Industry reacts to AA/Warc’s alarming 2020 forecasts

David Fletcher, chief data officer, Wavemaker

While the short-term outlook is extremely challenging, we share the longer-term optimism that the market will return to growth.

A lot of the current commentary is based on the old playbooks about brands continuing to invest through recession, however the current situation is far more complex than just an economic downturn. Decisions brands take now will determine how well placed they are to get back on the path to growth.

At Wavemaker we talk a lot about brands being not just present but present with purpose. Even in unprecedented circumstances, there are brands that have strengthened their relationship with existing and potential customers. It’s not simply that they have invested, it’s that they have put their investment in the right place, while demonstrating humanity and generosity that has resonated with the public.

Justine O’Neill, director, Analytic Partners

We’re in the middle of a pandemic, so it’s no surprise that for the first time in a decade, ad spend in 2020 is forecasted to decline significantly by £4.23bn.

Businesses are in survival mode and many are reigning in their marketing budgets to keep cash flow high, but this could be a costly mistake. Our analysis of data from the financial crisis in 2008 showed that brands who invested in advertising saw an average of 17% growth in incremental sales, and more than half saw subsequent improvements for the next two years.

We predict that if a brand cuts its ad spend in 2020 by £10M it stands to lose £25M in revenue the same year. Cutting investment in ad spend altogether is costly, brands must play the long game.

Martin Vinter, managing director – media, Ebiquity

As an industry, we knew this was coming. Although the drop is a significant one, some scenarios were suggesting an even steeper drop.

The price depression across most media will have a profound impact and ripple-effect for all parties in the ‘media value-chain’. Advertisers, agencies and publishers will be watching closely as to how and when the market rebounds; managing channel-investment tightly to ensure appropriate levels of effectiveness and efficiency in these unchartered waters. As budgets are cut and investments deferred, there will be greater pressure on advertiser Media Management functions to assert increased control and navigate their way back to “media normality”.

As organisations grapple with the myriad of COVID-19 induced issues – relating to production, supply, demand, profitability and growth, brand-owner media leaders and their teams will need to hone in on the effectiveness of their media investment. It is clear that the repercussions from COVID-19 will last for years; while media investment will likely recover in 2021/2022, the focus on media as a lever for profit and growth will become increasingly important – and maybe that is the one good thing to come out of this truly horrible situation.

The past two months have seen companies across sectors and geographies reimagine and recalibrate their business models. While this is a challenging time for everyone and we cannot ignore the significant disruption to ad spend, the pandemic has opened up industry conversations that have long been overdue.

We’re seeing the industry rally together to address pre-existing issues such as online keyword block-listing in a bid to support premium publishers. We’ve seen some advertisers pause and take stock, while many others have moved their spend into addressable environments and modified their creative to suit the current situation.

Agencies remain hugely cognisant of the need to sustain quality media environments to ensure great places for their clients to advertise; something we’ve seen first-hand through the support of Ozone’s ability to deliver in high attention, trusted, brand-safe environments. The most engaging editorial channels are flourishing, as the nation continues to rely on quality content to keep them up to date during lockdown.

Collectively and individually, our focus must be on emerging from the current climate in the best shape possible to help fuel the expected return to growth in 2021.

Ali MacCallum, CEO, Kinetic UK

Even in the toughest period that any of us can remember, out of home has continued to demonstrate its power to get influential communications out to audiences immediately and publicly.

In recent months OOH has played a key role in delivering vital public information right across the country. While none of us anticipated the day that OOH would be used as a medium to urge people to stay indoors, we’ve still seen some brave and brilliant campaigns from the likes of Tesco and Paddy Power as well as some fantastic initiatives supporting our key workers – often amplified at scale via social media. It is this dynamic creativity that will be positively remembered as we start to return to some form of normality.

There is growing optimism that the market will start to pick up in the coming weeks and months. As restrictions are gradually lifted OOH will have a crucial role to play in the UK’s social and economic recovery. The smart deployment of dynamic digital OOH will become highly effective for brands looking to reach audiences across location and context to communicate that they are open for business, and to capitalise on the demand that has built up.

This period has taught us all of the simple joy of being out of home. As the country moves out of lockdown, OOH can begin to move back towards the upward trajectory that we have seen in recent years.

It is without doubt that Covid-19 has had an unprecedented impact on the publishing industry in many ways. What it has also done is served to remind the public how important quality newsbrands are in the delivery of trusted journalism.

We know that consumer confidence has taken a huge knock, but we also know that Londoners, and especially our readers, are among the first to move forward, so it is our mission to continue working with brands to inject growth back into all our businesses.