Two sides to the return path for Outdoor
Various recent outdoor industry reports paint a good picture for the return of outdoor audiences – essentially in lockstep with the roadmap out of lockdown released by the government last week.
Normalisation of audiences is fundamental to market recovery, but there are two sides to the market recovery equation. The audience return is predictable, but what about the return of the advertisers? What level of confidence should we have that a return of audiences will lead the advertisers back at the same rate and enthusiasm?
Advertising spend has always been highly correlated with GDP – high economic growth coincides with increased media spend and vice versa. The smartest advertisers have always tried to maintain their investment despite economic challenges, but last year was a year unlike any other. Outsmart data released 2 weeks ago highlighted a 46% year on year decline for total UK outdoor spend to £699m. On the back of the successful rollout of the vaccination programme The Advertising Association/ WARC have forecast that virtually all of the 2020 declines with be recovered in 2021.
Is the confidence misplaced? Clearly many advertisers will have suffered over the past year, so why should we be so optimistic? Well 5 pieces of data (and 1 extra anecdotal one) lead us to support the optimistic perspective.
1. It’s estimated that £125-150bn of ‘excess’ household savings were accrued over the last year. The Reading Festival won’t be the only instantly sold out event of 2021.
2. Corporate balance sheets are strong in most sectors, bar obvious ones (e.g. travel & some retail)
3. Over $15bn in venture capital has gone into the UK’s 1000 most promising start-ups in the last year alone
4. Interest rates remain at virtually all time lows, meaning the cost of government, corporate debt and mortgage rates remain very affordable
5. Despite the UK government borrowing a record extra £394bn in 2020-21 to cover the cost of COVID 19 the cost of that debt is at historic lows – the yield on 10 year UK government borrowing is 0.82%, which means that tax rises are not going to be as immediate as they may have been.
The extra anecdotal data point is that our own pipeline reactivated strongly last week on the back of the roadmap out of lockdown. We all want to get back out there, be sociable and see people – and advertisers will want to get in front of us outdoors.