UK adspend will shrink by 4.9% this year, Interpublic Group’s Magna is forecasting, driven by double-digit slumps in "linear" ad sales channels such as TV, publishing and radio.
The Magna Ad Forecasts report is marginally more pessimistic than last week’s -4.4% UK forecast by WPP’s Group M. Magna, the research arm for IPG Mediabrands, is also slightly less optimistic about the prospects for 2021 – it is quoting a return to growth of 11.9% next year, compared with Group M’s forecast of 12.4%.
Linear (non-digital) ad sales, which are forecast to account for a little over one-fifth (22.4%) of UK advertising this year, will be down by 24.1% in 2020, Magna said.
By far the biggest linear spend channel, television, will be down 12.8% in 2020. This does not include digital ad sales for television, which are counted as digital video in Magna’s reporting.
Cinema and out of home, the media sectors hit hardest by this year’s coronavirus pandemic as cinemas have been forced to close and outdoor footfall has been heavily affected by social distancing measures, are forecast to be down 70% and 46.3% respectively.
Meanwhile digital ad sales, which are set to make up 77.6% of the UK advertising economy, are forecast to rise by 2.7% this year.
By far the biggest component of digital ad sales is spend on search (total UK market share 42.7%) and this is forecast to grow by 3.1% this year.
All digital spend channels are forecast to increase, with the exceptions of banner ads (down 9.6%) and “other formats” (down 28.6%). Spend on online display advertising, such as banner ads, has been hit this year by internet browsers moving to limit the use of advertising tracking tools, such as cookies.
Meanwhile, Magna is also forecasting global ad revenues will shrink by $25bn (-4.2%) this year, down to $569bn. This is a milder drop than Magna was forecasting in June (-7.2%). Globally, Magna forecasts next year’s return to growth at 7.6%. Magna noted that record levels of political ad spending during this year’s US presidential election generated “two percentage points extra market growth” in that country.
Travel, automotive and restaurants made the heaviest advertising budget cuts this year, while CPG/FMCG, finance and technology remained stable overall, Magna’s report added.
Vincent Létang, executive vice-president Global Market Intelligence at Magna, and author of the report, said: “Indeed, the pandemic triggered a tremendous acceleration in both supply (digital media usage and audiences, ecommerce) and demand (small businesses embracing digital media to keep their business alive, big brands pivoting towards lower-funnel marketing channels as they typically due in recession times).
“Magna believes the return of consumer mobility, major events and economic recovery will prompt most industry verticals to grow their linear advertising budgets in 2021, but the long-term trajectory has shifted even further towards a digital-centric marketing environment for years to come.”