The WIR: WARC/AA Predict 16.7 Percent Drop in UK Ad Sales, Facebook Expands Live Stream Monetisation, and UK Scraps its Online News Tax Seven Months Early

In this week’s Week in Review: The WARC/AA Expenditure Report forecasts a tough year for UK advertising, Facebook adds new monetisation options to Facebook Live, and the UK government scraps VAT on digital publications. To receive an update on the industry’s top stories every Friday, sign up to the weekly Video Round-Up.

Top Stories

WARC/AA Forecast £4.2 Billion Drop in UK Ad Market This Year
Total ad spend in the UK will drop by £4.2 billion this year, representing a 16.7 percent fall, according to the Advertising Association and WARC’s Expenditure Report released this week. James McDonald, head of data content at WARC, said the drop in ad sales is expected to primarily affect Q3 and Q4 this year, though aftershocks will impact Q4 and early 2021.

The Expenditure Report’s figures find that UK ad spend grew 6.9 percent in 2019, but the forecast for 2020 is grim. Total TV ad spend is expected to be down by 19.8 percent, with broadcaster video on-demand (BVOD) expected to drop by 6.3 percent. And national news brands are predicted to face significant drops, with overall ad spend on national news brands forecasted to fall by 20.5 percent. “The current quarter will be a tremendously tough time for many businesses across our industry,” said Stephen Woodford, CEO of the Advertising Association. “We are acutely conscious of their predicament and working fast with Government and officials, so that they get the best support possible.”

The positive note in the report is that something of a rebound is expected in 2021, with ad spend predicted to rise by 13.6 percent (though this rebound would still not return total ad spend to its 2019 level).

Facebook Expands Live Stream Monetisation
Facebook is adding new monetisation options to its live streaming platform, according to two separate reports this week. Facebook is expanding its test of in-stream ads within Facebook Live streams, allowing a wider variety of publishers to trial the format, according to a report from Search Engine Land. The tests are limited to pre-vetted entertainment, sports and news partners, and include pre-roll and mid-roll video ads.

Facebook also announced it will begin letting creators charge for access to live streams from within their Facebook Page. Users will be able to advertise live streams via Facebook’s ‘Events’ feature, with audiences paying for access through the event page.

UK Scraps Online News Tax Seven Months Early
The UK government announced it is scrapping the twenty percent value-added tax (VAT) on digital publishing from today, seven months ahead of schedule. The UK Treasury had announced the measure in its budget last month, and has now decided to implement the change early to help publishers which are struggling with the financial burden of the pandemic.

The change should provide a significant boost to UK publishers. Physical books and newspapers have long been free of VAT in the UK, with lawmakers acknowledging the public good which comes from UK citizens having cheaper access to information. But the tax on digital publications, criticised as a tax on reading, has become more and more of a burden on publishers as their readers have moved online.

The government also announced that newspapers will receive up to £35 million in additional government ad revenue over the next three months as part of its coronavirus communications campaign.

Coronavirus News

Proportion of Ad Buyers Pausing Campaigns Rises to 37 Percent
Thirty-seven percent of ad buyers have now paused ad spend as a result of the pandemic according to research from the US branch of the IAB, up from 24 percent in mid-May. The majority of this shift came from advertisers who previously reported themselves as “undecided” on how they would change their ad spend during the lockdown.

Ad Spend

OpenX Cuts Staff and Salaries
Supply-side ad tech company OpenX has furloughed and laid off a number of its staff and cut hours for others, with 15 percent of its workforce affected by these measures. The company has also reduced the salaries of its executive team by 15-20 percent to help deal with the financial burden of the pandemic. Outgoing CEO John Gentry said the company doesn’t expect advertiser spend on its platform to return to pre-pandemic levels until mid 2021.

TF1 Predicts Big Impact on Q2 Revenues
French broadcaster TF1 reported a 9.7 percent drop year-on-year in Q1 advertising revenues this week, with the pandemic costing the company €35-40 million in the last two weeks of March. And the broadcaster’s executive vice-president for Finance and Procurement, Philippe Denery, said in an earnings call that “the situation in the second quarter is not good”, predicting a significant fall in ad revenues in Q2.

Dentsu Postpones Q1 Results
Agency holding group Dentsu has postponed the release of its Q1 financial results, which were due to be released in mid-May, to an as-yet undecided later date. “As reported, the spread of the COVID-19 has had a major impact on worldwide society and the economy,” read a statement from the group. “This, in turn, has caused some delays to accounting procedures for the consolidation of the Group’s first quarter results.”

Omnicom Forecasts Sharp Declines in Q2
Omnicom reported 0.3 percent organic revenue growth in Q1, but says it expects double digit declines in overall revenues in Q2. CEO John Wren said that the company’s revenue forecasts suggest that Q2 will be the most affected by the pandemic, though the company says it still can’t predict when business will begin to pick up again.

PepsiCo Trims Nonessential Marketing
PepsiCo is trimming nonessential advertising and marketing spend to reflect the realities of the pandemic, its CFO Hugh Johnston said this week. While its ad spend was up in Q1 and sales were up eight percent, PepsiCo says its beverage business is taking a hit with consumers visiting grocery stores less regularly.

Unruly Finds ITV’s Gordon Ramsay Ad to be Most Emotionally Engaging Coronavirus Campaign
ITV’s “Apart. But Never Alone” TV as is the most moving coronavirus campaign in the UK so far, according to research from Unruly. Unruly found ITV’s campaign, featuring celebs Gordon Ramsay and Davina McCall urging people to stay at home, attracted the most intense positive emotions among ads created in response to the COVID-19 pandemic.

Mediaset Espana Sees a Nine Percent Drop in Ad Revenue
Mediaset Espana reported a 9.3 percent drop in Q1 advertising revenue, due in part to the impact of COVID-19 on the Spanish advertising market. Net profits meanwhile were down eight percent to €48.9 million.

The Week in Tech

UK Competition Authority to Investigate Taboola/Outbrain Merger
The UK’s Competition and Markets Authority (CMA) announced this week it is investigating the merger between content recommendation platforms Taboola and Outbrain. The deadline for the CMA to announce its decision whether to refer the merger for a Phase 2 investigation is 26 June 2020.

AT&T Merges Xandr with WarnerMedia
AT&T announced this week it is formally folding its advanced advertising unit Xandr into its content arm WarnerMedia. Xandr was already used heavily to monetise WarnerMedia, and as part of WarnerMedia, it will still continue to sell third-party publishers’ and broadcasters’ inventory. As part of the merger Gerhard Zeiler, CRO of WarnerMedia and president of WarnerMedia International, has been appointed to oversee all advertising responsibilities across AT&T.

Google Blocked 2.7 Billion Bad Ads in 2019
Google released its annual ‘Trust and Safety in Ads’ report this week, stating that last year it blocked over 2.7 billion bad ads, and suspended nearly one million advertiser accounts for policy violations.

RTL AdConnect Launches BVOD Buying Platform ‘VMP Connect’
RTL launched a new programmatic platform specifically for European BVOD (broadcaster video on-demand) this week, which it says is compatible with all major demand-side platforms. At launch, VMP Connect will be used for in-stream broadcast video inventory in Spain (A3 player), Germany (TV Now), France (6play), and Belgium (RTL Play, 6play, MyTF1), but RTL plans to roll it out across all its media partners.

Facebook Reports Stabilising Ad Sales
Facebook said in its Q1 financial results this week that it’s seen a stabilisation of ad sales, following an initial drop in prices as advertisers paused campaigns at the start of the pandemic. While ad revenues for the quarter overall grew 17 percent year-on-year, sales in March were down. But Facebook says ad sales in April were roughly the same as the same period last year, with gaming and ecommerce companies filling the gap left by other advertisers pulling out.

Criteo Revenues Down Ten Percent
Criteo reported in its Q1 financial results that revenues were down ten percent year-on-year to $503 million. Criteo said the impact of COVID-19 accounted for around $24 million of this drop. But CEO Megan Clarken said she believes her company’s strength in direct response marketing will place it well to help brands recover from the economic downturn.

Ogury Launches New Video Chooser Format
Ogury launched a new video ad format this week, Video Chooser, which it says is now set as its default format for full-screen video ads. Video Chooser lets audiences choose from three different brand ads to watch, with that ad then being played full-screen. Brands can also choose to buy all three ad slots.

Beachfront Introduces Pod Bidding for Connected TV Advertising
Beachfront this week introduced a new ‘Pod Bidding’ solution for connected TV advertising. Built on Prebid, Beachfront’s Pod Bidding product is designed to help premium video publishers properly construct and auction entire ad pods across Beachfront’s demand partners, rather than auctioning off individual ads within a pod. Beachfront says the solution supports deduplication and competitive separation.

The Week in TV

Channel 4 Launches Free Ad Creation Service
UK broadcaster Channel 4 launched a new free ad creation service this week through its in-house creative agency 4Creative. Brands buying media through 4Sales will be able to use 4Creative to remotely create new ad copy, or edit existing copy, which can then be used for TV ads on Channel 4. 4Sales also announced a suite of new data-driven digital advertising products.

ProSiebenSat.1 Goes All In On Joyn with Plans to Shut Down Maxdome
German broadcaster ProSiebenSat.1 has confirmed reports it plans to shutter its on-demand portal maxdome this summer, part of a plan to merge its content and convert its users over to Joyn, its joint venture with Discovery. ProSieben has already stopped allowing new users to sign up to maxdome, directing them to Joyn instead. In time maxdome will be shuttered completely, though the maxdome login may be kept to allow users to buy films directly. Read the full story on VAN.

Amazon Extends NFL Streaming Deal
Amazon has extended its streaming deal with US football league the NFL for a further three years. The deal will see Amazon Prime exclusively stream “Thursday Night Football”, as it has done for the past three years. It will also have exclusive rights to one Saturday game which won’t be broadcast on TV outside of the two participating teams’ home markets.

US Traditional TV Viewing Set to Rise This Year
Traditional TV viewing in the US is set to rise for the first time in almost ten years, according to a report from eMarketer this week, as the pandemic keeps audiences locked indoors. But eMarketer predicts that the uptick will not last, with traditional TV’s decline predicted to continue next year.

RTL Group’s SVOD Subscriptions Rise 34 Percent
European media giant RTL Group reported that subscriptions to its OTT services TVNow and Videoland were up 34 percent year-on-year in Q1. But overall group revenues were down 3.4 percent to €1.4 billion.

The Week in Publishing

YouTube’s Revenues Grow 33 Percent
YouTube was one of the star performers in Alphabet’s Q1 financial result this week, with revenues up 33 percent year-on-year, reaching $4.04 billion. But Google warned that it had started to see a “significant slowdown” in overall ad sales towards the end of the quarter as it began to feel the effects of the pandemic.

TikTok Reportedly Reaches Two Billion Downloads
App analyst Sensor Tower says video sharing app TikTok has now been downloaded over two billion times, just five months after reaching 1.5 billion downloads. Sensor Tower says in Q1 this year, TikTok generated the most downloads for any app ever in a quarter, accumulating more than 315 million installs across the App Store and Google Play.

Fortnite’s Travis Scott Concert Reaches 12 Million Viewers
Popular video game Fortnite’s live Travis Scott concert was watched by more than 12 million players, according to developer Epic Games. The event set a new record for Fortnite, which has begun pushing into live events and social experiences following the success of its Battle Royale game mode.

Twitter Makes a Loss Despite Soaring Userbase
Twitter reported 24 percent year-on-year growth in its daily users in Q1 this year, as more people are turning to the platform for coronavirus-related news. But despite the huge userbase growth, revenue growth slowed to three percent year-on-year. This led to an overall loss, the first since Q3 in 2017, according to the Wall Street Journal.

Snapchat Releases ‘First Commercial’ Format
Snapchat has released a new ad offering which lets an advertiser buy the first ad any user sees within the first Snap show they watch that day. The ads are non-skippable and retain their place as the first ad users see for 24 hours, according to Adweek.

Twitch Signs Streaming Deals with ESL and Dreamhack
Gaming livestreaming platform Twitch has signed exclusive streaming deals with MTG-owned ESL and Dreamhack, giving Twitch exclusive rights to some of the world’s largest esports events for 2021 and 2022.

The Week for Agencies

WPP Revenues Fall 3.3 Percent
Agency holding group WPP reported overall revenues down 3.3 percent in Q1 this year, as the company began to feel the effects of the pandemic. Like-for-like revenues meanwhile were down 7.9 percent. Alongside the results, WPP announced a new wave of cost-cutting measures, including redundancies and voluntary pay cuts.

Publicis Groupe Announces Money Back Guarantee
Publicis Groupe announced a new service called ‘The Pact’ which guarantees a campaign reaching a target KPI, with the advertiser receiving a full refund if goals aren’t met. Advertisers will be able to choose from KPIs including sales, customer acquisitions and return on investment.

Proportion of Women in C-Suite Agency Roles Slightly Rises, but Gender Pay Gap Grows
The IPA published its annual Agency Census this week, finding that the proportion of women in C-suite roles at its members’ agencies rose slightly to 34 percent, up from 32.7 percent in 2018. However the gender pay gap also rose, with the average salary gap sitting at 24.4 percent in favour of males, compared to 24.2 percent in 2018.

John Seifert to Step Down as Ogilvy CEO
Ogilvy CEO John Seifert announced in an internal memo this week that he is stepping down from the role next year. Seifert took the top job in 2016, and has been with Ogilvy for 41 years. His successor has not yet been chosen.

Hires of the Week

Dentsu Aegis Network Appoints Neil Gissler as Global COO
Dentsu Aegis Network has appointed Neil Gissler as its global chief operating officer. Gissler moves from his current position as president of Dentsu Aegis Network Americas.

Brian Lesser Joins InfoSum Board
Brian Lesser, the recently departed CEO of Xandr, has joined InfoSum’s board of directors. “I have always been incredibly impressed with InfoSum’s privacy-first stance within the industry. Now, more than ever, marketers and brands are looking for safe, secure, and trusted solutions for their identity and data applications,” said Lesser.

Integral Ad Science Names Eu-Gene Sung as Chief Financial Officer
Integral Ad Science this week announced Eu-Gene Sung has been appointed as chief financial officer. In her new role, Sung will report directly to the CEO, Lisa Utzschneider, and will lead the organisation in setting financial strategies to drive business outcomes and growth.

MediaCom UK Chooses Richard Davies as Chief Digital Officer
MediaCom UK this week announced it has appointed Richard Davies as its new chief digital officer. Davies moves from his current role at MediaCom UK as head of conversion and digital.

This Week on VAN

ProSiebenSat.1 Goes All In On Joyn with Plans to Shut Down Maxdome, read more on VAN

Here’s How the Industry is Asking the UK’s Competition Authority to Regulate Google and Facebook, read more on VAN

What’s Happening to Brand Budgets for the Olympics & European Championships? read more on VAN

From Early Payments to Zoom Boxing Classes: How Are Sales Teams Working Through the Lockdown? read more on VAN

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