AA forecasts (relatively) optimistic 16.7% drop in UK adspend – recovery in 2021

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The UK Advertising Association, in conjunction with WARC, is forecasting a 16.7% fall in adspend in 2020 compared to 2019 – which most media owners would probably bite their hands off for, with Covid-19 raging. Many people are forecasting 30 per cent or more. 2019 adspend was a record £25.36bn.

2021 adspend is forecast to return to growth – up 13.6% – although still behind 2019 levels.

By medium search and online display grew by 17.8% and 17.4% respectively in 2019 but are predicted to fall by 12.1% and 12.7% respectively this year. Video on demand (VOD) recorded growth of 15.5% in 2019 but, overall, TV saw a decline of 3.5%. Both are expected to be affected by the downturn this year, with TV forecast to see a 19.8% dip in advertiser investment and VOD a 6.3% fall. Both are expected to rebound in 2021, with TV expected to grow 15.0% and VOD an increase of 21.9%.

The ongoing decline in publisher revenue recorded in 2019 is expected to intensify this year, with decreases of 20.5% for national newsbrands, 24.1% for regional newsbrands, and 25.1% for magazine brands. All are then expected to record growth in 2021.

Given the restrictions on population movement and gathering ordered by the Government, formats including Out of Home and cinema are expected to see large falls in adspend in 2020, with growth projections at -18.7% and -33.6% respectively. However, both are forecast to record some of the largest gains in 2021, with digital out of home (DOOH) seeing a rise of 21.4% and cinema witnessing the highest increase of all formats at 39.9%.

AA CEO Stephen Woodford says: “Despite a good 2019 and promising start to 2020, Covid-19 has affected UK advertising as it has all parts of the economy and the falls we are seeing in adspend come as little surprise. The current quarter will be a tremendously tough time for many businesses across our industry. We are acutely conscious of their predicament and working fast with Government and officials, so that they get the best support possible.

“Instinct might tell businesses to be cautious in their advertising at this time and we all need to be mindful of the unusual times we’re living in. But at the same time, the importance of advertising during a downturn cannot be overstated.

“The vast majority of adspend, nearly 85%, will still be invested this year and businesses should ensure they are in the best possible place – and best possible shape – to take advantage of a return to growth when it comes. History shows the brands that emerge fastest and strongest are those that invest in advertising during a downturn.”

Let’s hope he’s right. But will there be enough people around to handle this adspend? The latest 1PA Census shows just under 25,000 people working in member agencies; down from 2018, media agencies increasing by 400 to 11,357, creative and non-media agencies falling by 600 to 13,509.

Admittedly many smaller agencies are not IPA members (it isn’t cheap) but this total number isn’t that far ahead of the numbers working in the 1970s, before media agencies were invented. There will certainly be a ferocious cull this year as agencies try to survive the virus and we could see numbers well below 20,000 by the end of the year.

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