WARC/AA ad spend figures: industry reaction
- Thursday, July 30th, 2020
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As the Advertising Association and WARC forecast that UK ad spend will fall by 15.6 per cent to £21.4bn this year due to the COVID-19 pandemic, we reached out to industry executives for their reaction to the news.
Justin Taylor, UK MD, Teads
“The latest AA/WARC expenditure report further demonstrates the devastating socio-economic impact COVID-19 has had on the advertising ecosystem. However, we must look for those glimmers of hope and to recovery. The slight improvement from the previous forecast is a small step in the right direction and credit has to be given to all of those who have worked tirelessly to keep businesses going and ensure people remain in employment.
“Government initiatives such as ‘Eat out to help out’ will no doubt attribute to the slight uplift which is expected over the summer months for some verticals. And if the tax incentive scheme for advertising and marketing services takes off, it will hopefully encourage businesses to continue advertising their way through this.
“However, what is evident from this report is, as an industry, we have a long winter ahead, with pre- COVID-19 ad spend levels not expected to bounce back until 2022. For this to happen, there must be a renewed focus on responsible advertising strategies which harness the power and agility of quality digital environments.”
Chris Phillips, CEO, TMWI
“UK ad spend has seen a sharp decline, according to the latest figures from The Advertising Association and WARC, with an almost 40 per cent decline estimated for Q2. But we have just lived through a global pandemic, which is still raging on. So this is hardly surprising.
“Looking beyond the potential for sensationalist headlines, and the undoubtedly severe and sudden decline, there are some positive forecasts for growth for 2021, across a number of very different media types; both traditional and newer channels.
“Video on demand (VOD) is projected to grow by over 20 per cent, year on year, in 2021, for instance, while it’s a figure closer to 40 per cent for digital out of home. Meanwhile search is also set to hold up well, alongside more traditional formats such as radio.
“The fact is that changing times call for finely tuned media plans which reflect the current state of the marketplace. Attribution systems to accurately measure kpis and success will be even more important as advertisers seek to make every pound count.
“Marketers have never before had such a range of tools and technology at their disposal, allowing real-time, iterative approaches to campaigns, whatever the end goal. But this is not a time for lazy thinking. It is so important to stay abreast of market changes and to ensure that bespoke, scalable marketing models are deployed.
“A steely and analytical focus on a rapidly shifting marketplace alongside an appreciation of the context audiences find themselves in will stand forward-thinking brands and advertisers in good shape.”
Ed Preedy, CRO, Cavai
“It’s easy to focus on the negative right now and a 39 per cent decline estimated for Q2 is not an encouraging figure. But the truth is, consumer behaviour has changed and the sophistication of digital marketing efforts will have taken a dramatic upturn as long as brands and companies continue to invest, while ensuring they use formats that resonate with consumers.
“With online display having performed well, with an 11.8 per cent rise year on year in the first quarter of this year, the signs are far from bleak. Growth is projected to stand at over 15 per cent in this channel for 2021, according to the data from The Advertising Association and WARC released today.
“This strong performance merely reflects that eyeballs are, increasingly, online. Brands that leverage innovative, non-intrusive, digital formats have a huge amount to gain right now, whatever the shape of the wider economy in the coming few months. The long-term picture is one of greater digital sophistication. Brands that invest now will see their efforts pay off as we emerge into a new normal.”
Rob Blake, Country Manager, Channel Factory
“The news that UK ad spend had risen 2.9 per cent in Q1 before the pandemic hit, followed by a 39 per cent decline estimated for Q2 should come as no surprise to no-one. Whilst it was impossible to foresee the upheaval of the past six months, the complex and evolving digital ecosystem was already being challenged, with calls for greater transparency and increased online safety. And we were right to question the status quo.
“One positive of the huge challenges society has recently faced has been an urgent resetting of priorities. Despite acute financial challenges for many companies, online safety has actually increased in importance as consumers seek trusted communications from brands at a time of crisis and anxiety.
“We hope that, as we emerge into the so-called new normal, brands and advertisers will be able embrace a more sophisticated ad supply chain, with greater scrutiny and controls and an awareness of long-term gain over short-termism.
“We were already heading in this direction, albeit relatively slowly, but the recent crisis has in fact served to focus our minds on the advertising industry we want to see, rather than aiming blindly for growth above all else. And with growth forecast to return in 2022, let’s hope a renewed focus on quality continues.”
Vihan Sharma, Managing Director LiveRamp Europe
“While it is reassuring to see that ad budgets are expected to rebound to predicted levels in 2021, inarguably ad budgets will continue to be under increased pressure and scrutiny for the foreseeable future amidst the backdrop of an economic downturn and global pandemic. It’s more important than ever therefore, that advertisers prioritise addressable media across web, mobile in-app and TV, to name a few, to ensure every dollar spent is measurable and accountable.
“Advertisers also need to be mindful of industry shifts such as the disappearance of third-party cookies, and increasing regulations of device-based identifiers like mobile advertising identifiers (e.g., Apple’s IDFA). When advertising budgets do rebound, it will be vital that advertisers, platforms and publishers have partnerships and solutions in place that persist well beyond these significant industry headwinds, while protecting consumer privacy, transparency and trust above all. This will be crucial in ensuring business continuity.”
Patrick Johnson, CEO and Chairman, Hybrid Theory
“With financial pressures mounting on brands and marketing teams, marketers will be tasked to find ever more efficient and smarter ways to buy media and reach target audiences. With the Facebook Boycott underway, brand safety will continue to remain of paramount importance.
“As individual consumer behaviour changes based completely on personal circumstance, it’ll be critical for brands to understand who is in market for products and services to reduce ad wastage and improve campaign performance.
“Look below the superficial doom and gloom and there is opportunity for brands. Those businesses that have adapted and responded to the increase in online purchase behaviour have welcomed new audiences, and can expect more to come. Consumer spending hasn’t shut down so it’s up to marketers to find those that are spending and connect them with their brands.”
Owen Hancock, Marketing Director EMEA, Impact
“We are heartened to see that online and digital performed excellently – for example with search and online display growing by over 10 per cent and almost 12 per cent respectively. During this strange time, digital consumption has rocketed and marketers are waking up to new, innovative possibilities inherent in collaboration.
“Video on demand (VOD) was another star performer, recording growth of 11.3 per cent and demonstrating how digital habits and behaviours have changed more rapidly at this time than perhaps any other during history. Now is the perfect time for advertisers to forge new and exciting paths, through greater use of digital channels and automation.
“If we all work together to achieve the same goal of ROI, I see no reason why the AA WARC’s forecast of a return to growth in 2020 is unrealistic.”