A decline of 4.4% for 2020
It could have been worse. Nine months into the COVID-19 pandemic, the scale of its impact on the U.K. is relatively clear by now. Overall, our forecast predicts a decline of 4.4% for 2020, which is much improved over our prior expectation of a 12.5% decline that we forecasted in June. While the economy was historically weak as anticipated, marketers both large and small proved to be relatively resilient.
One of the “bright spots” of advertising in 2020 has been in digital. We estimate that pure-play digital advertising will grow by 4.9% during 2020, following 2019’s 16% rate of growth. Next year should see additional growth of around 12%, tapering off toward 7% after 2021. While this year’s gains look strong in comparison to the rest of the industry, it reflects significant deceleration versus prior years.
Additionally, e-commerce growth in the U.K. has seen accelerated growth—53%—economy-wide during the third quarter. We anticipate that e-commerce-related advertising will continue to experience rapid growth, rising around 50% this year and 66% next year, reaching £2.4 billion in media owner ad revenue by 2024.
In television, for 2020, we estimate it will fall by 10%, the worst rate of decline since 2009, but better than we anticipated earlier this year. Our 2021 forecast now anticipates a 10% gain and a return to 2019 levels in 2022. Although streaming services receive much of the industry’s attention, traditional ad-supported television continues to do the bulk of the work supporting marketers’ brand-building efforts. SVOD is drawing consumption away from conventional TV, at least in line with the heightened levels of investment going into the new offerings from the media owners themselves. But legacy media owners’ platforms are finding ways to add value for their customers.
Some other key takeaways:
Print media, including newspapers, magazines and their digital extensions, will account for 7% of media owners’ ad revenue in 2020, down from 9% last year. We expect a decline of 23% this year, followed by a rebound of 13% in 2021.
Out-of-home advertising is set for a decline of 45% in 2020; however, much of that loss should be regained next year, when we expect the medium to expand by 31%. Digital formats, which now represent around 60% of the medium’s activity, will continue growing next year and beyond.
Cinema has been most heavily affected by the pandemic, with an estimated decline of 80% for 2020; however, we expect a strong rebound of 160% in 2021 as film studios seek to monetise their backlogs with a surge of highly anticipated launches. While this rebound may seem optimistic, we note that it only brings cinema back to 52% of pre-pandemic advertising spend.
For 2020, we think audio will fall by 16%, and we expect growth of nearly 12% in 2021. The bigger question is what happens in the years beyond? The effectiveness of audio-based media has rarely been in doubt, though its appeal has been somewhat limited, as the medium commands only 2% of industry spending. Arguably, this presents opportunity for growth over time, especially as new digital formats emerge.
For 2021 and beyond, Brexit uncertainty still weighs on the British economy. While the implications for media might not be obvious, the macroeconomic impact is potentially significant. At a minimum, our forecasts anticipate some degree of disruption to the economy in the early part of 2021 as adjustments are made; however, we think Brexit’s impact on the advertising market will be limited to a shift in spending away from the first quarter rather than meaningful full-year cuts. More generally, we continue to assume that “normal” activity will return by the second half of the year, which pre-supposes that Brexit will not cause ongoing problems and that an effective vaccine will be widely distributed across the population.