GroupM: UK ad growth revised down
Online brand safety concerns have contributed towards a downgrade in GroupM’s latest ad forecast, with growth in the pure-play internet category revised down by -4%.
Pure-play, which includes Google, YouTube and Facebook, was estimated to grow by 15% in November 2016, but that figure has now been downgraded to 11%.
Over the last year the ad industry has witnessed a spate of serious brand safety issues which saw ads placed alongside extremist content, in addition to a number of high profile measurement blunders. In response, GroupM said advertisers have increased their brand safety and accountability expectations and were taking “a more measured view toward digital.”
Despite the downgrade, pure-play internet will still account for £10.5 billion this year.
Overall, GroupM, the investment arm of WPP, has downgraded UK advertising growth from the 7% predicted at the end of last year to 4.1%. However, it still marks the eighth successive year of growth and the UK will remain one of the fastest-growing media markets in 2017 with investment predicted to reach £18.6 billion
GroupM says the fall in ad investment growth predicted is also partly attributed to a generalised drop in TV investment by several of the medium’s largest categories, which prompted a reduction of its TV forecast from flat to -3% this year. This is down from 10% in 2015.
While online advertisers are big and growing supporters of TV, they are not enough to offset falling investment from TV’s more traditional categories such as food, finance, cosmetics and retail, many of which face multiple pressures on sales and margins.
GroupM says a continuing challenge in TV is the accelerating loss of the 16-24 year-old audience and predicts 2017 will yield 59 billion 16-24 year-old commercial TV impressions in the UK – a 10% drop since the prior year and the lowest volume since the arrival of Sky Digital in 1998.
“The ‘cost-per-view’ culture engendered by digital video, which prizes price above safety and quality, has fortunately not yet knocked off TV’s crown as the medium with the best-value cost per impression,” said Adam Smith, futures director, GroupM.
“We think TV’s present pressures are more cyclical, which is typical behaviour in this sector and reflects the economic cycle, rather than structural issues.”
Smith added that while GroupM had previously discounted Brexit as a drag on the economy, the recent UK general election has magnified, rather than reduced, uncertainty in contrast to the political and economic stabilisation in the Eurozone.
“This is not helpful for growth when consumers and public finances are already under stress, and corporate investment subdued,” he said.
GroupM’s inaugural forecast for 2018 is for total UK media investment growth of 4.5% to include pure-play digital gaining two points of market share, rising to 58%.