Lead Forensics

Key insights from the Mid-Year Advertising Forecast

29 June 2022


The UK advertising industry is expected to grow by 9.3% in 2022 despite inflation and the cost-of-living crisis, according to GroupM’s latest Mid-Year Advertising Forecast.

With household costs set to escalate by 7.8% this year – the highest inflation for thirty years – fears of a downturn in economic activity and the possibility of a recession are not unfounded. Upon this new uncertainty, the fact that brands remain committed to ad investment should be seen as a hugely positive sign.

The industry’s rise – which is 2% higher than predictions made in December 2021 – will see the UK retain its status as the fourth largest market in the world behind the U.S., China and Japan.

So, what are the main forces driving this predicted growth? And what does it all mean for advertisers?

Digital surges onward

GoupM’s forecast centres largely on the continued upsurge in digital ad investment, with spend set to grow 10.4% on top of last year’s rise of 41%. It’s expected that digital advertising on pure-play platforms will account for a whopping 79% of all industry activity this year – ten years ago, that figure stood at 36%, though total advertising has also tripled in growth over the same period.

Notable protagonists within the digital sphere are retailers and e-commerce brands, whom GroupM predicts will account for several billion pounds of digital ad investment in 2022.

TikTok, too, is forecast to carry on eating away at share, with take-up to mushroom further; while Google’s unrelenting dominance will see search continue to thrive.

TV’s growth will be more muted

After delivering 24% growth in 2021 and further momentum in the first quarter of 2022, this year will ultimately see TV’s ascent clipped at around 3% YOY. The industry should see a boon in the final quarter with the FIFA World Cup, while longer-term, the introduction of tiered, ad-funded subscription models is expected to open streaming platforms to the market.

The pending launch of ITVX is a case in point here, while the likes of Rakuten and Pluto may benefit from a growing desire among consumers to enjoy premium content at minimised cost.

Another possible entry-point into streaming for the television market is brand integrations, or in other words, brand-supported content that’s included in digital streaming libraries.

Then, of course, there’s YouTube. With more broadcasters agreeing to license their content on the platform, the report forecasts that more marketers will come to see it as a substitute for traditional TV.

And while it may be becoming harder for TV advertisers to hit their reach and frequency targets among some audiences, the ongoing evolution of highly targeted, addressable advertising should – at least to a large extent – mitigate any negative repercussions of this dwindling coverage.

Out-of-home continues to rebound

OOH’s pandemic travails appear to be subsiding fast. Feet are once again being planted on the streets, and with them, new and returning advertisers – in particular, travel brands – are driving the media’s return to pre-lockdown levels of investment.

Key to outdoor’s anticipated 26% growth this year – following on from 29% in 2021 – is the unabated rise of DOOH. Improved, data-driven targeting and delivery automations have seen it take 64% of out-of-home’s market share, and this is only likely to increase as, like with TV, outdoor becomes more interlaced with digital technology.

Print capitalises on the rise of conscious brands

Viewed as the flag-bearer of trust and quality perception, print is enjoying something of a return to form as brands seek safe spaces that support their social and cultural positions.

Its trajectory is forecast to be similar to that of TV and nestle in single-digit growth; though, with many publishers now diversifying their offerings into the realms of digital, experiential and podcasts, the future looks rosier than it has for a while, especially with the return of advertising categories such as travel and entertainment.

Print is also poised to enjoy a similar final quarter boost to TV thanks to the World Cup. This, however, is likely to be negated somewhat by the continued reduction in government spending in support of journalism, as well as the dwindling level of coverage around the pandemic.

Audio forges its own path

Unlike most mediums, audio’s performance in 2021 actually improved on 2019 levels. Consequently, its growth has been driven not by returning advertisers but new ones, while other brands have simply increased budgets that were already in play.

Despite this, the audio market enjoyed considerable year-on-year growth of 16% in the first quarter of 2022, though this is likely to tail off as the year progresses to end at around 3%.

If these figures were not already enough to look beyond 2022 with optimism, developments in booking flexibility and access to geographical audience data are expected to continue adding fuel to the audio market’s momentum – as will the evolution of platforms such as Spotify, Amazon Music and Podfront.

Cinema tentatively re-emerges  

No medium suffered more than cinema during the pandemic, with screens across the country shuttered throughout the majority of the past two years. So, it will come as little surprise that its recovery has been slower than others.

As well as the pandemic, exclusive deals with streaming platforms have also eaten into cinema’s share of the market, and this is likely to become a bigger issue over time as audiences become more accustomed to this new landscape.

Despite this, cinema will remain an important industry for viewers and production companies alike; nothing can truly replace an evening at the movies. This should ensure it remains a fixture on media plans.

Final thoughts

It’s clear that the advertising market is still feeling the aftershocks from two years of disruption – and new uncertainties are emerging. Some things may never go back to how they were pre-pandemic, but this shouldn’t – nor does the evidence suggest it will – alarm brands and agencies.

On the contrary, this can be seen as an opportunity to evolve, reorient, and adopt a more holistic approach to marketing. Businesses that embrace change are best placed for the future; this report highlights the importance of having an agile and forward-thinking company culture that thrives off trying new things.

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