The UK advertising market is set to hold up against the Covid-19 attack on budgets and will perform much better than forecast earlier this year, shrinking by 4.4% to £21bn as opposed to the 12.5% that was predicted in June, according to Group M’s “This Year, Next Year” report.
The recovery has been driven by the return of online display advertising, which was forecast in June to fall by 12.5% this year, but is now expected to grow by 7.5% to £6bn in 2020.
Overall, “pure-play digital channels” will grow by 4.9% this year (Group M’s June forecast had predicted a 7.8% fall) although this does not include digital spend linked to offline channels, such as video-on-demand, which is counted within TV category.
As well as small firms being able to take advantage of tools and ad inventory on Facebook and Google, Group M said that US-based digital media companies and performance/direct-to-consumer marketers were driving online spend growth.
The report states: “When companies such as Amazon – now the world’s largest marketer in addition to the third largest seller of advertising – expand their marketing abroad, internationalisation of even a small share of their budgets to countries such as the UK can contribute to outsized growth.”
Ecommerce media spend, meanwhile, will continue to experience rapid growth, the report predicts, rising by about 50% this year and then another 66% next year. It forecasts ecommerce spend in the UK will hit £2.4bn in media owner ad revenue by 2024 – bigger than radio, newsbrands and magazines combined.
There is also an improved forecast for the TV, with the revised forecast saying the market will drop by 10.2% this year to £3.9bn (compared to its June figure of 14.8%), before rebounding by 10% next year and a return to 2019 levels in 2022.
Outdoor and cinema, however, have been marked down even further; cinema will crash by 80% to £45.7m this year, while outdoor will dive 45% to £577.2m.
Bizarrely, given that direct mail is still the third largest advertising medium after online and TV, Group M has not included mailshots in the report.
For next year, Group M warns that Brexit uncertainty still weighs heavily on the British economy, but said its impact should be limited to the first quarter, rather than the entire year.
2021 growth is forecast to reach 12.4% for 2021 while 2022 and beyond should see a return to growth in line with pre-pandemic activity of between 6% and 5%.
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