Distribution: external brand owners Territory: UK Date: 27.05.21 AV UK MEDIA MARKET REPORT ONLINE PRINT Q2 2021 ANALYSIS AND AUDIO Q3 2021 FORECAST OOH CINEMA TL;DR TOO LONG; DIDN’T READ AV The fantastic sporting schedule and the return of flagship programming bring the potential for significant viewing figures and plenty of must-watch TV moments. However, the continued proliferation of how and where we watch, combined with increased demand from brands, mean taking advantage isn’t straightforward. Early-mover advantage could determine the winners and losers come the autumn. SEE FULL REPORT ONLINE We’re expecting a jump in pricing over the next few months, though to a lesser extent than originally anticipated (we’ve not seen the same rush back to the market as after the first lockdown). As restrictions ease budgets will increase and dormant advertisers will re-enter the market, growing the demand for addressable audiences. SEE FULL REPORT PRINT With encouraging signs of recovery and innovative opportunities arising, the outlook is positive for publisher brands as they continue to adapt to changes in consumer behaviour. And while millions of us are still likely to be (at least partially) working from home in Q3, we’re expecting brands to continue making the most of this through letterbox media campaigns. SEE FULL REPORT AUDIO Listenership soared across radio, podcasts and digital audio over the past year. With post-lockdown working habits likely to be slow to change, we expect audio to continue reaching more audiences than ever before. RAJAR hopes to return later this year in what would be the most widespread and robust research into radio listening in over a year. SEE FULL REPORT OOH After a challenging 14 months for the out of home industry, audiences are back and so are advertisers. Our advice is to brief early to avoid disappointment. The latest forecasts expect to see roadside audiences return to pre-Covid levels by 21st June, with transport reaching around 75% by the start of September. SEE FULL REPORT CINEMA While admissions aren’t forecast to return to their pre-Covid levels just yet, early signs are promising. With a slate of postponed blockbusters to come, this channel is likely to go from strength to strength. SEE FULL REPORT AV Q2 market conditions • A recent AA/WARC report carried some heartening news for marketers, with the overall UK ad market set to grow by 15.2%1. Within this, TV is forecast to grow by 8.8%, which (while impressive) would still see the year track behind 2019 spend levels overall. • What we’ve seen in Q2 so far would both appear to confirm this but also leave open the possibility that 2021 might reach the same overall levels we saw two years ago. • We are currently expecting revenue for Q2 to finish anywhere from +70% to +80% vs 2020. While this figure comes with the caveat of a much lower than normal base, there’s no doubt that the easing of lockdown restrictions and growing optimism has fuelled increased spending. • A return to growth has been further aided by the policies of all main saleshouses regarding late money and the more relaxed 4-week AB deadline (which continues to operate). • While positive in many regards, this makes forecasting a trickier business. The results can sometimes be significant: in some places, the price of TV in May rose by 20% compared to initial release only a few weeks prior. • In our last report, we wrote that there would “likely be high levels of inflation in Q2” and have been proven correct. In addition to revenue, impacts across many audiences have seen double-digit decline vs the same period in 2020. 2020’s high base partially explains this (creating somewhat of a false perception). However, advertising revenue is indeed returning to market at the same time as viewing is beginning to return to pre-Covid levels. • June is a significant month for the nation as we wait to see if lockdown will truly end or if restrictions carry on beyond the 21st. From a TV perspective, we expect to see a surge in viewing around the Euros and Love Island (both were postponed in 2020). As well as being must-see TV for many, meaning a higher chance of live viewing, they are a healthy source of 16-34 impacts in a traditional linear space. What to expect in Q3 • Q3 will start very much in the same vein as Q2, with the Euros and Love Island continuing throughout summer. The Euros will be into the knockout stages come July, and the hope is that all or at least some of England, Scotland and Wales are still in with a chance. Should this be the case, we can expect a surge of late money into market (not forgetting that some games will be exclusive to the BBC). • This is not to say that only ITV will benefit (although clearly, they are the main beneficiaries): both Channel 4 and Sky will be hopeful that their flagship programming sees an upturn in non-linear viewing over the summer. Given the importance of BVOD in the coming years, a strong performance here will be warmly welcomed. • Looking further ahead, we could see further investment in market from the Olympics and Paralympics partner brands (assuming both go ahead). Savvy planning will be essential to create an association with the Olympics as the lion’s share of viewing will be delivered on the BBC. The Paralympics on Channel 4 offer an excellent chance for brands to be associated with this content. At the same time, the return of Premier League and other club football in August will see Sky look forward to a strong end of Q3. • All three main broadcasters share a deserved sense of optimism surrounding their non-sports scheduling. We’re beginning to see the return of new TV content after the pause in production over the last year. It’s hoped this will mean viewers who fell back in love with TV in 2020 don’t abandon it in 2021. Given the planned lack of restrictions in Q3, it’s highly possible that viewers choose to enjoy this content in increasingly non-linear formats. • In Q3, we should see the return to more normal indices when analysing revenue performance. By July last year lockdown had begun to ease and thanks to increased optimism and government support (e.g. Eat Out to Help Out), the market was much more buoyant. That means that Q3 is likely to show some growth of circa +5% vs 2020, but the higher base than we’ve seen in Q2 means it will be a challenging period for TV trading. Advice for brands • Book early. Revenue looks to be strong for Q3 so saleshouses are in a better position to put premiums on late spots or turn money away • Try something new. The market is going to be challenging, and you could be at risk of delivering a lower share of voice than usual. Maximise your 1+ cover by diversifying your AV approach to include BVOD and CTV as well as traditional linear - these channels are experiencing strong post-lockdown growth • Audience first. Don’t look at AV in binary terms; it isn’t linear or VOD, it should be a balanced view of who you want to reach and in what content 1 AA/WARC Expenditure Report April 2021 ONLINE Q2 market conditions • Last quarter we projected an imminent uptick in the CPMs required to win auctions on the open exchange. This has happened, but more slowly and to a lesser extent than anticipated. • Average CPM rates have remained lower year on year throughout Q1 despite signs of gradual recovery. However, as we now move into the second year of Covid, year on year changes become less helpful in identifying what’s happening. • What’s clear, looking at effective CPMs from across our pooled data, is that we’ve not seen the same rush back to the market as we did at the end of the first lockdown. While costs are now trending upwards, they’re doing so more slowly than we might have expected. Pooled eCPMs vs Covid-19 Cases 1,400,000 1,200,000 1,000,000 800,000 CPM 600,000 eported cases R 400,000 200,000 - Jul-20 J an- 21 Feb-21 Apr-21 Mar-20 Apr-20 May-20 Jun-20 Aug-20 S ep- 20 Oct- 20 Nov-20 Dec- 20 Mar-21 May-21* Jun-21* Average eCPMs Reported Covid Cases (UK) What to expect in Q3 • We still anticipate a significant jump in pricing over the next few months, though we have revised our expectations as to the extent of this downwards. • Although the increase in costs may be smaller in volume and slower to take effect than expected, the upwards pressure is likely to prove inevitable. As lockdown eases, advertising budgets will increase and dormant advertisers will re-enter the market, increasing the demand for addressable audiences. • The easing of lockdown and return to more typical working patterns is likely to shrink the amount of time consumers spend online, reducing the supply of impressions. An increase in average CPMs seems unavoidable. • By the end of Q2, we’re anticipating average costs in programmatic advertising to have returned to more or less the same level as before the pandemic. • Search and social will be subject to similar forces, but this will manifest in different ways. • Search is likely to see a significant uptick in investment from previously dormant sectors (e.g., travel), but this will be localised to relevant keyword auctions.