This Year, Next Year: UK mid-year media forecasts

How COVID-19 and Brexit have affected the UK media industry

With the current global pandemic having a greater impact on the UK than most other countries, it is now all but certain that the UK’s 2020 economy will be weaker than any it has seen in the past century. Consensus data tracked by Refinitiv predicted a 7.7% real decline in economic growth as of the end of May, surpassing expectations of a 5% decline as of the end of April.

The economic impact will probably be mitigated to some degree by government support schemes. However, it is unlikely that a decline can be avoided completely. Some might argue that this felt inevitable at the start of 2020 due to the imminent impact of Brexit, though a slight growth was still predicted in early March, before the COVID-19 lockdown.

Since the initial downward turn that began in late March, the UK ad market has started to stabilise. With that in mind, here are the key predictions from the This Year, Next Year: UK Mid-Year Forecast Report.

Seven key takeaways

1. Digital advertising is expected to decline by only 8% during 2020, with an expected rebound next year of 11% growth. We also estimate that ecommerce-related advertising will expand by 45% this year and another 66% next year, on the way toward £2.2 billion in advertising revenue for media owners by 2024.
2. Television advertising is expected to decline by 15% in 2020, followed by growth of 13% next year. This includes a drop of 17% for linear TV in 2020 followed by a 13% rise in 2021, as most of the spending cancelled during the second quarter of this year will effectively have been deferred. This rise in spending is expected alongside pent-up consumer demand and a presumed return of otherwise “normal” trends next year.
3. Print media is expected to decline by 24% in 2020 and then grow by 18% in 2021. News brands are likely to fare worst, with an expected decline of 28% in 2020, followed by a 24% gain in 2021, essentially recouping most of this year’s lost revenues. By contrast, magazines are expected to decline by “only” 13% this year, followed by a 4% gain next year.
4. OOH (out of home) advertising is set to suffer more than most media during 2020, with a 35% decline expected this year and a 23% rate of growth expected for next year. Demand for new outdoor advertising essentially stopped during the worst of the pandemic, generally leaving media owners with only the limited revenue that was associated with longer-term budget commitments and long-term ad placements.
5. Audio media is expected to fall by 16% this year and then grow by 14% next year. Overall, audio remains cost-efficient and the growth in digital formats, especially podcasts, is generally making audio more appealing to marketers. As a result, digital streaming services should roughly double their revenues between 2021 and 2024, while the overall medium will likely see low single-digit annual expansion.
6. Cinema revenue has been heavily impacted by COVID-19, which forced the closure of all cinemas for 15 weeks from mid-March. Revenues are expected to fall 50% this year and recovery will be slow as social distancing measures will remain in place when cinemas reopen (currently scheduled for July 2020). We expect revenue growth of 25% in 2021 from films deferred from 2020.
7. 2021 and beyond. If a COVID-19 vaccine is developed and distributed at some time in the first half of 2021, we should see all the normal activities that have been made challenging by social distancing return in some form next year. Events such as the Olympics should take place and professional sports will resume. It is hoped that economic activity will return to its normal rate after 2022. However, the scale of decline and the action taken now, as well as the impact of Brexit, will all have implications for the pace at which the economy expands and the time it takes to return to even 2019 levels.

For more in-depth insight and analysis, read GroupM’s This Year, Next Year: UK Mid-Year Forecast Report