Almost 10 years after its launch, Five has made tentative steps into the digital TV market with spin-off channels Five Life and Five US. In the intervening years the market has changed beyond recognition, and consumer interest in new channels has dried up almost as quickly as the careers of the Spice Girls, mascots of Channel 5's original launch campaign in early 1997.
There is no doubt that as the last terrestrial entrant to the market, Five is late to the digital party. As the smallest terrestrial broadcaster, there is a question as to whether it can afford to compete with the deep pockets of bigger rivals including Sky and establish credible brands without cannibalising its existing, declining terrestrial audience.
Kathleen Rigg, joint head of TV at media agency Initiative, says it has been a difficult year of trading for Five. 'Its audiences have plateaued and are showing signs of decline,' she says. 'As with many terrestrial broadcasters, it's a case of managing this, which is why these digital channels are so vital to its future success.'
Establishing a presence in more upmarket digital homes is key to driving revenues. Yet, even though it is now nine years since Dawn Airey, then programme controller at the broadcaster, famously said Channel 5 was about 'the three Fs: films, f***ing and football', the broadcaster has still to ditch its downmarket image.
Chris Hayward, head of investment at ZenithOptimedia, says Five faces a difficult challenge. 'The problem is that all the broadcasters are seeking to get a more upmarket audience,' he says. 'Five has got in shows such as Home and Away, but there is huge competition for the big shows. It's an expensive way of getting the audience.'
Five Life, which is aimed squarely at female viewers, got off to a poor start. Its debut last October attracted an audience of just 44,500 - a 0.1% share of the available audience and the worst ever figures for a terrestrial spin-off channel launch.
Five US, meanwhile, has focused its marketing activity on flagship programmes such as CSI rather than developing the channel itself as a destination.
Early agency estimates show its digital channels currently combine for 12% of Five's overall audience, compared with 17% at ITV and 23% at Channel 4.
While its terrestrial presence can give its digital channels a clear advantage over their digital-only rivals, Five has nothing like the cross-promotional strength of ITV or Channel 4 because of its smaller audience base.
Stewart Easterbrook, group managing director at Starcom, says the channel has to shout louder to achieve cut-through, but it won't be easy. 'Even Sky, with its deep pockets and first runs of shows such as Lost and ER, has struggled to make Sky One a powerful entertainment channel in its own right,' he says.
Neil Johnston, head of TV at OMD, adds that while Five's channels are noticeable in Freeview homes, consumers with Sky or cable at home probably don't even know they are there. 'To build a brand in the crowded broadcast market you need consistency and cash - not a two-week marketing campaign concentrated on London,' he says. On the Sky platform, Milkshake!, Five Life's extended children's strand, does not even show up on the dedicated EPG.
While Five has secured some high-profile series such as CSI and Home and Away, the offering on its digital channels have received a mixed response from agencies. Jim McDonald, head of broadcast at Media Planning Group, says the channels are a 'qualified success' but have a number of 'unknown' shows many consumers will not have heard of.
He warns there is a danger that digital channels, hamstrung by tight budgets, could become a dumping ground for substandard programming. 'The channels which are successful, such as ITV2, are promoting their programming in its own right - such as Wags Boutique,' he says. Channel 4 has similarly run a successful campaign to promote E4 drama Skins, yet it remains to be seen whether Five will find the budget to do this for its digital offering.
Agencies agree the challenge for Five is to develop a stronger audience profile. According to Hayward, the smallest movement in audience figures affect it greatly and can have a disproportionate impact on its audience profile.
Despite the difficulty to achieve a greater share of viewing, agencies say there is a demand for digital channels among advertisers. Easterbrook claims that while the ad breaks of digital channels such as Five Life are not going to attract the major showpiece executions and brands of a World Cup match on ITV1, they are attractive to a different type of advertiser, such as providing a cheap entry point for direct-response advertising.
Five has much to prove, though. Andy Zonfrillo, investment director at MindShare, says that while the broadcaster has some way to go to get the audiences it needs from digital, its profile is growing. 'Five has come a long way, but still has work to do both in terms of marketing and acquisitions,' he says. 'Crucially, the digital channels need to identify more programmes people actually want to watch.' Whether that's more repeats of Happy Days and Dawson's Creek or genuine new drama remains to be seen.
DATA FILE - SHARE OF IMPACTS
Share of all commercial 30-second impacts, 15 Oct-31 Dec 2006 (%)
Adults 16-34 ABC1 HWCH*
1 Sky Media 13.55 15.58 15.22 13.16
2 IDS 10.08 10.13 10.90 9.64
3 ITV (digital) 7.06 6.75 7.15 6.88
4 Five (main channel) 9.35 7.56 8.05 8.02
5 C4 (digital) 3.66 6.08 4.76 3.73
6 Viacom 3.15 6.49 3.56 6.00
7 Five (digital) 1.26 1.47 1.11 1.48
8 Turner 0.83 1.41 0.77 2.10
Share of all commercial 30-second impacts, 1-22 Jan 2007 (%)
Adult 16-34 ABC1 HWCH*
1 Sky Media 12.37 14.30 13.47 12.05
2 IDS 9.73 10.20 10.30 9.48
3 Five (main channel) 9.12 7.30 7.73 7.46
4 ITV (digital) 6.28 5.92 6.14 6.01
5 C4 (digital) 5.23 7.80 6.44 6.17
6 Viacom 2.57 5.62 2.95 5.09
7 Five (digital) 1.16 1.51 1.05 1.48
8 Turner 0.70 1.14 0.66 1.72
*Housewives with children