Our all media ad forecasts predict 4-5% growth in advertising expenditure on UK media in 2020, driven by double-digit growth of pure play online, expected to reach 58% of total spend this year, up from 55% in 2019.



We expect that pure play online spend will grow by 10.9% in 2020, while TV and Press continue to fall by 3.1% and 8.6%, respectively.



Although the economic outlook for 2020 is more positive than 2019, debt-fuelled growth in spending is a continuing concern on the consumer side.

Car transactions are down for the third consecutive year and consumer demand is dramatically shifting (away from diesel and towards alternative fuels), but the marketing expenditure on used cars remains robust overall. Auto Trader has extended its leading position as the largest used car portal, so far shielded from the structural headwinds affecting its core customer group of dealerships. Several disruptors have entered the UK automotive space in the past couple of years, but none have gained real traction in the listings space, instead opting for ancillary approaches. Tech disruption will come, but much longer term.

Expenditure on UK classifieds peaked in 2004, but has since almost halved to £1.95 billion in 2018. In every vertical, the print to digital transition of expenditure has favoured a first mover, leading to dominant positions that challengers find hard to disrupt.

The property market was stagnant in 2019, with stable house price growth but low transaction volumes as Brexit uncertainty held back sales. An expected cut in interest rates this year should contribute to a slight rise in transaction volumes.

The low tide of transactions has cemented the reign of Rightmove and condemned challengers to low traction. No. 2 player, Zoopla, plans for a major drive in 2020 after a 1.5-year investment spree by parent private equity firm Silver Lake Partners.

Amazon is finding women’s fashion, a missing piece of its household-centric model, a tougher nut to crack than downmarket apparel.

Higher-end US department stores are pushing back with an omnichannel model, emphasising long-term partnerships, a clever full-price/outlet model, and experiences which cross the online-offline divide.

In apparel, Amazon and big box retailers have already triumphed over lower-tier American department stores, and even prestigious fashion brands are finding it harder and harder to refuse cooperation with the giants.

Many European telecoms operators are pursuing a fixed/mobile convergence strategy on the pretext that the addition of mobile reduces churn. We see no evidence of churn reduction from this strategy

Discounts required to encourage take-up of fixed/mobile services are often value-destructive, even before competitor reaction: a 10% bundle discount necessitates a 2ppt improvement in churn to wash its face economically. M&A premia on the basis of convergence synergies raise the hurdle even higher

Most UK operators offer very limited discounts on fixed/mobile bundles for now, sensibly focusing on enhanced services. Vodafone is the most aggressive, albeit less so than it is elsewhere. All UK players should hope that it stays this way

Yet another annual hype cycle in 2018 can’t hide a tepid consumer appetite for all VR platforms and heavy weather for the industry as a whole

The launch of Oculus GO, a standalone device at an attractive price, is a milestone for VR; nevertheless, even Facebook remains worried about reach and the state of the industry

Mobile AR is still a strategic focus for Google and Apple, producing diverse applications instead of just games, but new headsets from Microsoft and Magic Leap which promise advanced MR experiences have no launch dates

Online advertising became the majority of all UK ad spend last year, in step with China but ahead of all other major markets. 

Direct response has further increased its share to 54% of UK ad spend, fuelled by the self-serve platforms of Google, Facebook and Amazon, while content media nets just 11% of the online advertising pot.

We estimate that all online-delivered channels - including "pure play" online properties, broadcaster VOD, digital out-of-home and online radio - could account for well over 60% of UK ad spend by 2020, but only with improved commitment to industry governance. 

In this report we develop a rough segmentation of the adult population by level of online use: offline (10% of adults), shallow online (10%), deep online (80%). We examine how online services seeking to reach new audiences increasingly face the obstacle of missing demand rather than a lack of consumer skills or access

The app economy still relies on a limited consumer pool, but ecommerce is now reaching almost all of the deep online. Bridging the current gap between occasional and frequent online buyers is a clear opportunity and we are still in the early days of evolving buying services into shopping services

The only industry monetising all online users is advertising. Ad platforms, led by Google and Facebook, also play a critical role expanding the ranks of the deep online and online immersed. But offline brand display media, led by broadcast TV, remain critical for online brands wanting to expand their audience