Advanced Television

Forecast: Traditional TV advertising flat in 2020

December 2, 2019

GroupM has published its latest UK ad forecast which provides an even larger growth projection for 2020 than was originally predicted in its June forecast.

One of the major reasons for this, says the media investment company, is because as more digital endemic marketers increasingly replace traditional companies that came before them, spending shares will shift more toward digital marketing. Digital behemoth’s like Facebook, Amazon, Netflix, Alphabet and eBay are massive contributors to the double-digit growth for advertising.

Focusing specifically on television, GroupM believes traditional TV advertising will be flat in 2020 as the medium sustains tremendous value for marketers even as TV evolves during an uncertain economic period. GroupM estimates television will be down by -2.3 per cet this year but rebound closer to flat next year and in subsequent periods.

Few advertisers blame Brexit expressly, but it was a convenient explanation for 2019’s slow start and a useful alibi for continuing caution. As Brexit was delayed, more money come back to the ad market, and GroupM expects that to continue into 2020 as uncertainty means corporations will want to protect cash reserves.

Pressure on budgets shows up most in big brand partnerships in TV and other media. Sponsorships still sell but are less contested, and the supporting activation – merchandising, content, talent – less elaborate. But we are seeing new-to TV clients willing to exchange equity in the company for airtime value exchange.

Secular factors are impacting the TV market as well. Voluntary reform in live-odds advertising took effect towards the end of 2019. Excepting horse racing, this brought an end to such advertising during sporting event transmissions. Demand for such airtime far exceeds supply, so it trades at a big premium. Pre-watershed HFSS is the other current focus for regulation. Brexit distractions have pushed this back to 2020, and ITV has the most to lose here. Broadcasters may revise schedules and move minutage from pre- to post-watershed to protect revenue. Grey areas seem likely, for instance when HFSS is incidental or subsidiary in a commercial message.

Data and new forms of trading should also help reinforce the value of the medium, even if they don’t directly lead to spending growth in the future. Data now allows for narrower targeting of audiences across both linear ad insertion (Sky’s AdSmart) and online platforms when compared with historic broadcast TV trading audiences. Further advances are likely as Sky’s owner, Comcast NBCUniversal, hopes to bring CFlight (a unified measurement that captures all advertising exposures across all screens; initially developed for the US) to the UK in 2020.

Other key highlights from the report include:

  • As economic conditions improve looking past 2021, digital pure-play media owners will account for 73 per cent of all advertising in the UK by 2024.
  • The UK has grown much more than any other market globally, up +55 per cent over that 2013’s levels
  • Outdoor should be the fastest growing “traditional” medium with predicted growth of +4 – 5 per cent over each of the next five years after growing close to +5 per cent in 2019.
  • Radio will grow closer to +2 per cent in 2020 while national print titles are predicted to fall by another -6 per cent next year.

The report also notes how the previously mentioned digital behemoths will spend more than £25 billion on advertising in 2019, accounting for about five per cent of the world’s total spend and an entire percentage point of growth between the eight of them.

Categories: Advertising, Articles, Markets, Research