Glimmer of daylight as AA/Warc forecasts faster UK ad recovery

'Enjoy summer safely': multiple advertisers have signed up to government campaign
'Enjoy summer safely': multiple advertisers have signed up to government campaign

Keith Weed urges adland to beat forecasts and drive economic growth.

The recovery from the coronavirus ad slump will be slightly faster than expected in the second half of 2020 and in 2021, according to an upgraded forecast by Warc, but the Advertising Association’s president, Keith Weed, threw down a challenge to adland to do significantly better and drive economic growth.

"Let’s get this country going again," Weed told Campaign, adding the Advertising Association is still pushing the UK government to consider tax incentives for advertisers because of advertising’s ability to drive growth.

"Advertising connects people with brands and services. Without advertising, people do forget [about brands]," he said. "We're not going to get the economy going again without the one positive tool that every business has, which is to advertise."

Warc said its new forecast, in the latest Advertising Association/Warc Expenditure Report, shows a “slight improvement”.

Q3 is on course for a decline of 20.7%, compared to Warc’s previous prediction in April of 24.3%, and Q4 is set for a drop of 6.7%, again an improvement on the earlier prediction of 8.9%.

"These figures point to the light at the end of the tunnel," Philippa Brown, the chair of the Advertising Association and global chief executive of PHD, said, although Weed conceded the improvement is "not huge".

Q2, during the worst of the lockdown, is expected to be the low point, with Warc sticking to its earlier forecast of a 39% slump for the April to June period.

Overall, Warc expects an annual decline of 15.6% to £21.4bn for UK ad expenditure in 2020, slightly better than 16.7% when it first slashed its expectations in April because of coronavirus.

The recovery in 2021 should also be a little faster with growth of 16.6%, rather than the earlier prediction of 13.6%.

Warc cautioned that revenues won’t start growing again until the second quarter next year. Q1 2021 is set to be down 4.4% and a return to growth in Q2 2021 "assumes a successful vaccine will be in place".

Despite the improved figures, AA chief executive Stephen Woodford cautioned they show the outlook for UK advertising "remains fragile" – pointing to the planned restrictions on "junk food" advertising announced this week as a barrier to recovery.

"This forecast demonstrates the need for government to continue working with the advertising industry to boost confidence in the economy and among consumers," Woodford said. "This can be achieved through initiatives such as our tax credits scheme for advertising, but also by ensuring we have a regulatory environment that is open and fair, to ensure businesses have the confidence to invest. This means avoiding increased rules and regulations, such as those proposed for HFSS advertising, that will weigh on the much-anticipated recovery we hope to see next year.”

Weed, meanwhile, added that it was “vital that our industry continues to do all it can to support the recovery, most pertinently by joining the ‘Enjoy Summer Safely’ coalition to help mainstream essential public health messages".

He said it had been "incredibly impressive to see how our industry has so quickly rallied together to carry public health campaigns and other initiatives to inform and assist people across the country".

But Weed, the former chief marketing and communications officer of Unilever, who now sits on the boards of Sainsbury's and WPP, warned central London remains "a ghost town" and raised fears about the long-term impact of the crisis, especially on "young people in this industry", if they miss out on experiences and networking.

Advertising can play an important role in getting "consumers to re-engage", which is why tax incentives for advertisers, particularly small businesses, could help to speed up recovery, he added.

The ad industry has been lobbying Whitehall about tax incentives for advertising for several months.

"If we thought that there was no possibility or way through, we wouldn't be persisting [in pushing for such incentives]," Weed said. "We've had some encouraging conversations."

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