GroupM upgrades forecasts for UK advertising growth
UK advertising is forecast to reach £22 billion in 2019, up from £20.5bn in 2018, according to WPP’s investment wing GroupM.
The figures represent a rate of growth of 7.8% this year – an upgrade from the 6.1% forecast made by the group in June.
GroupM has also revised its expectations for 2020, now predicting a growth of 6.7% to £24 billion rather than its previous forecast of 4-5%.
In the latest edition of its ‘This Year, Next Year’ report, GroupM said the driving factor behind these strong predictions is “the emergence of massively scaled digital brand owners whose businesses are endemic to the internet.”
Facebook, Amazon, Netflix, Alphabet, IAC, Uber and Booking.com spent more than £20 billion on advertising globally in 2018, and are likely to spend more than £25 billion in 2019 – equating to approximately 5% of the world’s total spending and a full percentage point of growth.
“If we add in the next tier of digital endemics that may not have existed even a decade ago, it’s not hard to imagine additional percentage points of growth emerging from these types of marketers. With much of the revenue generated by these companies occurring in the U.K., it’s hard not to imagine the flow-through effects on the growth rates described here,” GroupM said.
In the UK, digital “pure-play” media is predicted to end 2019 with a 15% year-on-year rise. Growth is expected to be “resilient” in 2020, rising by a further 11%.
“Pure-play” digital advertising will account for two-thirds of total UK advertising next year, GroupM predicts, rising to 73% by 2024.
Meanwhile, traditional TV advertising is forecast to drop -2.3% this year but rebound to flat in 2020, as the medium “sustains tremendous value for marketers” despite the “uncertain” economic environment surrounding Brexit.
Out of home is predicted to grow the fastest of any traditional medium with a 7.7% increase in 2019, followed by a 4-5% rise every year for five years. Radio, meanwhile, is to grow 2% next year after a flat 2019.
However, it is cinema which will end 2019 with the most robust growth at 9% – but GroupM does not expect that growth level to be sustained going forward. In 2020 cinema is forecast to grow 4.5%, followed by low single digit growth.
Elsewhere, print faces more declines – “although it retains value as a niche medium”, according to GroupM. National titles are expected to have fallen by -7% this year and -6% in 2020, while regional titles drop -11% and -9%. Magazines face a similar story.
Although the digital offerings of newspapers and magazine publishers “help ensure that trends will not be worse”, in total newspapers and magazines account for less than 10% of media investment in 2019 and beyond, GroupM said – down from over 50% in 2004.