The UK ad market is forecast to contract by £4.2billion (16.7%) this year) to £21.1bn this year due to the coronavirus lockdown and economic slump.
The figures were revealed in the Advertising Association/Warc Expenditure Report, which is regarded as one of the industry’s most authoritative surveys.
The report predicts that the second quarter from April to June 20202 will see a crash of 39.1 per cent and indicates that every medium is facing double-digit declines.
Even previously high-growth sectors such as internet search and online display are predicted to suffer badly in the second quarter, down by 29.6 per cent and 31.8 per cent respectively.
TV is forecast to fall by 46.6 per cent, radio 44.1 per cent, national news brands 45.3 per cent, out-of-home 52.6 per cent and cinema 100 per cent.
Full-year figures in the new Advertising Association/WARC Expenditure Report show UK adspend rose 6.9 per cent year-on-year to reach £25.36bn in 2019. And while 2020 started promisingly, the downgrading of projections for the rest of the year demonstrate the deep impact that COVID-19 has had on advertising since mid-March, as it has the UK economy as a whole.
Projections prior to the COVID-19 outbreak forecast adspend growth in 2020 of 5.2 per cent to a total of over £26billion. The revised forecast is for advertising expenditure of £21.13bn meaning a year-on-year reduction of 16.7 per cent – or £4.23billion – from 2019.
Adspend is expected to return to growth in 2021 with a rise of 13.6 per cent, but absolute levels of investment are not expected to surpass the 2019 total.
Online formats performed strongly during the past year and they are forecast to decline by less than traditional formats during 2020. Search and social media – 45.7 per cent of the UK ad market combined – grew by 17.8 per cent and 24.6 per cent respectively in 2019 but are predicted to fall by 12.1 per cent and 6.3 per cent respectively this year – the first recorded declines in these sectors.
Broadcaster video on demand (VOD) recorded a growth of 15.5 per cent in 2019 but, overall, TV saw a decline of 3.5 per cent. Both are expected to be affected by the downturn this year, with TV forecast to see a 19.8 per cent dip in advertiser investment and VOD a 6.3 per cent fall.
The ongoing decline in publisher revenue that was recorded in 2019 is expected to intensify this year, with decreases of 20.5 per cent for national newsbrands, 24.1 per cent for regional news brands, and 25.1 per cent for magazine brands. All are then expected to record growth in 2021.
Given the restrictions on population movement and gathering ordered by the Government, the out of home and cinema markets are expected to see large falls in adspend in 2020, with growth projections at -18.7 per cent and -33.6 per cent respectively. However, cinema and digital out of a home are forecast to recoup losses fully in 2021 – the only channels to do so.
Rates of decline ranged from 27.2 per cent for broadcaster VOD to 52.6 per cent in the out of home market during the second quarter. The forecasts do not anticipate cinemas to open their doors before July, resulting in spend drying up completely.
Overall, the market is expect to contract by 39.1 per cent – or £2.4billion – during the second quarter of 2020, while spend is projected to fall by a further 24.3 per cent in Q3.
“This virus-induced recession is different from previous downturns in that the impact has been both swift and sharp across all media,” said James McDonald, Head of Data Content, 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.”
He singled out the effects of the lockdown on small and medium sized enterprises for whom digital advertising – paid search especially – is a staple and whose recovery is expected to take some time.
“Media costs have fallen as a direct result of lower demand for inventory and this, paradoxically, comes at a time when consumption and reach has grown markedly across TV, social media and online publications,” McDonald added.