MASTERCLASSING

UK ad spend records its worst ever quarter in Q2 2020, down 33.8 per cent year-on-year

David Murphy

Figures from the Advertising Association and WARC reveal that the UK ad spend fell by 33.8 per cent in Q2 2020 at the height of the nation’s lockdown. This was the worst ever quarter recorded for the UK’s advertising industry and contributed to a 14.9 per cent dip over the first half of the year, equating to a loss of £2bn when compared to the same period in 2019.

The new data show investment fell across all advertising formats in Q2, with some sectors that were shut down, such as cinema, and those that lost significant amounts of consumer contact, such as out of home and direct mail, seeing significant declines.

Cinema spending fell 100 per cent, out of home by 83 per cent, and TV by 31.3 per cent. As the population was encouraged to remain at home, online formats performed relatively less badly than others, with online display ad spend falling by 13.9 per cent and search by 20.6 per cent in Q2 2020, compared to Q2 2019.

The stats come from the latest Advertising Association/WARC Expenditure Report, which has downgraded its 2021 forecast to a return-to-growth of 14.4 per cent, lower than the figure of 16.6 per cent predicted in July. Growth in 2021 will fall just short of offsetting this year’s losses completely, meaning the UK’s ad market is now not expected to recover fully until 2022.

Ad spend is set to fall by 14.5 per cent this year to £21.5bn as a result of the COVID-19 outbreak, equating to a loss of £3.6bn compared to 2019. The final quarter of this year – traditionally the Golden Quarter for retail and ad spend because of the Christmas Advertising season – is set to see a 10.5 per cent drop to a total of £6.2bn, some £724m lower than the previous year.

Looking ahead to 2021, cinema ad spend is forecast to rise by 138.3 per cent as picture houses reopen and films that have been postponed make it to screens. Other media predicted to perform well year-on-year include out of home (+57.1 per cent), regional newsbrands (+16.2 per cent) and magazine brands (+18.8 per cent), underpinned by strong growth in their online formats.

“These stark figures demonstrate the strain that all parts of the advertising ecosystem were under during the second quarter,” said Advertising Association Chief Executive, Stephen Woodford. “Large parts of our industry and the wider economy were effectively shut down. Events of recent weeks have shown this will be no straightforward recovery, as different parts of our country enter or leave local conditions at varying speeds. We must boost growth and support jobs through an advertising tax credit and a skills programme to aid colleagues facing unemployment. It is essential that our workforce, business, and Government work together on the recovery plan for our industry and our country.”

The outlook from James McDonald, Head of Data Content at WARC was also gloomy. He said: “The latest results show that the UK’s advertising industry endured its worst quarter on record during Q2 2020, an unprecedented period in which a national lockdown was imposed in response to the COVID-19 outbreak.

“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 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.”

You can read the industry's reaction to the report here.