UK ad spend rose 2.9 per cent year-on-year in the first quarter of 2020, but the latest Advertising Association/WARC Expenditure Report points to an estimated 39 per cent slump in the second quarter as the impact of the Covid-19 crisis was felt across the industry.
While the third quarter is expected to see relative improvement at -20.7 per cent, it’s not until Q4 that some sort of normality returns and even then spending is still forecast to be 6.7 per cent down on the same period in 2019.
Overall, UK ad spend is predicted to fall 15.6 per cent – £3.9 billion – year-on-year in 2020 to £21.4 billion. This is a slight improvement on the drop of 16.7 per cent forecast in April, linked to the estimated impact of recent measures announced by the Government to stimulate consumer spending.
“First quarter metrics were softer than had been anticipated going into lockdown, but we believe the second quarter will represent the nadir,” says James McDonald, Head of Data Content, WARC. “With unemployment expected to remain well above pre-pandemic levels into next year, and the possibility of a second virus wave during the winter, no growth in total adspend is forecast until Q2 2021. Our cautious optimism that investment will rebound from April 2021 is rooted, in part, in a belief that a ‘new normal’ will then have been established, borne by a successful vaccination programme. Under these circumstances, we feel the UK’s ad industry can attain a full recovery during 2021 as a whole, though total market value will still be down on 2019’s peak.”
Online and digital formats performed strongly in Q1 2020: search and online display grew by 10.1 per cent and 11.8 per cent respectively, while broadcaster video on demand (BVOD) recorded growth of 11.3 per cent and online national newsbrands saw a rise of 14.2 per cent.
However, these are all expected to see a significant fall in Q2 2020 due to the impact of the pandemic and the consequent lockdown. The biggest falls are predicted to be for cinema with a 100 per cent decline and out of home with a 70.4 per cent decline. These media are both forecast to record some of the largest gains in 2021, with digital out of home (DOOH) seeing a rise of 38.7 per cent and cinema witnessing the highest increase of all formats at 79.6 per cent.
The stark figures reinforce the Advertising Association’s call for a tax incentive scheme for advertising and marketing services, with the aim of stimulating investment and encouraging advertisers to continue, or return to, advertising. Such a plan would also encourage companies that do not currently advertise, typically SMEs, to invest in advertising and act as a stimulus for the wider economy.
There’s also a need for “a regulatory environment that is open and fair, to ensure businesses have the confidence to invest”, adds Stephen Woodford, Chief Executive, Advertising Association. “This means avoiding increased rules and regulations, such as those proposed for HFSS advertising, that will weigh on the much-anticipated recovery we hope to see next year.”