AA Warc: Tech Platforms Continue To Profit As Other Sectors Suffer Severe Declines
New data has shown that the tech platforms are continuing to profit through the coronavirus pandemic as all other sectors suffer severe declines.
Adspend figures for Q2 2020 from AA/Warc show that internet pure play, mainly Google and Facebook, grew by 5.1 per cent year-on-year (moving annual total) while every other category experienced double digit falls caused by the impact of the coronavirus pandemic on the wider economy.
The pattern is a continuation of the trends in the previous set of AA/Warc figures which showed stark declines for all media sectors while the tech platforms remained buoyant despite the effects of the pandemic.
Last week, the FT reported that Google’s advertising sales have rebounded much stronger than expected, following a decline during the pandemic.
Local radio was the worst affected sector in Q2, declining by 26.7 per cent, followed by B2B magazines, down by 24.9 per cent; direct mail, down by 23.3 per cent, and regional newsbrands, down by 21.4 per cent.
Announcing the Q2 figures, AA/WARC downgraded its 2021 forecast, adding that growth in 2021 will fall just short of offsetting this year’s losses completely, meaning the UK’s ad market is now not expected to recover fully until 2022.
James McDonald, head of data content, WARC, said: “The latest results show that the UK’s advertising industry endured its worst quarter on record during Q2 2020, an unprecedented period in which a national lockdown was imposed in response to the COVID-19 outbreak.
“Advertising trade remains depressed, and the rising likelihood of sustained localised lockdowns over the winter, a disorderly exit from the European Union in December, and a prolonged economic recovery embodied by rising unemployment, now leads us to believe that the industry will not fully recoup this year’s losses until 2022.”
But, looking ahead to 2021, regional newsbrands are one of the key sectors forecast by AA/Warc to recover, with growth of 16.2 per cent year-on-year forecast, alongside magazine brands, cinema, and out of home.
The NMA has urged Government to act following the Competition and Markets Authority report into the digital advertising marketplace which found that the “exploitation” of commercial relationships with news media publishers by Google and Facebook was likely to lead to “substantial” consumer harm as publishers were less likely to be able to monetise their content.