The year ahead for adspend: get ready for the comeback

The UK should see a strong recovery in adspend in 2021 after the coronavirus slump of 2020. Cinema and outdoor suffered most during lockdown and are set to enjoy the biggest bounceback. Internet advertising held up well, thanks to the boom in ecommerce and streaming, and Group M estimates the overall decline in ad expenditure was not as bad as previously feared. That augurs well for the year ahead.

The year ahead for adspend: get ready for the comeback

'Ecommerce should continue to grow from its new plateau'

By Brian Wieser, global president of business intelligence, Group M

The UK’s advertising market will almost certainly have a very good year in 2021 (see graphic, below) despite all of the uncertainties associated with Brexit, as well as the pandemic and matters of public health (a new lockdown in England was announced on 4 January).

In general, expectations around advertising depend, at least directionally, on the improving state of the economy. We can only start with some assumptions that should determine that outcome, including an absence of persistent Brexit disruptions and the successful  widespread distribution of a Covid-19 vaccine by the middle of the year.

However, even the specific pace of economic growth or decline isn’t by itself going to determine outcomes for the advertising market.

The transition the economy has made in recent years to incorporate digital activity has helped to elevate growth in advertising activity to levels that were well above what we might have expected both prior to and especially during 2020, when the pace of decline more closely resembled a once-in-a-decade recession rather than a once-in-a-lifetime pandemic.

Ecommerce should generally continue to grow from its new plateau, and heightened levels of digital advertising will inevitably follow.

Of note, the role of small and medium-sized businesses and uniquely digital businesses connecting international manufacturers with domestic consumers will continue to account for a growing share of spending on advertising in the market, largely independent of their share of economic activity.

Marketers will also have to deal with the consequences of substantial and increasing investment in ad-free television by many of the world’s largest media owners. These efforts will contribute to shifts in viewing patterns away from traditional ad-supported TV. As this occurs, marketers will face accelerating challenges in managing reach-and-frequency-based media goals.

Paradoxically, scarcity will lead to pricing pressure, as measured on a like-for-like basis. This presents opportunity for new tools and processes to better manage budgets, but it also highlights the ongoing importance of looking for alternatives to traditional media channels.

Other media will experience a wider range of outcomes. In brief, we expect an eventual return to normal ad growth for outdoor media, stability in audio and ongoing declines for print-based media owners, even including their digital extensions.

While we can point to these expectations for individual media owner growth rates as somewhat predictable within a relatively narrow range, expectations for individual marketers should not be taken as anything like a given.

Marketers who best invest in understanding how consumer behaviours and preferences are evolving, tie those insights into product and distribution choices and find novel ways to support efforts to build brands will inevitably be best positioned to outperform for 2021 and beyond, independent of the state of the economy and the media industry within it.

Illustration: Ben Jennings