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ITV Web Target Hugely Optimistic, Analysts Cut Forecasts

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Investment analysts don’t believe ITV (LSE: ITV) can hit its ambitious target of £150 million online revenue by 2010 any more than I do. One such individual cited by mad.co.uk says the figure is “unachievable”, claiming ITV will reach just £60 million – less than half the target.

ABN Amro, in a note obtained by paidContent:UK, has also cut its forecast thanks to slower-than-expected growth and delays to the Kangaroo JV. And Lehman Brothers has scaled back its forecast of £58 million web income this year to just £49 million.

Online revenue was just £33 million when the aim was announced in 2007, up by £10 million from the previous year, so the task is mighty. Michael Grade said it would be achieved mostly through online display, video and local classified advertising, plus subscription services and pay-for content. But, by ditching Friends Reunited premium subs this April in a very late attempt to compete with proper social networks, ITV slaughtered the cash cow that was responsible for two thirds of its web income

At £22 million in 2007, Friends sales had ballooned by 36 percent annually, even if it had been outmaneouvered in audience terms. Switching to an ad-funded model, Friends Reunited finds itself on the cusp of an advertising recession, and with much of its once-enviable audience having migrated to Facebook.

Progress is slow. In Q1 this year, online revenue grew a mere £1 million on the year-ago period to £9 million – way short of where it needs to be in order to reach the target.

Meanwhile, the launch of Kangaroo, which would bring in money through ads and download fees, has been delayed to 2009 by the OFT’s referral to the Competition Commission, and ITV has lost both its broadband/ITV.com MD Annelies van den Belt and worldwide new media head Martin Blakstad from the top of its digital ops.

By the time ITV releases half-year results next month, ABN Amro reckons ITV will have sunk £5 million in to online during the first six months, going toward Kangaroo, ITV.com redesign and hiring sales staff.