Media buying behemoth GroupM has lowered its expectation for UK ad spending growth in 2017 to 4.1%, down from a 7% growth rate predicted in November 2016.
GroupM’s revision comes just days after another researcher, Zenith, lowered its forecast for UK ad spending growth in 2017 to a paltry 0.9% due to a slowing UK economy, rising inflation and political uncertainty over midyear elections and upcoming Brexit negotiations.
GroupM’s new slower-than-expected increase in total media ad spending is due in part to what it calls “a generalized drop” in TV investment. TV ad spending is now expected to decline 2.7% this year, instead of remaining flat, as was predicted in November of last year. Several of the medium’s largest advertising categories, such as food, finance, cosmetics and retail are cutting back on spending as they face declining sales and dwindling margins.
“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 stabilization in the eurozone,” said Adam Smith, GroupM’s futures director. “This is not helpful for growth when consumers and public finances are already under stress, and corporate investment subdued.”
Declining digital media ad spending is another contributing factor to GroupM’s bearish growth forecast for the year. Spending on “pure-play internet” efforts (defined by Group M as digital advertising excluding digital spending on legacy print brands or broadcaster video-on-demand [VOD] platforms) is now expected to rise 11.1% for the year, down from nearly 15% previously predicted.
Digital’s dip is in part due to UK marketers pulling back on ad investment following revelations that ads for some of the UK’s biggest businesses were appearing alongside extremist material on user-generated content sites like YouTube. According to GroupM, that caution continues.
Speaking to The Guardian, Smith noted that, “since March, we have seen a surprisingly general effect of clients either stopping spend altogether, or pausing spend in this area. â€¦ If you thought it was something that was a seven-day wonder, it isn’t. There is still a substantial number of advertisers yet to return to their prior weight of ad investment.”
Nonetheless, GroupM predicts that weakened pure-play internet outlays will still provide nearly all the UK’s ad spending growth in 2017, with its share of the country’s overall media ad spending rising to 56.3%. But the value of ad investment to all other UK media will slip by a combined 4%.
Propelled by digital, UK ad spending will be worth £18.62 billion ($25.13 billion) in 2017, GroupM predicts, marking the eighth consecutive year of growth.