can spend millions of pounds on TV advertising without having to spend any cash. You're able to do a media-for-equity deal where you give up some equity dilution in return for the commercial airtime that we invest. In doing that, you're able to preserve your cash position and thereby extend your cash runway and use that cash to invest in other parts of growing the business. But at the same time very much supercharge your growth, because you are still investing millions of pounds into brand building and all the broader benefits that provides. I'd say that's a really important one.

And then at ITV, in terms of our media for equity offering, we offer highly favourable media terms and therefore there is not just a capital allocation benefit, but also a capital efficiency benefit. By doing the media-for-equity deal with us, we can make that budget work harder for the start-ups that we invest in and partner with. That's a great benefit to be had.

Then I'd say more broadly at ITV AdVentures, we see ourselves as a very experienced partner which brings a high degree of expertise and knowledge and, crucially, skin in the game. That is everything from a dedicated media planning team that works hand-in-glove with each of our investees to really make sure that we're building bespoke and flexible media plans for them that will really drive success. A measurement and innovation team that can help to make sure that we're accurately measuring and attributing the impact that the TV campaign has had and, crucially, using that data to continually optimise the campaigns when they're live on air. And then an in-house creative team that - to the extent that it's helpful and wanted from the start-up’s perspective - can help them to do everything from scripting stage to going out and shooting the TV ad. But equally, if they want to go and partner with an external agency, we have a great rolodex of external creative agencies that we’ve pre-vetted as being a lot more start-up friendly and agile. And we're able to make those introductions. So pretty much everything that you need to build and create a successful TV campaign, we are able to provide.

You must have a lot of different scale-ups that you could invest in. How do you choose which ones you partner with?

"It's so important that (...) we're going into that deal with a high degree of confidence that we are going to make a genuine difference in the scaling journey of that start-up as a result of our investments."

We have a very clear focus around investing in mass-market consumer businesses. Businesses where advertising on TV has to make sense. That's a very clear focus and a no-brainer. And then in broader terms I look for very similar things that a traditional VC or cash investor would: businesses that are led by strong management teams and where there is a large addressable market opportunity to go after. Businesses with a strong product-market fit that's established and good unit economics, or at least unit economics that are trending in the right direction.

And then beyond what a typical investor would look at, one of the things that we spend a lot of time understanding and getting to strong conviction around, is something that I call the ‘media-customer fit’. And that is really understanding whether there is a strong overlap between the target customer base of that company and our audience. It's so important from our perspective that, when we agree to do a media-for-equity deal, we're going into that deal with a high degree of confidence that we are going to make a genuine difference in the scaling journey of that start-up as a result of our investments. So having really strong conviction around that element is crucial.

And, as you mentioned before, you talk to a lot of people that are approaching broadcast TV for the first time as part of their journey. What are the main challenges for scale-ups that are doing that for the first time?

"(There are) lots of ingredients for success and you won't necessarily be able to simply apply what you do and the learnings that you've had in a digital performance marketing world to TV."

I'd say there are a fair few challenges, if I’m being honest. Firstly, I would say that there's a knowledge gap to be plugged. Most of these businesses are digitally native start-ups that have built their business through performance marketing, and that is a world that they know very well. And when it comes to thinking about TV and mass-market brand building, it can be a very unknown, opaque black box. And the figures involved in terms of the level of spend is incredibly high, so the stakes are high, but the knowledge isn't necessarily there.

So, I think it can definitely be quite a daunting thing for a digitally native or early-stage start-up to embark upon. There's lots of things that you need to get right for it to work. Everything from the media plan, through to the creative that you go out with, measuring and attributing it properly such that you're then optimising and learning and consequently iterating. Lots of ingredients for success and you won't necessarily be able to simply apply what you do and the learnings that you've had in a digital performance marketing world to TV. So I think that's where our offering and ITV AdVentures is so key in partnering with the businesses we invest in, and guiding them and supporting them and helping them navigate this fairly unknown and opaque world.

And I would say one of the main challenges to overcome, at least from what I've seen, is around the mindset and the measurement. I think the two go hand-in-hand. With performance marketing, it's highly measurable. You know exactly what CPA (cost per acquisition) you're paying, you know exactly what impact it's driven and it's pretty much instantaneous. Whereas in the TV world, TV has a much broader impact. It's more often than not delivered over a longer- term time horizon. And so, as a result of that, the impact is a lot harder to both understand and measure, so it requires a very different mindset and set of success criteria going in.

And have you got a couple of examples of brands that you have worked with successfully with ITV AdVentures recently?

Yes, I'd call out two. The first would be What3Words. Chris and his team have done a really great job of using media-for-equity as a really important funding model, not just in terms of brand building, but they've used it as the linchpin of their international expansion strategy. They did a number of media-for-equity deals. Firstly, in the UK with us. They did a German media deal when they were launching in Germany. They did a £10 million pound-plus deal with Brand Capital International in India. They used it across a number of key international markets as a way of investing heavily when they launched and they recognised quite early on that consumer adoption by building brand awareness was key. They were able to get app downloads and drive the adoption of the service through targeting the consumer. And what they've seen as a result of that is that they were then able to unlock a number of B2B partnerships with everything from the automotive sector in terms of integration with navigation systems in cars, through to delivery companies, logistics companies and the full ecosystem that they need for the business to grow and succeed. And it all started with driving consumer awareness and adoption through brand marketing and TV.

And then another one where we've done a media-for-equity deal is a company called Spoke. There we have proven that ITV can be a really successful customer acquisition channel and scaling channel for them. On the back of what they've seen, from a business perspective, that TV is able to do, we've made a follow-on investment and they're very much doubling down on TV which is fantastic to see.

Great examples. So, this blog is aimed at scale-ups - what would be your top three tips for any scale-ups looking to use TV for the first time - whether it's with ITV as a media-for-equity deal or in other guises?

"The great strength of TV is that it is a mass-market brand building channel and therefore you have to view the results and the success criteria over a longer-term view than you will for digital channels."

My first tip is make sure that you are operationally ready to scale. When it comes to TV, you only get one opportunity to launch and you absolutely want to make the most of it. So, having confidence that your back end, whether it's your supply chain, your logistics, call centres etc everything operationally is geared up and optimised. And also, your customer conversion is optimised when you're getting people in at the top of the funnel. TV will generate a huge influx of demand once you launch, so make sure that the whole system is working as efficiently as possible such that you can then monetize that demand that you generate and make the most of the opportunity that TV provides.

The second is to think about TV within the context of an omnichannel marketing mix. TV has really great amplification benefits when it's done alongside other marketing channels, both digital and other offline channels. We definitely see the highest success rates across the board when TV is part of a broader marketing mix.

And then the final one I would say, is to make sure you're evaluating the impact of TV in the right way. It comes back to what we talked about earlier: the great strength of TV is that it is a mass-market brand building channel and therefore you have to view the results and the success criteria over a longer-term view than you will for digital channels. In the long run, TV does have one of the highest ROI in terms of advertising spend, but it won't happen instantaneously by any means. So make sure you have invested in the right set of tools for measurement and attribution. And make sure you are factoring in the longer-term multiplier effect that TV has such that you're evaluating it fairly. Then you can make the right investment decisions in the long term when you're thinking about everything that TV can drive for you.

Great tips. Thank you. And what would be one mistake that people should avoid?

I would say don't take your performance marketing ad and stick it on TV. They are different marketing channels and therefore have different ingredients for success. A recent Thinkbox study showed that 47% of people said that a TV ad would make them feel emotional, compared to 17% of social media ads and just 10% for YouTube. TV is unique in that it's a very rich audio-visual format and you've got 30, if not 60, seconds to play with. So, you should be looking to tell a story and create a narrative. If you can evoke a real emotional response and thereby build a genuine connection with a viewer and ultimately your customer, then I think you'll do really well on TV.

Thanks, Sheena. That's all incredibly interesting and really helpful. Thanks for your time!

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