Direct mail spend will hold firm in the face of a new surge in online spend and predicted wholesale cuts in print marketing budgets – remaining the UK’s third largest medium behind online and TV ads – to be worth an estimated £1.6bn.
According to Group M’s latest forecasts for UK advertising investments for next year, direct mail spend in 2017 will match this year’s figure of £1.6bn. However, it does not even take into account other areas of physical mail, such as door-drops and leaflets.
The prediction flies in the face of the Advertising Association/Warc figures which forecast total direct mail adspend will be down 10.6% in 2016, with a dip of 7.3% in 2017.
While most coverage of GroupM’s study centres on the unrelenting growth in what it calls “pure-play digital”, which will rise 15.2% from £9.1bn this year to £10.5bn next, traditional direct marketing techniques appear to be alive and kicking.
The same cannot be said for other print media, however, with national and regional newsbrands predicted to fall sharply (-10% and -6.7% respectively), while consumer and B2B magazines will also falter (-9.3% and -5.1%).
Overall, UK advertising is set to see the eighth successive year of growth, despite the short-term effect of the EU referendum, with predicted growth up from 6.3% to 7.2% for 2016, and from 5.8% to 7.2% for 2017. This increase in spending takes the industry to an investment of £18.8bn in 2017. TV will rise 1% from £4.3bn to £4.4bn.
GroupM’s outlook for traditional media advertising has deteriorated slightly, from -1.1% to -2.6% for 2016 and from +0.5% to -1.4% in 2017. The predicted ad market share for pure-play digital has consequently risen by a point to 52% in 2016 and then up 3 more points 55% in 2017. The UK remains among the most digital-centric advertising markets in the world.
GroupM has found that digital display demand continues to rise strongly with a +15% rise predicted for 2017, particularly into social media, and, within digital, from static to video. The largest driver is paid search which is accelerating again. It benefits from rising automation, geo-targeting capabilities and the point of sale immediacy of mobile for performance-minded advertising.
GroupM futures director Adam Smith said: “The effect of the future EU exit on the UK economy is unknown, but the short-term impact was negligible. To our own surprise, we are revising UK advertising growth up from 6.3% to 7.2% for 2016, and from 5.8% to 7.2% for 2017.
“The main driver that we have seen is paid search accelerating again. It benefits from rising automation and the immediacy needed for mobile and performance-minded advertising. We expect digital display advertising to continue growing by 18% in 2016 and 15% in 2017. The ambition of pure play digital vendors to conquer TV territory and categories will be hard-won, but today’s undisputed winner is pure-play digital.”
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