The UK Government marketing campaigns will be “key” to newspaper ad revenues rebounding next year, according to the UK’s biggest ad buyer.
Group M is forecasting total UK advertising spend of £23.6bn in 2021, which would be the biggest growth (12.4%) seen in more than a decade.
It follows a disastrous 2020 which saw the first decline in the sector of 4.4% to a market total of £21bn, following growth of 8.6% in 2019 to £22bn.
Print media was one of the worst-hit sectors this year, with an expected decline of 23% – although a rebound of 13% in 2021 is anticipated.
Newsbrands were “bearing the brunt” of this year’s decline with an expected drop in ad revenue of 28% in 2020 ahead of 17% growth next year.
The Group M end of year forecast report said Government spending with new brands this year had “helped temper declines”, adding: “The degree to which it returns next year will be key to any rebound.”
Between April and June the Cabinet Office approved spending of £216.8m on advertising, marketing and communications for the Covid-19 pandemic and £90.2m on the Brexit transition (excluding VAT).
Magazines did better this year by comparison with news brands, falling by 12%, and are likely to grow by 6% next year with the return of travel and more spending from luxury brands.
The report said of print media’s performance: “While consumption trends are certainly a factor here, ongoing disinvestment in content or, alternately, publishers’ intolerance for diminished profit margins, makes print less compelling to alternative media on a relative basis.
“Moreover, many of the print industry’s traditional sources of revenue, such as retailers, continue to face heightened challenges from online-based competitors, shifting activity—both in terms of selling efforts and related marketing—toward pure-play digital media.”
TV had a tough 2020 with its worst rate of decline (10%) since 2009 but still better than Group M predicted earlier in the year. It now expects a 10% gain in 2021 and a return to 2019 levels in 2022.
Pure-play digital advertising is expected to grow by 4.9% in 2020 despite Covid-19 pressures, with additional growth of about 12% in 2021 before it tapers off at around 7% after that.
The fact digital advertising now makes up about 70% of the industry total means “historically high levels of advertising growth across the broader market” would be needed for steeper growth to continue.
“While possible, we think it unlikely that the total advertising market will grow by much more than mid-single digits in 2022,” the report said.
“At the same time, competing media types continue to offer significant value to marketers and are not about to fall to zero any time soon.
“Consequently, it seems difficult to fathom that digital advertising, in total, might grow much faster than we currently forecast.”
The uncertainty of Brexit means there is likely to be some disruption but the report forecasts this will impact the ad market in the form of a shift away from spending in the first quarter of 201 rather than any “meaningful full-year cuts”.
Normal advertising activity is therefore expected by the end of the year assuming a Covid-19 vaccine is also able to be widely distributed.
“There would be a more meaningful effect on advertising if the kind of uncertainty we have seen during the pandemic were to persist.”
The Group M report was somewhat more optimistic than the Advertising Association and marketing agency Warc’s latest ad expenditure report, which predicted the UK’s ad market will not fully recover until 2022.