GroupM’s TV and print ad spend forecast drops amid Brexit fears
WPP’s media arm GroupM has reduced its forecast of UK ad growth for 2016 by £220m in anticipation of the financial impact of a vote to leave in the upcoming European referendum.
EU referendum
GroupM’s forecast for UK ad spend in 2016 dropped from a predicted 7.2 per cent increase made in November 2015, down to 6.3 per cent, representing a downgrade of £220m.
The media investment group, owned by Sir Martin Sorrell’s WPP, believes that a vote to remain in the EU would "end uncertainty" and help the market bounce back in the second half of 2016.
TV and newspapers will be the most hurt by an unsettled industry holding back on spend until the future of the UK in the EU is known, according to GroupM’s forecast. It said budget cuts and deferrals are most noticeable in TV, explaining its marked cut to TV ad spend from 7.1 per cent growth forecast in November to just 2.6 per cent for the year.
Adam Smith, futures director at GroupM, commented: "We came into the year predicting +7 per cent for TV and now we are at 2 per cent -3 per cent, in part thanks to a harder comparison created by TV outperforming in 2015.
"We'd agree with ITV's remark that softness set in around 20 February, when the EU referendum was announced. Although TV subsequently lost momentum, and it is relatively easy to defer TV investment, we still think a degree of post-EU referendum recovery is a likely scenario."
The newspaper market is looking similarly gloomy, with GroupM’s November forecast of a decline of six per cent now doubled to a decline of almost 12 per cent this year. It’s evidence of the rapid decline of print advertising revenues across the market, where some newspapers are even considering joint ad sales ventures to lure advertisers back on board.
Meanwhile digital advertising growth remains the principal contributor to investment growth for the third successive year with growth double the market average. The research showed that 'core biddable' online display advertising investment including video across the main platforms is presently growing on the order of 50 per cent.