The latest expenditure report from the Advertising Association and WARC forecasts significant drops in ad spend levels across the media industry.
The report’s full year (2020/21) forecast summary suggests a 46.6% TV ad spend decline in Q2, with Q3 down 25.8% and Q4 returning to some semblance of normality, predicted to be 8% in arrears. Overall 2020 TV ad spend is forecast to be down 19.8%.
It is a stark reminder of the tangible negative impact of the pandemic on media companies and their ability to maintain revenue levels despite an upswing in viewing figures as consumers continue to stay at home during the lockdown period.
The report points to BARB and Thinkbox data that show live TV viewing has grown by 22.7% on average since 9 March, “but the TV ad market is forecast to contract by almost a half in the second quarter. The decline in TV ad investment is equivalent to a £976 million reduction in broadcaster revenue versus 2019.
The decline in Video on demand (VoD) ad spend follows a similar trajectory, if not volume: forecasted Q2 spend down 27.2%; Q3 down 17%; and Q4 down 3.9%, with 2020 to finish -6.3% overall.
Both sectors are due to return to positive numbers in 2021, according to the forecast, with TV seeing growth of 15% and VoD 21.9%.
It is a familiar story for radio, with traditional channels scheduled to suffer a 44.1% drop in Q2 (-32% of which online), finishing the year 21% down overall (-10.9% online) before returning to growth in 2021.
The expenditure report covers total UK ad spend covering cinema, direct mail, online platforms, out of home, print, TV broadcast, and radio. It predicts that 2019’s record ad spend figures will fall by 16.7% (£4.23 billion) to £21.13 billion in 2020.
In comparison to other sectors in the report, VoD platforms are set to suffer the smallest reduction in ad spend across the 2020 period, with only cinema seeing a stronger resurgence in 2021. This follows 2019 numbers that were up 15.5% on the previous year, with ad spend on TV declining slightly by 3.5%.
In releasing the report, the Advertising Association has called on the UK government to introduce a tax credit scheme for advertisers to ‘boost the economy and support job creation’ while the country and economy remains in the grip of the COVID-19 crisis.
WARC’s head of data content, James McDonald, explained, “Media costs have fallen as a direct result of lower demand for inventory and this, paradoxically, comes at a time when consumption and reach has grown markedly across TV, social media and online publications. Research on WARC from multiple sources shows that cutting advertising in a recession directly correlates with a slower recovery, but the practicalities of marketing in the current climate mean sustained investment is simply no longer feasible for a number of large product sectors.”
