Report Overview

2020 UK advertising forecasts: Robust growth despite the soft economy

We predict 4-5% growth in advertising expenditure on UK media in 2020, driven by double-digit growth of pure play online, expected to reach 58% of total spend this year, up from 55% in 2019

The outlook for the economy in 2020 is more positive than in 2019 because the risk of “crash-out” has given way to a more hopeful prospect of an EU-UK free trade agreement by the end of the year

On the consumer side of the UK economy, signs of fragility include the debt-fueled expansion of expenditure in excess of nominal income growth since 2016, a risky stance in the prospect of job losses

Slow economic growth spells decline for traditional advertising media:

• We predict 3% drop in expenditure on TV, also exposed by the structural decline of audiences, which is testing brand adherence
• Despite the ongoing decline of expenditure, press had a more benign year in 2019 than previously, which we also expect in 2020
• Much smaller brand-building media – out of home, cinema – that appeal to younger audiences are riding digital waves
• Radio is benefitting from audience building initiatives, digital-only stations, and the more fashionable nature of “audio” media due to the appeal of podcasts to audiences

Pure play online however also benefits from the structural shift from offline transactions to e-commerce, also attracting SMEs, leading ad spend growth to substantially outperform economic growth

In all, this will be the 11th successive year of advertising growth, generating £10 billion more annually than in 2009

Contents

Our forecasts: total advertising spend and display advertising spend

Share of total advertising by media

Share of display advertising by media

Slow GDP growth expected for 2020 in the wake of Brexit on January 31, 2020

Household finances are improving, with the consumer credit binge subsiding

Employment running out of steam, the effect on households in imminent

Retail running out of steam; weakest December growth for online and offline retail on record

Ad spend growth diverges from consumption growth; a sign of an expanding universe

TV picked up at the end of 2019, though BVOD growth not enough to stem NAR decline

Some major advertisers are spending significantly less, while growth comes from “new” areas

Online advertising continues to surge, with buying largely outside the big media agencies

Ad spend growth outstrips ecommerce, driven by non-retail advertisers and video formats

Google and Facebook properties collect two thirds of online ads, but regulators are circling

News advertising: national calm, local storm

Magazine advertising: the accelerating spiral

Radio relatively flat, with continued decline from local advertising

Out of home advertising strong growth in 2019

Cinema had a blockbuster 2019, but a weaker 2020 slate will set attendance back

List of charts/tables

Total ad spend year-on-year % change 2019-2020 by media

Total UK advertising spend (£m) and year-on-year % change

UK display advertising spend (£m) and year-on-year % change

Share of total advertising by media

Share of display advertising by media

Forecast real GDP and business investment growth, %

Consumer confidence & business confidence index and household consumption (£m)

Growth rate for household disposable income and nominal consumption against household cash basis savings ratio, %

Yearly growth in credit, %

Employment net flows, (000’s)

Average weekly real and nominal wages, £

YoY change in the value of all retail sales, %

Value of retail sales and share of internet sales as a proportion of all retail

Ad spend versus private consumption (£m)

Commercial TV impact delivery (solid lines) and TV-set viewing (dotted lines) (2010=100)

Total number of commercial impacts by ad category, 2017-2019 (billion)

Change in Commercial Impacts among top 100 clients, 2017 to 2019, CI (million) and % change 2019 v 2017

Online ad spend by format (£m)

Share of online spend going through big 5 media agencies, 2018

Online ad spend and online retail sales, 2012 = 100%

Video advertising by segment

Platform ad revenues (£m)

Ad tech providers average fees, 2018

National and regional newspaper annual print circulation (m)

National and regional newspapers display forecast (£m)

Consumer magazine annual print circulation (m)

Magazines display forecast (£m)

Total UK commercial radio revenue (£m)

Weekly hours of commercial listening by demo (m)

Total out of home revenue (£m) and year-on-year change (%)

Cinema admissions and DCM revenue (m)

UK total cinema advertising spend (£m)