UK advertising is set to see the eighth successive year of growth, despite the short-term effect of the EU referendum, with predicted growth up from 6.3% to 7.2% for 2016, and from 5.8% to 7.2% for 2017. This increase in spending takes the industry to an investment of £18.8 billion in 2017, according to the latest media and marketing forecast figures from GroupM, the world’s leading media investment management group.
GroupM’s outlook for traditional media advertising has deteriorated slightly, from -1.1% to -2.6% for 2016 and from +0.5% to -1.4% in 2017. The predicted ad market share for pure-play digital has consequently risen by a point to 52% in 2016 and then up 3 more points 55% in 2017. The UK remains among the most digital-centric advertising markets in the world.
GroupM has found that digital display demand continues to rise strongly with a +15% rise predicted for 2017, particularly into social media, and, within digital, from static to video. The largest driver is paid search which is accelerating again. It benefits from rising automation, geo-targeting capabilities and the point of sale immediacy of mobile for performance-minded advertising.
GroupM’s forecast for the year ahead is continued strong growth in search, which maximises automation and technology. ‘Search’ embraces YouTube’s substantial AdWords trade.
For the first time, GroupM offers an analysis of the aggregate digital advertising investment it manages for its UK clients. This includes paid search which differs to the IAB’s analysis which only includes details on display. GroupM now invests approximately the same amount in digital advertising as in TV (linear and VOD), and half of GroupM’s digital investment is automated, up from 40% in a year.
GroupM UK’s digital investment by venue in Q2 2016 vs Q2 2015:
|Type||% of Q2 ’16 investment||% of Q2 ’15 investment|
|Display (mainly static)||31||37|
|Social including video||16||11|
Today, five advertising categories stand out as being important for TV but relatively light on digital.
These are Cosmetics & Personal Care; Food; Retail; Household Equipment & DIY; and Leisure Equipment. These five together comprise a third of UK TV ad investment, or £1.5 billion. Pure-play online advertising is by contrast approaching £10 billion. GroupM predicts that pure play digital vendors will target these categories more aggressively in future.
“The effect of the future EU exit on the UK economy is unknown, but the short-term impact was negligible. To our own surprise, we are revising UK advertising growth up from 6.3% to 7.2% for 2016, and from 5.8% to 7.2% for 2017,” said Adam Smith, Futures Director, GroupM.
“The main driver that we have seen is paid search accelerating again. It benefits from rising automation and the immediacy needed for mobile and performance-minded advertising. We expect digital display advertising to continue growing by 18% in 2016 and 15% in 2017. The ambition of pure play digital vendors to conquer TV territory and categories will be hard-won, but today’s undisputed winner is pure-play digital”
|Year Over Year Percentage Change|
|Media yoy % change||2015||2016f||2017f|
|Consumer magazine brands||-4.2||-9.9||-9.3|
|B2B magazine brands||-6.5||-6.7||-5.1|
“We continue to support advertiser investments in digital campaigns by investing in the data and technology resources needed to inform and efficiently execute these campaigns. Of course, this is crucial as more media become digital, addressable and available in real time,” said Nick Theakstone, CEO, GroupM United Kingdom. “However, it is also important that advertisers not abandon top of the marketing funnel activities for creating brand awareness, like TV, with over-investment in digital. We are advising careful consideration in balancing investments to ensure support of long-term brand growth.”