UK's 2020 ad slump not as bad as rest of Europe, AA/Warc study finds

Quarterly Expenditure Report upgrades 2020 adspend estimate by significant margin.

Ecommerce: drove better-than-expected online search adspend (Getty Images)
Ecommerce: drove better-than-expected online search adspend (Getty Images)

The UK ad market is forecast to have fared better than the rest of Europe last year after the industry was rocked by the Covid-19 pandemic, the latest Advertising Association/Warc adspend survey reveals.

The Expenditure Report, published today (Tuesday), is the latest industry forecast to significantly upgrade its growth estimates for 2020. It said the UK ad market shrank by 7.9% to £23.2bn last year, a 6.6 percentage point improvement on its forecast three months ago.

When comparing the UK with its European neighbours, its 7.7% decline (adjusted for purchasing power parity) is ahead of Germany, the next-biggest ad market, and the rest of Europe (excluding the UK). However, the UK suffered a larger fall than China, the US and Canada.

Estimates for 2020 spend were higher than in the previous AA/Warc report across nearly all media channels, with the exception of direct mail, out-of-home, news brands and magazine brands.

The less pessimistic outlook is driven by a better-than-expected performance of online platforms over the summer, the report said. UK adspend in the third quarter was forecast in October to drop by 17.9%, but fell only 3.3% to £5.9bn, owing mostly to strong internet spend growth of 10.1% to £4.2bn. Internet spend was buoyed by a 14.5% rise in search spend, which in turn was driven by ecommerce advertising.

AA and Warc now predict the UK ad market to grow by 15.2% this year (or 15.5%, adjusted for purchasing power parity) – a slight improvement on its previous forecast from October. Most media sectors are expected to see double-digit growth in 2021.

The more sanguine 2020 estimate echoes agency research published last month by WPP's Group M and Publicis Groupe's Zenith.

Stephen Woodford, chief executive of the AA, said: “Not only does the data show the overall decline expected in 2020 may be less than feared, but the recovery in 2021 will be stronger than we would have dared hope even a few months ago.

“With the vaccine roll-out accelerating and a Brexit trade deal in place, the 2021 business outlook is brightening, reflected by these new forecasts showing a stronger and quicker recovery in adspend, with a stronger rebound than in other large economies. With every £1 of advertising spend generating £6 of GDP, this is good news for jobs and growth in the wider economy.”

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