This year, next year: TV
2020 -14.8%, 2021 +13.3%
Although the correlation between economic growth and TV advertising revenue is not specific, the two are often intrinsically linked. In the past, TV advertising has in the past been seen as a barometer for the state of the economy and continues to be a focal point when discussing market predictions.
For 2020 the market is set to be down -14.8%. This varies by quarter, with Q2 suffering worst at -42.9%. Throughout Q2, we’ve witnessed late investment in month in the TV market, prompted by specific events such as easing of lockdown rules or the return of live sport. Currently, we predict Q3 to be -15.3%, versus Q2 this appears to show signs of recovery. In part, Q3 is propped up by deferred budgets from Q2, which will displace existing planned budgets. Q4 we predict the TV market to be -3%. Next year will be determined in part by the economic recovery in 2020 and actions taken by the government to support economic growth. Events such as the EUROs and the Olympics will help increase spend across the summer, in a year where they should not have taken place. In 2021, we forecast growth of 13.3% based on current 2020. This would represent a 5% decline versus 2019. H1 2021 sees a forecast growth of 27.8%, with H2 being down 3.9%.
Previous conversations on restrictions to HFSS advertising may have passed for now, but potential talks on future enforced gambling restrictions would come at a detriment to the Whilst we’ve focussed on revenue, which plays a fundamental role in UK TV pricing, the model is also based on supply (viewing impacts). The country wide lockdown caused a positive shift in linear viewing, across all audiences in Q2 2020, which was not in keeping with the decline of recent viewing trends. The increase impacts in combination with mass declining spends has led to an exceptionally low price point for TV in Q2. As lockdown has begun to ease, viewing patterns have returned to a ‘near normal’ pattern. We anticipate the decline rate of impacts to re-join the trajectory it was on pre-COVID, driven as before, by an increased up take of screen time now dedicated to online viewing. The decline rate stabilising will require the ability for studios to produce new content and for the returning live sport to be continuing to be able to be broadcast on our screens.
This year, next year: Audio
2020 -15.6%, 2021 +13.7%
Overall, audio remains a cost-efficient vehicle. The growth in digital formats, especially podcasts, is making the medium more appealing to marketers. Digital streaming services should roughly double their revenues over the period between 2021 and 2024 as a result, while the overall medium will likely see low single digit annual expansion.
Looking at 2020 specifically, Q1 revenue was initially planned up 5% but, as a result of the COVID-19 lockdown, it finished down 5%. Across Q2, where the UK was put into lockdown, radio revenues saw a decrease of 45% as many advertisers either could not or did not feel it was appropriate to advertise.
With the UK easing out of lockdown from mid-June, we’re expecting revenue to return to linear radio across Q3 with our current forecast to be down 15% year-on-year. In Q4, as long as we do not see a second COVID-19 spike, we expect revenues to continue to return to audio and the quarter finish flat year-on-year.
This year, next year: Cinema
2020 -50.0%, 2021 +25.0%
Overall cinema revenue has been heavily impacted by COVID-19, which forced the closure of all cinemas for 15 weeks from mid-March. As such, this has had a significant impact on ad revenue across 2020.
We believe Q1 to be up 8%, owing to the success of films such as “1917” but, as all cinemas were closed from 23 March, and won’t re-open until 4 July, Q2 revenue will be down 100%.
Moving into Q3, all the chains are scheduled to open on 4 July with the first major release scheduled to be Tenet”. As a consequence of the imposed lockdown, a number of films were pushed back to 2021 but, across H2, there are still a number of high-profile films being released including “Mulan”, Wonder Woman 1984”, The King’s Man”, “Top Gun: Maverick” and “No Time to Die “to name but a few.
As such, we forecast Q3 to be down 70% and Q4 10%.
This year, next year: Digital
2020 –8.0%, 2021 +11.0%
We expect digital advertising in totality to decline by only 8% during 2020. Digital ad revenue realised by traditional media owners is expected to under-perform versus other digital media which has an ecommerce or short-term performance objective.
We estimate traditional digital media to decline by -13% during 2020, with magazine and news brands’ digital-related ad revenues performing marginally better at -10% decline. Meanwhile, BVoD ad revenues are expected to decline by only -7% during 2020. Whilst revenue figures are down, VoD viewing has increased significantly through the lock-down period, with on average 30% year-on-year increases across the major broadcaster platforms. Typically, VoD works to a fixed price mechanic and therefore has not seen the same deflationary pricing as per other dynamic supply/demand digital models.
However, VoD is boosting the opportunities for reach extension, with new users signing up to the platforms as they seek entertainment during lockdown. One area that is experiencing rapid growth this year is ecommerce-related advertising. We expect this to increase by 45% this year and another 66% next year.
This year, next year: News Brands
2020 -21.2%, 2021 +16.0%
All news brands have seen year-on-year increases in average monthly reach for the 12 months from April 2019 to March 2020, ranging from 15.8% for The Mail (with a reach of 36 million) to 87.3% for The Times (latest Pamco data).
Such positive trends will be hard to take for publishers, as we are predicting a -21% decline in revenue this year, despite consumer demand for their products and trusted news sources.
We do expect increased consumption to be maintained through the rest of the year and believe that lockdown will further accelerate the trends already affecting the publishing industry. Publisher brands are resilient though and can adapt to meet the challenges they face.
This year, next year: OOH
Out-of-home advertising is predicted to suffer more than most media in 2020, with a -35% decline expected this year (a steeper drop than WARC’s expected -19%), resulting in a 4% share of media – its lowest level for well over a decade. OOH will, however, rebound – we forecast a +23% rate of growth in 2021 and a further 17% in 2022.
New demand for OOH formats essentially stopped during the worst of the pandemic, generally only leaving media owners with limited revenues. Our predictions for Apr-Jun were close to 80% down. While some spending will return as social distancing abates over the course of 2020 (Roadside formats are now at 60%+ of pre-lockdown impact levels), our assumption is we will not resume normal out-of-home behaviours until the middle of 2021. Increasing use of digital inventory and the flexibility that follows from digitisation, including programmatic trading tactics, will further help to support favourable ongoing trends – moving to ‘audience first’ over price per panel activation models.
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