Ad spend growth of 6% forecast for the UK next year

Chris Pash
By Chris Pash | 16 July 2020
 
Thinkstock

UK agencies expect a lift in advertising spend next year from the depths of the COVID-19 slump.

The IPA’s (The Institute of Practitioners in Advertising) latest Bellwether Report, authored by information service IHS Markit, points to a 11.3% fall in ad spend during 2020. 

However, this figure is heavily dependent on most sectors in the UK economy staying open for the rest of the year, with a second wave of coronavirus infections a significant risk.

In the second quarter of 2020, UK marketing budgets were slashed to their lowest levels in the twenty-year history of the report from the IPA.

The worst performing sub-category was out of home advertising (-61.2%), followed by audio (-50%), published brands (-49.2%), video (-39.3%) and other online (-35.1%).

However, the report sees a robust recovery in 2021 as businesses move closer to operating at full capacity.

This would translate into a 4.9% expansion in GDP and implied ad spend growth of 6%.

Beyond that, the economy is expected to hit above-average growth during a further recovery phase, before stabilising in 2024 and 2025.

“Despite the weak headline figures and the corresponding hardship that many businesses will face for the rest of this year, we do expect a strong bounceback in 2021,” says Eliot Kerr, economist at IHS Markit

Paul Hutchison, CEO UK at Wavemaker, says today’s report confirms the reality of what the industry has been experiencing since the middle of March.

“Of course, whilst the headline of the fastest decline since this report commenced 20 years ago is shocking, it is, however, hardly surprising,” he says.

"V shaped recovery, U shaped recovery, who knows. What we do know is that marketing is an investment and growth is there to be had.

“We may need to think differently about how and where to find growth and experience uncomfortable change to realise it but those brands who positively provoke and focus on both short term optimisation and longer term transformation will bounce back strongest and fastest."

Patrick Reid, group CEO, Imagination, says the coronavirus’ impact on marketing expenditure in Q2 2020, for live events, especially, has clearly been a huge challenge.

However, the expectation of recovery for the rest of this year and into 2021 is encouraging.

“Without a doubt, the marketing industry will need to adjust to meet post-pandemic expectations, and experiences – which have enjoyed such growth in recent years thanks to the unrivaled opportunity they give brands to inspire and engage through the telling of brand stories in holistic environments - will be well-placed to recover lost ground,” he says.

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