UK adspend rose 6.9% year-on-year in 2019 to reach £25.36bn, according to the latest Advertising Association/Warc expenditure report – both a new record and the tenth consecutive year of ad market growth.
However, as a result of the impact Covid-19 is now having on the wider industry, projections for 2020 and 2021 have been dramatically downgraded.
Overall the ad market had been forecast to grow 5.2% in 2020, reaching a total expenditure of £26bn. This has been revised to a -16.7% decline to £21.13bn, a loss of £4.23bn.
Much of 2019’s growth was driven by online and digital formats, which are expected to also fare better over 2020 than traditional media.
Search, which grew 17.8% in 2019, is forecast to experience a -12.1% slide in adspend this year, as SMEs see their advertising purse strings tightened and product verticals such as tourism and leisure pull back from performance marketing.
Online display, which grew 17.4% in 2019, is expected to experience a slightly steeper decline at -12.7%.
Although TV saw an overall drop of -3.5% in 2019, video on demand (VOD) was up 15.5%. However, with VOD forecast to fall -6.3% this year, TV is set to see its ad revenues down by -19.8% – although, paradoxically, the market has seen a significant lockdown boost to TV viewing.
Publishers face a similar year: national newsbrands (down -1.5% in 2019) are expected to drop -20.5% in 2020; regional newsbrands (-10.5% in 2019) are to decline -24.1%; and magazine brands (-8.8% in 2019) are to fall -25.1%.
Meanwhile, the out-of-home sector is projected to fall -18.7% this year as lockdown keeps people in their homes. The market is expected to contract by more than 50% in Q2 alone.
Likewise, cinema – which has temporarily closed its theatres in response to the virus – is forecast to plummet -33.6%.
“This virus-induced recession is different to previous downturns in that the impact has been both swift and sharp across all media,” commented James McDonald, head of data content at Warc.
“The deterioration of advertising trade, we believe, will be focused primarily in the second and third quarters of this year, though the aftershocks are likely to last into the fourth quarter and early 2021.”
However, according to the report, 2021 will see all media formats return to growth, with the largest boost to cinema (39.9%), DOOH (21.4%), VOD (21.9%) and online newsbrands (17.7%).
UK adspend is therefore expected to grow 13.6% in 2021, but investment is not expected to surpass the 2019 total.
Stephen Woodford, chief executive of the Advertising Association added: “Despite a good 2019 and promising start to 2020, COVID-19 has affected UK advertising as it has all parts of the economy and the falls we are seeing in adspend come as little surprise.
“Instinct might tell businesses to be cautious in their advertising at this time and we all need to be mindful of the unusual times we’re living in. But at the same time, the importance of advertising during a downturn cannot be overstated.
“The vast majority of adspend, nearly 85%, will still be invested this year and businesses should ensure they are in the best possible place – and best possible shape – to take advantage of a return to growth when it comes. History shows the brands that emerge fastest and strongest are those that invest in advertising during a downturn.”
Mediatel Connected subscribers can use Media Landscape reports to view these figures alongside other industry forecasts.
— to mediatel.co.uk