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UK Video Ad Budgets Continue to Fall, but Green Shoots are Emerging

Tim Cross  25 January, 2021

While many in the industry are hopeful for an ad spend rebound this year after a difficult 2020, marketing budgets continued to fall sharply at the end of 2020 according to the IPA’s latest Bellwether Report. Over 40 percent of marketers surveyed said their marketing budgets retracted in Q4 last year, compared to just 16.4 percent who said budgets increased. But video budgets were comparatively resilient, seeing much less steep budget cuts than most other categories.

While Q4 saw the start of the UK’s COVID-19 vaccination programme, lockdown measures were also ramped up across the whole country. The virus was the most commonly cited reason for budget cuts, but Brexit is also weighing on marketers’ minds. Though a trade deal has been agreed between the UK and EU, respondents said the potential for tariffs, and increased paperwork, delays and costs cause by Brexit all had a negative impact on marketing budgets.

These budget cuts weren’t evenly distributed however. A net balance of 3.5 percent of marketers reported that budgets for video advertising were cut in Q4, compared to an average of 21.8 percent with the ‘main media advertising category’ (which includes, digital, audio, and out of home). And the IPA’s ‘other online’ category (digital ad spend outside of audio, video, and publisher brands) actually grew, with a net balance of 0.7 percent of respondents seeing budget increases.

And while the start of 2021 may be tough for the ad industry, the IPA’s director general Paul Bainsfair said the report shows “reveal significant promise of green shoots ahead”.

The report forecasts robust ad spend growth of 6.9 percent this year and 6.2 percent next year, as marketers’ confidence returns. And while most of those the IPA surveyed were still pessimistic about the industry’s prospects as a whole, more and more are feeling optimistic about their own businesses. A net balance of 18.1 percent of firms said they are more confident of an improvement in their company’s financial outlook than they were three months ago, the first positive outlook since the end of 2019.

“As the vaccination roll-out continues, as the lockdowns begin to ease and as firms adapt to post-Brexit rules, perhaps we can dare to ready ourselves for the roaring twenties after all,” said Bainsfair. “Those brands that have withstood the storm, kept their voices heard and their subsequent market share up, will be the ones consumers turn to first in the good times.”