UK advertising spend will decline 12.5% during 2020 to £19.2bn, before rebounding by almost the same proportion in 2021, according to Group M’s Mid-Year Forecast.
Group M’s prediction for the hit to the market from the coronavirus pandemic puts it halfway between those of IPG Mediabrands' Magna Global Ad Forecast and Warc’s Global Advertising Trends report at the end of May – the latter of which was almost twice as bad as the former.
Magna’s report, published yesterday (Monday), said the UK market would suffer an 8.9% decline in 2020, while Warc forecast a 16.4% contraction – almost replicating the 16.7% figure from April’s Advertising Association/Warc Expenditure Report.
Group M forecast growth in 2021 of 12.6% to £21.7bn – slightly below the size of the market in 2019.
The gap between Group M and Magna’s forecasts for this year appears to be caused by different projections for digital advertising, with the two expecting declines this year of 7.8% and 3% respectively. In contrast, Group M’s forecast for linear TV (down 17% is identical to that of Magna. Group M expects overall TV to be down 14.8% in 2020.
Group M said that while digital would decline overall, it estimated that ecommerce-related advertising would enjoy a boom this year of almost half (45%) to £764m, while next year it will grow at an even faster rate, by 66%. It is then expected to grow at around 20% for each of the following three years, reaching a total spend of £2.2bn in 2024.
Speaking on last week's Campaign podcast, Brian Wieser, global president, business intelligence, at Group M, said the crisis was disproportionately affecting companies that have been slow to transition to digital platforms.
"Those smaller businesses who are often in a desperate situation struggling to survive are finding that the only way to keep this business going is to transition part of the business online," he said. "We’re seeing business transformation by these smaller businesses bring forward their [digital] business by several years."
Out of home and cinema are the two media channels worst hit by lockdown, with predicted declines of 35% and 50% this year. They should recover some lost ground next year with increases of 23% and 25% as social distancing could continue to hamper growth.
Group M's forecast estimated the ad market will grow 12.6% in 2021 and then return to its pre-COVID-19 rate of annual growth of about 5.5% in 2022 and 2023.