WPP, TRMR, SAA: Advertising stocks you may check out

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WPP, TRMR, SAA: Advertising stocks you may check out

 WPP, TRMR, SAA: Advertising stocks you may check out
Image source: Megapixl

Highlights:

  • Ofcom has said it may review the advertising regulations for TV broadcasters.
  • The announcement comes amid the rising influence of OTT platforms.

The rapid growth in technology has changed how we consume content. Online streaming is slowly taking over traditional sources like cable TV. In fact, during the coronavirus-induced lockdowns, OTT platforms witnessed a significant boost in subscriptions as more people switched from TV to on-demand content on platforms like Netflix, Amazon Prime, and Disney+.

This changing scenario also means that TV broadcasters must up their game to remain in the competition. Moreover, the regulations regarding the broadcasters also need to be reviewed to maintain relevancy in the present time. In line with this approach, the UK's communication regulator Ofcom has said that it may increase the duration and frequency allowed for advertising breaks on TV channels.

The regulator said the changes would be considered in the wake of the rising influence of OTT services.

Ofcom may review the advertising regulations for TV broadcasters amid the rising influence of OTT platforms.

Image source: Vantage_DS|Shutterstock

What are the current regulations for TV advertisements?

At present, public broadcasters in the UK are allowed an average of seven minutes of advertising per hour a day. On the other hand, private channels are limited to nine minutes of advertisements per hour. There are additional three minutes for teleshopping, which cannot be used for other forms of spot advertising.

The maximum duration of an ad break within a program is three minutes and 50 seconds. For programs up to 20 minutes long, there can be no ad breaks, while those between 21-44 minutes in duration can have just one ad break.

The regulator also stressed that there needs to be a balance between sustaining the broadcasters and safeguarding viewers' interest. It added that it was researching the viewers' perspective on the matter.

Let us explore some London-listed advertising companies and how they reacted to the news.

WPP Plc (LON: WPP)

The UK-based multinational primarily focuses on communications, advertising, and public relations, with services in 110 countries. The company recently acquired Australian marketing technology service firm Bower House Digital for an undisclosed amount. The FTSE 100 constituent holds a market cap of £9,005.23 million. Stocks of WPP have slipped by over 28% in the last six months, while the one-year return stands at -15.54%. The shares were trading at GBX 822.80, down 0.22%, as of 11:32 am on 1 July.

Tremor International Ltd (LON: TRMR)

Tremor provides advertising solutions to its clients through multiple brands that combine video and technology. The company holds a market cap of £528.70 million and is a constituent of the FTSE AIM 100 Index. Its share value has almost halved in the last 12 months, and the year-to-date return too has dropped by 35.56%. Shares of Tremor International were up by 1.94% at GBX 357.00 as of 11:46 am on Friday.

M&C Saatchi Group (LON: SAA)

The UK-based international communications network provides advertising and marketing services in several regions across the globe, including the UK, US, Europe, Africa, the Middle East, Asia, and Australia. The company's share price has slightly depreciated by 0.75% over the past one year, while the year-to-date return is -5.76%. It was trading at GBX 158.20 on 1 July 2022 at 15:51 pm.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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