GroupM Revises UK Ad Spend Forecast Downwards by Three Percent due to Reduced TV Investment

Group MGroupM have revised their forecast for growth in ad spend this year downward from 7 percent growth to 4.1 percent. They say the fall in ad investment growth predicted is partly due to a drop in TV investment by several of the medium’s largest categories. This led GroupM to reduce its TV investment forecast from flat to -3 percent this year. GroupM say that advertisers are ‘big and growing supporters of TV’ but 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.

On a more positive note, the industry is still set to see an eighth successive year of growth and the UK will remain one of the fastest-growing media markets in 2017 with a 4.1 percent increase in spending taking the industry to predicted investment of £18.6 billion.

The company also says that another factor to the more modest overall growth prediction is GroupM’s more conservative outlook on “pure-play internet” growth, from the 15 percent estimated in November to 11 percent predicted in the new forecast. GroupM defines pure-play internet as digital advertising minus elements attributable to “legacy” TV and print brands.

Concerns around brand safety, which prompted some large advertisers to pause investment on unmoderated user-generated platforms, also contributed to the projected decline. GroupM say that advertisers are increasingly taking a more measured view toward digital as they “grapple with developing data strategies; setting more coherent objectives; attribution considerations; increased brand safety and accountability expectations and the appreciating trade-off between risk, price and performance”.

However, it’s not all bad for digital and pure-play internet is still providing “nearly all” of the net advertising investment growth in the UK market. GroupM predicts ad revenue to the other media will contract 4 percent in 2017, then stabilise in 2018. They also stress that traditional media owners need to do a better job of better job of justifying their premium prices to an agency/advertiser audience.

The statement also said that TV needs to solve the problem of declining youth audiences:

A continuing challenge in TV is the accelerating loss of the 16-24 year-old audience. TV has always been an older-skewing medium, but the loss of younger, ‘lighter’ viewers – or at least their escape from TV’s measurement domain – makes TV’s measured audiences less varied. This nibbles away at the total campaign reach a given volume of audience can achieve. GroupM predicts 2017 will yield 59 billion 1624 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.

“We came into the year predicting zero revenue growth for TV, and now we are at -3%, a dramatic change compared to TV’s outstanding performance of 10% growth in 2015. 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. 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,” said Adam Smith, Futures Director, GroupM.

“We had previously discounted Brexit as a drag on the economy, but the recent UK General Election has magnified rather than reduced uncertainty, in contrast to 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,” Smith added.

GroupM’s forecasted distribution of advertising investment growth across media formats is detailed below:

Year Over Year Percentage Change  
Media yoy % change 2016 2017f 2018f
Media Category      
TV 0.7 -2.7 2.0
Radio spot 3.3 3.2 2.0
National newsbrands -10.0 -10.8 -6.4
Regional newsbrands -13.2 -5.3 -3.4
Consumer magazine brands -4.9 -10.1 -7.7
B2B magazine brands -9.4 -12.4 -13.5
Outdoor 4.6 2.4 3.1
Cinema 2.0 4.0 2.0
Pure-play internet 14.9 11.1 8.1
Media 6.1 4.1 4.5


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