Forecast: UK adspend slower 2021 recovery

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Figures from the latest Advertising Association/WARC Expenditure Report forecast slower growth in 2021 than previously expected, with any gains made in 2021 unlikely to offset this year’s losses, meaning the UK’s ad market is not expected to have fully recovered until 2022.

The report downgrades July’s 2020 forecast from a return-to-growth of 16.6 per cent in 2021 to just 14.4 per cent. Adspend is set to fall by 14.5 per cent this year to £21.5 billion as a result of the COVID-19 outbreak, equating to a loss of £3.6 billion compared to 2019.

2020’s final quarter – typically a strong season thanks to the Christmas advertising boom – is set for a 10.5 per cent drop compared to last year. In raw cash, that’s £724m less than 2019.

The biggest losses happened in Q2, when adspend fell by 33.8 per cent: the worst ever quarter recorded, contributing to an overall first half dip of 14.9 per cent, and £2 billion lower than the same three months in 2019.

As expected, the formats that suffered worst were those that shut down outright, such as cinema, while others lost out from diminished consumer contact during lockdown. While online formats should be the obvious winners, none are back to the frothy heights of 2019.

“These stark figures demonstrate the strain that all parts of the advertising ecosystem were under during the second quarter,” notes Stephen Woodford, chief executive of the Advertising Association. “Large parts of our industry and the wider economy were effectively shut down,”

“Events of recent weeks have shown this will be no straight-forward recovery as different parts of our country enter or leave local conditions at varying speeds. We must boost growth and support jobs through an advertising tax credit and a skills programme to aid colleagues facing unemployment. It is essential that our workforce, business, and Government work together on the recovery plan for our industry and our country.”

Some detail on 2021’s recovery: according to the forecast, cinema adspend is expected to rise by 138.3 per cent as picture houses reopen and films that have been postponed make it to screens.

Other media predicted to perform well year-on-year include out of home (+57.1 per cent), magazine brands (+18.8 per cent) and regional newsbrands (+16.2 per cent), underpinned by strong growth in their online formats. James McDonald, Head of Data Content at WARC notes that “advertising trade remains depressed, and the rising likelihood of sustained localised lockdowns over the winter, a disorderly exit from the European Union in December, and a prolonged economic recovery embodied by rising unemployment, now leads us to believe that the industry will not fully recoup this year’s losses until 2022.”

While the results will surprise few marketers who have lived through 2020’s turbulence, there are lessons. “There’s room for cautious optimism,” observes Azlan Raj, Chief Marketing Officer EMEA of the performance agency Merkle, “especially for those agencies using this period of turbulence as a time for reflection and re-evaluation.”

While a more online world (and advertising landscape) could see a pivot to performance, brands still matter, explains Shazia Ginai, CEO of NeuroInsight. “As we head into the festive season – arguably one of the most emotional times of the year for people – many brands may need to reassess their current courses of action, or risk eroding those positive bonds in which they have invested so much. At a time when customers are seeking reassurance from the world around them, the potential rewards to be reaped could be massive.”

Commenting on the report, Philippa Snare, SVP EMEA, The Trade Desk, said: “Despite today’s report revealing that ad spend is down by 14.5 per cent this year, it is extremely encouraging to see that channels across the board are predicted to perform well in 2021 as the industry recovers after a turbulent year.

It is unsurprising that digital looks set to steam ahead in the new year. With ongoing uncertainty, the live data insights provided by digital advertising will be invaluable to marketers. Programmatic gives marketers the control to pivot their messaging at a click of a button, which is absolutely essential when areas of the UK continue to face differing restrictions. For example, Digital-out-of-home (DOOH), forecasted to improve year-on-year by +60%, allows marketers to create broad scale brand awareness, while ensuring they can turn off or tweak messaging according to the local context.

Looking to the future, those who embrace digital advertising are most likely to bounce-back in the coming months – so now is a crucial time for marketers to be nimble, adaptable and ready for when the industry returns to pre-pandemic health.”

“These figures paint a stark picture of the difficulties the advertising economy has come up against this year,” added Mark Inskip, CEO UK & Ireland, Media Division, Kantar:. As pandemic restrictions continue, it’s sensible for the industry to be realistic about how long recovery will take, but savvy business leaders won’t lose sight of the value of advertising through such uncertain times. Smart investment in channels where consumers are spending more time will win brands greater consumer engagement and share of voice – which may well prove key to weathering this storm.

While budgets remain tight and the economy is still getting to its feet, businesses can find much needed certainty by measuring each step of their marketing campaigns to make smart, informed decisions. Especially as different areas of the UK experience different lockdown measures, it’s never been more crucial for brands to understand consumer mindsets in order to deliver appropriate and engaging content. Those who do will stand to benefit enormously when the ad market rapidly rebounds in 2021 and returns to the spending levels we enjoyed pre-pandemic in 2022.”


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