Christmas ad spend could drop by more than 10% this year as retailers rein in spending after a difficult year and amid ongoing uncertainty over both Covid-19 and Brexit.
The final quarter of this year, which traditionally sees a sharp rise in retail ad spend because of Christmas, is predicted to post a 10.5% year on year decline to £6.2bn, according to according to new figures from the Advertising Association and WARC. That would be £724m lower than last year.
Across 2020, it is now predicted that ad spend will decline by 14.5% compared to 2019 to £21.5bn, equating to a loss of £3.6bn compared to last year. That is an improvement on the 16.7% fall that was predicted back in April.
However, the recovery is now expected to be slower. Previously, AA/Warc had expected the market to return to the size it was in 2019 next year but now says it won’t offset this year’s losses until 2022. It has downgraded its 2021 forecast to growth of 14.4%, lower than the figure of 16.6% predicted in July.
WARC’s head of data content, James McDonald, explains: “Advertising trade remains depressed, and the rising likelihood of sustained localised lockdowns over the winter, a disorderly exit from the European Union in December, and and a prolonged economic recovery embodied by rising unemployment, now leads us to believe that the industry will not fully recoup this year’s losses until 2022.”
The latest industry data also shows that UK ad spend fell by 33.8% in the second quarter of 2020, the worst ever quarterly performance for the UK’s advertising industry. This contributed to a 14.9% decline in ad spend over the first half of the year, equating to a loss of £2bn when compared to the same period in 2019.
|Forecast year-on-year % change, select channels||2020||2021|
Investment fell across all advertising formats in the second quarter as a national lockdown saw some sectors, such as cinema, post significant declines. Outdoor spend was down 83% in the second quarter, cinema by 100% and direct mail by 62%.
The best performing sector in the second quarter was online display but even this fell by 13.9%, while search was down 20.6% and TV 39.3%.
The Advertising Association’s chief executive, Stephen Woodford, says: “These stark figures demonstrate the strain that all parts of the advertising ecosystem were under during the second quarter. Large parts of our industry and the wider economy were effectively shut down.
“Events of recent weeks have shown this will be no straight-forward recovery as different parts of our country enter or leave local conditions at varying speeds.”
Nevertheless, the forecast is predicted a return to growth for almost every sector in 2021. Cinema ad spend is forecast to rise by 138.3% as they reopen and films that have been postponed are released.
Other media predicted to perform well year-on-year include out of home, up 57.1%, regional news brands, up 16.2%, and magazine brands, up 18.8%, all underpinned by strong growth in their online formats.
Few will rebound fully next year, however.