Ad-free Disney is coming. Google and Facebook still dominate digital spend but cinema, OOH and radio are fighting back
The new decade begins with some bullish forecasts for UK adspend in the wake of last month’s general election.
Advertisers have spent so long coping with uncertainty over Brexit that it has become "the new normal" and Boris Johnson’s victory could give a short-term boost, according to Brian Wieser, president of global intelligence at Group M.
The WPP media buying group has pencilled in a 6.7% increase in UK ad expenditure to £22bn for 2020. Publicis Media’s Zenith has suggested a still-decent 4.9% growth rate. Wieser says the UK’s forecast is unusually good compared with most other developed countries and "it’s all digital". What’s more, these increases follow 10 years of sustained growth in adspend.
The UK is benefiting from the advanced state of its digital ad market and a broader global trend as digital-first companies such as Google, Amazon and Netflix, as well as other disruptors, are investing heavily in marketing to build their brands.
Addressable TV
This just might be the year when addressable TV advertising comes of age in the UK. ITV’s new targeted, online TV advertising service, Planet V, is set to go live in February, following a roadshow around media agencies, and Channel 4 is to put its channels on Sky’s AdSmart, after the two broadcasters agreed a deal last September.
Commercial TV needs new sources of growth. Group M expects the UK TV ad market to be flat this year, only marginally better than a 2% drop last year. However, the real action might not be on the free-to-air side of the TV business in a year when England co-hosts the Euro 2020 football tournament. The UK’s streaming wars will enter a new chapter as Disney+ launches its ad-free service on 31 March, after a debut in the US in November 2019, when it reached 10 million sign-ups on launch day.
BritBox, a joint venture between ITV and the BBC, started operating last November but is at risk of looking like a minnow in the subscription video-on-demand space as it seeks to build a distinctively British alternative to well-funded, global SVOD giants, including Netflix, Amazon Prime Video and Apple TV+.
Ofcom, which will be under new leadership, as Sharon White has quit as chief executive to become chair of John Lewis Partnership, has warned that UK creative industries could be under threat and may need greater protection.
Performance marketing fuels growth
Google and Facebook already dominate the UK digital ad market and the pair continue to grow strongly, thanks in part to the boom in performance marketing as brands seek an accountable and rapid return that drives sales. Search advertising revenues are set to grow 12% and other digital display ad sales are likely to increase by 10% this year, according to Group M.
Last year brought a wave of M&A investment in a trio of UK performance agencies, Jellyfish, Croud and Brainlabs, which are all specialists in marketing on Google – another sign that investors see further potential upside in the search advertising market.
Instagram is fuelling Facebook’s growth. The social-media group’s annual UK revenues are likely to be running at more than £2bn as we begin the new decade – a significant milestone because it means Facebook is set to overtake ITV to become Britain’s second-biggest media owner by ad sales behind Google.
The power of the tech platforms remains under scrutiny because of an ongoing inquiry into the UK’s digital ad market by the Competition and Markets Authority, which is due to issue a final report by July 2020.
Trusted, brand-building qualities
Out-of-home looks set to be the strongest performer among traditional media channels, with a forecast 5% increase in revenues this year – albeit slower than in 2019. Global, the second-biggest player in OOH after JCDecaux, has spent months integrating its three acquisitions and joining up different IT systems. The owner of Capital Radio is planning to present its new outdoor offer to the market in mid-January. Digitalisation of billboards and the promise of higher revenues are attracting new smaller OOH entrants, including Foris Outdoor, which launched in November, and Alight Media.
Cinema, which is forecast to be up 4.5% in 2020, and radio, by 2%, are also benefiting from similar trends as advertisers value their trusted, brand-building qualities.
News and magazine brands remain under pressure and unable to buck the downward trend in ad revenues, which is why many publishers are looking to increase their reliance on subscription and revenue diversification. Future’s planned acquisition of TI Media in October and DMGT’s purchase of i in November signalled there is considerable appetite from buyers that see an opportunity to drive scale and greater efficiencies – hence the interest in speculation about a sale of Telegraph Media Group.
If there is to be a wildcard factor in the coming year, it could be politics. Limbo at Westminster since the Brexit referendum in June 2016 stymied policy-making in practically every area, including media. Now, Boris Johnson could be emboldened to push for change to the BBC or Channel 4.
Out-of-home heads down Route 2.0…
Chris Marjoram
Managing director, UK & Europe, Rapport
In 2020, out-of-home will continue its strong trajectory – third-quarter 2019 numbers showed growth of 10%, with digital out-of-home increasing its share of revenue to well over 50%. But, significantly, there has been revenue growth across all formats, including classic, and a clear reminder that nothing beats brilliantly inspired design on a large canvas.
But digital is where the focus is, with vendors investing £100m in 2019 alone, leading to a 40% increase in screens. While DOOH is everywhere in London, it is now also a national opportunity embracing major cities and larger towns, as well as new environments. By blending digital with classic, OOH is now a stronger, more flexible, connected and better-looking proposition for advertisers than it has ever been.
All looks good, then. But there’s always a but. If OOH continues growth at 5% annually, is that enough? Usually, the answer would be yes. This level of sector growth in one of the four legacy media channels is often a reason to celebrate, but how does that look to investors that have spent hundreds of millions on digital screens? 8 Outdoor, a relatively new entrant, was a notable casualty in 2019, so it doesn’t necessarily follow that building screens guarantees success. Global hasn’t invested hundreds of millions of pounds buying Primesight and Exterion just to diversify. There’s more to come, but what’s going to really super-charge growth?
The answer could be measurement or, to be precise, Route 2.0 and the introduction of spot level ratings for ads on screens. Three years ago, OOH committed to a long-term increase in investment in audience research. Significantly more money means that Route can employ ground-breaking technology at a scale that will deliver greater precision. The opportunity to base our trading on the audience at any specific time, in any chosen location, puts OOH in line with other media. It offers new potential to compete for budgets that might not previously have been open to the medium.
But is OOH ready for changes to the way it’s traded? Automated, data-led planning will help with that, as will a unified trading metric, and the experience that Global can bring with its DAX ad-serving platform.
In last year’s Year Ahead copy, Posterscope’s Glen Wilson said he wouldn’t mention programmatic OOH. A year on, however, and the move towards better automation still feels right to me.
…while online takes a turn from data distraction to data action
Dino Myers-Lamptey
Founder, The Barber Shop
This year marks a symbolic one for clarity, reflected goals and vision, but for online media, it is likely to be the most unpredictable year since its existence.
On the face of it, the simplification of the medium should lead to more clarity and progress. Facebook (Group), Google and Amazon continue to dominate, and what’s left is falling increasingly into the growing universe of programmatic, making up 78% of all online display advertising.
Within those gaps are the collaborating publishers. The Ozone Project, Unruly and LADbible, and the likes of Social Media Chain and Brand Advance, are all examples of publishers that are trying to give the market differentiation in the form of an appreciation of trusted contextual environments, over simply audiences and eyeballs. Most importantly of all, they’re prioritising first-party data, and first-party content.
In the year ahead, the cookie should finally crumble, with the right regulation kicking in at last. This is something that well-meaning advertisers should celebrate, because it’ll mean we get back to thinking about the "unique" customer, with the content and the context in mind, rather than viewing them in isolation. Basic things that we have long taken for granted, such as "unique" reach and frequency, will be metrics we can hope to apply across the entirety of our online plans as opposed to just within the Facebook Ads Manager or equivalent.
Online media desperately needs just that. While it has undoubtedly claimed its place as the leader of performance media, it is still in beta mode in terms of the brand media space. Video is the great hope, but we are still fighting over which metrics count, and there are many different answers as to what should qualify as a view or an engagement. The good news here is that, with addressable TV stepping on to the turf of online video, there could be a solution in the shape of "universal metrics".
The noticeably smaller Dmexco in 2019 was, hopefully, a sign of much-needed consolidation
and collaboration on the tech and supply side. This will help us to move to an online world demystified of new words for old things, and enlightened by transparency, benchmarks and consumer interest at the heart. In 2020, online media should move us away from data distraction into data action, and the best of the web should thrive as a result.
Silver screen retains its lustre
Hannah Gething
Head of cinema, OMD UK
Subscription TV is constantly in the news – whether it’s Apple TV, Disney+ or HBO Max. Everyone seems to be going TV-mad. Yet, despite this renaissance, the power of the big screen remains, and cinema continues to be a big draw for consumers – cinema admissions have had a great couple of years.
A big reason is those plucky little upstarts over at Disney, who enjoyed four movies grossing more than $1bn in 2019. Avengers: Endgame racked up £89m at the UK box office, and was backed up by stellar returns for The Lion King (£75m), Toy Story 4 (£66m), Joker (£50m, and counting) and home favourite Downton Abbey (£28m). All this at a time when consumer confidence and disposable income have been low.
The reason is the modernisation of cinema real-estate, the quality of the on-screen product and the buzz around long-anticipated releases creating a FOMO moment that has turned a cinema trip into a big, social event. For 2020, one film stands out above all the others in this respect and that is the return of 007 in No Time to Die; a £100m UK box-office target looks on the cards. Also, watch out for the return of family favourites the Minions in The Rise of Gru, Tenet, a mysterious thriller from Christopher Nolan, and Steven Spielberg’s take on West Side Story.
And cinema is a great environment for advertisers. The unique power of the darkened room, no second-screen distractions, no remote control changing channel, pitch-perfect Dolby Atmos sound and flawless 4K projection becoming the norm. There is a wide range of targeting and partnership options – through the continued success of the huge Meerkat Movies activity, to the smaller integrations such as Green & Black’s chocolate or Grey Goose promotions with Everyman, tying up trial, experiential and distribution.
A challenge for cinema in 2020 is showing that "it works" and, with AV content consumption now fragmented across platforms, advertisers need to be smart about how they deliver cost-effective and targeted reach. This leads to an approach that increasingly delivers on short-term sales benefit, and one that cinema may not instantly be considered a part of. However, a smarter planning approach, considering how the power of the cinema experience helps trigger the highest positive emotional response, is the way forward.
The past two years were record-breaking for cinema. As we enter 2020 armed with the latest Bond movie, it won’t lose its power any time soon.
Listen up, radio is valuable for brands
Mesha Williams
AV associate director – investment, MediaCom London
Radio continues to prove to us why it’s so valuable for brands and why it shouldn’t be overlooked. We have recently seen the medium’s renaissance, and now we are witnessing its evolution. It remains the biggest part of audio, and commercial radio continues to perform better than the BBC, reaching 2.4 million more people on a weekly basis.
Speech stations are on the rise despite the popularity of podcasts, with both LBC and talkRADIO noting spikes in listenership. Its popularity has also led Global to launch a nationwide 24-hour news station, LBC News, "Where the news never stops".
Going into 2020, I expect this trend to continue, because radio is still considered the most trusted medium in an era of fake news.
Although radio delivers the biggest weekly reach within audio, we must not forget that it is still part of a much wider ecosystem. Listeners now have more choice, and technological innovation has helped to drive this. About 30 million people listen to digital audio every week in the UK. Streaming has become mainstream, and podcasts’ weekly reach has hit nine million, an 18% increase year on year.
Digital audio has huge growth potential for advertisers, driven by the ability to apply a brand’s first-party data and then optimise campaigns based on data sets. In 2019, revenue grew by about 20% year on year, with 2020 set to deliver similar levels of growth.
There’s no denying that voice-activated speakers are one of the catalysts for audio growth. Smart-speaker penetration is now at 28%, which has helped to boost listening hours online and via apps by nearly 30% year on year. As voice-activated products continue to grow, it is important brands begin to find their own brand voice in audio in 2020.
The continued popularity of podcasts has led to traditional brands tapping into this format. For instance, the success of ITV’s Love Island: the Morning After podcast led to a younger audience becoming ITV listeners.
Measurement will be vital if we are to scale digital audio in 2020. It will have to be at the heart of future technological developments to provide more proof points and greater consistency across the audio ecosystem.
Overall, it’s an exciting time for audio and I am hopeful that continued investment will encourage brands to back the medium. Most importantly, for audio to keep growing, it will need to integrate into the wider communication strategy to avoid being seen as a short-term solution.
TV and VOD will be led by the power of three
Mihir Haria-Shah
Head of broadcast, Total Media
This year will bring the apex of three key trends in TV and video on demand: one led by viewers, one by tech and one by broadcasters.
Viewer behaviour
Consumer behaviour will continue to evolve as viewers increasingly choose to watch premium videos at their own convenience. It’s no secret that, among young audiences, live linear TV is declining in favour of on-demand services. With the streaming wars really set to take off in early 2020, the impact on broadcasters is one to watch.
When there is choice overload, consumers often shy away from making decisions and revert to the familiar. That happened with pay-TV, where only seven or eight of the 200 channels available are regularly watched. We’re starting to see this in the subscription VOD market, with users spending nine and a half minutes searching for new Netflix content to watch and ending up picking The Office (US) and Friends. With greater choice and higher subscription fees, broadcasters may be quietly confident that this could work in their favour as overwhelmed viewers return to traditional TV schedules.
Data
There will be more opportunities for advertisers to reach niche audiences in premium broadcast content. Technology is facilitating data-led TV approaches, using first- and third-party data to create one-to-one marketing strategies and allowing advertisers to target by behaviour as well as demographics, across linear TV and broadcaster VOD. In fact, Sky’s launch of the Comcast product, C-Flight, allows advertisers to plan an integrated marketing strategy across video platforms. This will enable advertisers to optimise across all platforms and react to campaign successes in real-time.
Collaboration
While the fight for audience share continues to divide broadcasters, over the past few years there has been increased talk of collaboration. This year is when it should become reality, with Channel 4 and Sky due to join the BBC and ITV’s BritBox platform. Meanwhile, Sky announced that Channel 4 will be added to the AdSmart portfolio, and ITV is to launch its addressable TV platform, Planet V, in 2020 with an invitation to other broadcasters to use its tech.
This collaboration among the biggest broadcasters can only make TV stronger in the fight against the SVOD giants, and give brands the confidence that TV is still the place to be for brand building and ROI.
Mags will not just survive but thrive
Peter Thomson
Co-founder, The Press Business
I confidently predict that not only will magazines survive in 2020, they will thrive. However, there are some tricky hurdles to overcome.
The first, and most pressing, issue is how to arrest the decline in circulation. This will be achieved by driving digital subscriptions. Until now, readers have been reluctant to pay for digital issues. However, as people become familiar with subscription models (think Amazon Prime and Netflix) this reticence will diminish.
Furthermore, the current economic and political climate plays to the medium’s strengths. At the economic, news and B2B end of the magazine spectrum, readers want greater analysis and in-depth reporting – something that the 24/7 TV news cycle is poor at delivering. At the celebrity gossip, fashion and hobby end of the magazine spectrum, magazines continue to deliver beautiful, self-indulgent escapism.
Publishers will then need to persuade advertisers and media agencies to pay as much for digital impressions as they do for print.
The solution is multi-layered. Magazines need to sell their digital environment as well as they sell their print environment. To facilitate this, both sides (buyers and sellers) must fully embrace PAMCo, allowing a new combined paper and digital currency to be created. To enable this, press buyers need to wrestle the buying of digital packages back from the digital teams. This will reduce the amount of space that is bought through programmatic, which reduces everything to the lowest common denominator, and certainly does not factor in the unique environment (beautiful photography, crafted layout) of a digital magazine.
Magazines will also thrive because they know who their readers are and truly understand their hopes, fears and passions. This means they will be able to expand their portfolio of products – events, merchandise, shows, websites partnerships, sponsored content – all built around the halo product: the print title. This, in turn, will create better data and greater consumer insight, enabling them to further monetise their readerships.
The most difficult challenge for magazines is to persuade more agency planners to include the medium. The desperately inconvenient truth is that agencies make more money out of planning and buying media in other channels. This was highlighted by the recent Attention Pays: Optimising for Profit study by Magnetic, which demonstrated that the "conservative estimate on the levels of magazine underinvestment is £220m". To solve this, magazines need advertisers to instruct their agencies to include print in the mix. After all, in these austere times, the one thing we know is that there is very little wastage in magazine advertising.
Renewed focus on editorial quality will help drive trust
Steven Ballinger
Managing director – commercial and trading, Amplifi
Trust. A small word that carries great significance and value for news brands as we enter what you can only expect to be another eventful but unpredictable year.
Uncertainty in public life has eroded consumer trust in many public institutions and, in a fast-paced, digital world, it’s not surprising that journalism has also come under scrutiny.
However, people still find sanctuary in the output of their preferred news brand; an Ofcom study found that 70% have confidence in the publication they read. This comes at a time where consumer demand for content is insatiable and time spent engaging with publications across numerous platforms has never been so high.
An improvement in ad standards for these platforms has brought greater confidence in brand safety for advertisers, which was made possible only by greater collaboration. The pooling of digital inventory through initiatives such as The Ozone Project has become a fundamental part of the industry and, while publications experience different commercial pressures, the drive for consensus is likely to continue.
The renewed focus on quality editorial content has borne fruit for many and will be a continued trend as titles seek to maximise value across platforms rather than simply trying to squeeze every last drop out of their advertising inventory.
And greater tech integration will be a real differentiator and a huge draw for advertisers. This is likely to be heightened by an increased focus from the major tech players such as Apple, which will look to maximise the return on their investment in products and services like News+. At the same time, agencies are getting to grips with how to better chart the way people engage with different channels through integrated planning tools that merge multiple data points. As such, contextual buying is becoming a reality in many agency groups.
The introduction of more sophisticated metrics will become standard. This is likely to make alignment in the metrics devised by industry bodies even more important, especially as advertisers look for a single, established industry standard.
Building on the power of trust for news brands will help the sector to flourish.