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2021 UK adspend forecast for slower recovery

/ October 29th 2020
Advertising and the Economy

Critical Christmas Q4 2020 forecast down £724m year-on-year

London, October 29 2020: The latest Advertising Association/WARC Expenditure Report has downgraded its 2021 forecast to a return-to-growth of 14.4%, lower than the figure of 16.6% predicted in July. Growth in 2021 will fall just short of offsetting this year’s losses completely, meaning the UK’s ad market is now not expected to recover fully until 2022.

Adspend is set to fall by 14.5% this year to £21.5bn as a result of the COVID-19 outbreak, equating to a loss of £3.6bn compared to 2019. The final quarter of this year – traditionally the Golden Quarter for retail and adspend because of the Christmas Advertising season – is set to see a 10.5% drop to a total of £6.2bn, some £724m lower than the previous year.

The latest industry data also show that UK adspend fell by 33.8% in Q2 2020 at the height of the nation’s lockdown. This was the worst ever quarter recorded for the UK’s advertising industry and contributed to a 14.9% dip over the first half of the year, equating to a loss of £2bn when compared to the same period in 2019.

The new data show investment fell across all advertising formats in Q2, with some sectors that were shut down, such as cinema, and those that lost significant amounts of consumer contact, such as out of home and direct mail, seeing significant declines. As the population was encouraged to remain at home, online and digital formats performed relatively less badly than others, though each recorded their first annual falls in advertising investment.

Looking ahead to 2021, cinema adspend is forecast to rise by 138.3% 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%), regional newsbrands (+16.2%) and magazine brands (+18.8%), underpinned by strong growth in their online formats.

Stephen Woodford, Chief Executive, Advertising Association commented:

“These stark figures demonstrate the strain that all parts of the advertising ecosystem were under during the second quarter. 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.”

James McDonald, Head of Data Content, WARC commented:

“The latest results show that the UK’s advertising industry endured its worst quarter on record during Q2 2020, an unprecedented period in which a national lockdown was imposed in response to the COVID-19 outbreak.

“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.”

Media Q2 2020

year-on-year

% change

H1 2020 year-on-year % change 2020 forecast year-on-year

% change

Percentage point (pp) change in 2020 forecast vs July 2021 forecast year-on-year

% change

Search -20.6% -3.7% -7.5% +4.8pp 16.1%
Online display* -13.9% 0.2% -3.1% +4.8pp 8.2%
TV -39.3% -19.9% -12.0% +2.5pp 11.2%
of which VOD -30.1% -5.0% 1.4% +2.6pp 19.5%
Online classified* -51.4% -32.6% -32.7% -5.9pp 16.1%
Direct mail -62.4% -39.5% -29.7% -3.5pp 8.6%
Out of home -83.0% -44.8% -39.5% -14.1pp 57.1%
    of which digital -77.5% -38.8% -35.0% -14.1pp 60.2%
National newsbrands -44.8% -25.6% -25.0% -3.8pp 11.5%
of which online -19.6% -4.2% -7.5% +3.9pp 8.9%
Regional newsbrands -52.8% -34.3% -33.1% -5.6pp 16.2%
of which online -43.6% -23.7% -24.4% -3.4pp 24.4%
Magazine brands -48.2% -31.1% -28.7% -4.5pp 18.8%
of which online -47.2% -34.7% -27.0% -3.7pp 25.3%
Radio -45.7% -25.2% -22.0% -1.0pp 15.2%
of which online -32.9% -19.6% -15.9% +2.5pp 17.7%
Cinema -100.0% -61.3% -64.5% -20.3pp 138.3%
TOTAL UK ADSPEND -33.8% -14.9% -14.5% +1.1pp 14.4%
Note: Broadcaster VOD, digital revenues for newsbrands, magazine brands, and radio station websites are also included within online display and classified totals, so care should be taken to avoid double counting. Online radio is display advertising on broadcasters’ websites.

Source: AA/WARC Expenditure Report, October 2020 

Forecast year-on-year

% change

Q3 2020 Q4 2020 Q1 2021 Q2      2021      Q3 2021 Q4 2021
Search -14.0% -8.3% -3.7% 42.1% 18.8%      16.6%
Online display* -5.7% -6.1% -6.3% 22.5% 12.2%      8.1%
TV -6.3% -2.7% -2.2% 56.5% 7.6%      1.8%
of which VOD 4.7% 9.9% 3.0% 67.2% 17.3%      11.7%
Online classified* -39.5% -26.4% -17.0% 63.9% 29.0%      7.7%
Direct mail -28.0% -12.0% -12.0% 85.0% 15.0%      -8.0%
Out of home -52.9% -19.6% -7.9% 441.3%      107.9%      23.7%
    of which digital -50.4% -17.5% -4.2% 349.2%      115.7%      28.7%
National newsbrands -35.6% -15.7% -13.1% 46.8% 27.7%      5.8%
of which online -18.4% -3.7% -5.4% 23.6% 16.5%      7.1%
Regional newsbrands -43.5% -20.5% -18.9% 75.4% 43.2%      -0.8%
of which online -38.8% -11.3% -11.7% 75.6% 48.5%      8.8%
Magazine brands -36.2% -16.6% -12.1% 68.2% 32.5%      6.8%
of which online -29.4% -11.5% 4.9% 74.5% 28.0% 8.8%
Radio -24.7% -13.2% -6.9% 66.5% 23.1%      1.7%
of which online -15.1% -9.5% -3.8% 60.0% 19.6%      7.5%
Cinema -68.1% -66.1% -28.1% 165.8%     219.8%
TOTAL UK ADSPEND -17.9% -10.5% -6.5% 48.6% 19.2%      9.8%
Note: Broadcaster VOD, digital revenues for newsbrands, magazine brands, and radio station websites are also included within online display and classified totals, so care should be taken to avoid double counting. Online radio is display advertising on broadcasters’ websites.

Source: AA/WARC Expenditure Report, October 2020

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