UK ad market unlikely to rebound until April 2021, says AA/Warc
Despite a marginally improved outlook for the rest of this year, the UK ad market is not expected to return to year-on-year growth until the second quarter of 2021 - assuming a successful Covid-19 vaccine is by then in place.
This is according to the latest Advertising Association/WARC Expenditure Report, which now expects adspend to fall by -15.6% this year to £21.4bn, a slight upgrade from the report's earlier forecast of -16.7%.
The revision comes as new figures for the first quarter of 2020 show a 2.9% year-on-year rise in total adspend for the period, reaching £6.4bn. However, the market's value is forecast to plummet by -39% in the second quarter of the year, which began as the coronavirus pandemic and subsequent nationwide lockdown took hold in the UK.
“First quarter metrics were softer than had been anticipated going into lockdown, but we believe the second quarter will represent the nadir," said James McDonald, head of data content at WARC.
"With unemployment expected to remain well above pre-pandemic levels into next year, and the possibility of a second virus wave during the winter, no growth in total adspend is forecast until Q2 2021."
According to the report, next year's growth is expected to be "substantial", with total adspend for 2021 forecast to be 16.6% higher than 2020.
However, the total market value is still expected to be less than 2019's peak of £25.3bn.
“Our cautious optimism that investment will rebound from April 2021 is rooted, in part, in a belief that a ‘new normal’ will then have been established, borne by a successful vaccination programme," McDonald added.
Online and digital formats continued to drive market growth in the first quarter of this year, with search and display up 10.1% and 11.8%, respectively. TV video on demand (VOD) saw a rise of 11.3% over the quarter, while investment in online national newsbrands grew 14.2%.
Nevertheless, declines are anticipated across the board for the second quarter and the rest of the year, although all formats are to rebound to some degree in 2021.
Commenting on the data, Stephen Woodford, chief executive of the Advertising Association, said: “Today’s figures show that the outlook for UK advertising remains fragile, with a significant decline forecast for the rest of the year, before welcome growth in 2021.
"This forecast demonstrates the need for Government to continue working with the advertising industry to boost confidence in the economy and among consumers. This can be achieved through initiatives such as our tax credits scheme for advertising, but also by ensuring we have a regulatory environment that is open and fair, to ensure businesses have the confidence to invest.
"This means avoiding increased rules and regulations, such as those proposed for HFSS advertising, that will weigh on the much-anticipated recovery we hope to see next year.”