Published this month, the quarterly Advertising Association and Warc Expenditure Report looks at latest marketing spends across magazine segments, regional and national news titles, out-of-home (OOH) signage, direct mail and radio and television. It gives comparative figures for previous years and quarters and offers predictions for the coming two years; in this case the report reflects spending in 2016 and shows forecasts for 2017 and 2018.

Across all mediums ad spend in Q4 of 2016 enjoyed its highest grossing quarter on record with growth of 3.9%, contributing to overall growth for the year of 3.7% for a total ad spend of £21.4bn. It was the seventh consecutive year of growth, the report states, topping pre-recession levels for the first time and continued growth of 2.5% and 3.3% is forecast for 2017 and 2018 respectively. 

Internet ad spend, once again, drove much of the growth over the year with a 13.4% increase to £10.3bn, the first time this segment has passed the £10bn mark. Nearly half of this was mobile spend, which accounted for 45.4% or £3.86bn. 

OOH saw an increase of 4.5% to £1.1bn, a trend that is forecast to continue over the next couple of years, and although print still does make up more than two thirds of this (2016: £689m), digital spend is the prime driver of growth in this market. 

Of course, print enjoys none of this sort of upward trajectory nowadays but, according to Warc senior data analyst James McDonald, it has experienced the worst and is heading for a levelling and in some areas a marked improvement in printed ad revenues.   

“We do believe that the decline in print advertising has reached its terminal velocity, and will ease in the coming years,” he says. “A core group of advertisers for whom print still proves effective will continue to invest, and this will cushion losses in revenue over time,” he explains.

“Over the last decade, print classified ad revenues among national news brands have been hit disproportionally. Where in 2005 classified accounted for 51% of total print revenue, they now account for just under a third. This can be seen as a reflection of the diversification of the market over the last decade, with online specialists taking share.”

Indeed ad revenues from printed national news brands were down 13.2% in 2016, the same as the previous year’s decline. Spend dropped from £1bn in 2015 to £870m in 2016. 

In the regional news brand segment the numbers appear much worse with ad spend dropping 15.2% last year compared to 9.5% from 2014-2015. Although the data isn’t so specific, the closures of certain titles is thought to be a contributing factor to the sharp drop last year. 

In both segments however, the Expenditure Report forecasts an improving trend moving forward with decline this year and next predicted to be around 9% and 10% respectively for national and regional titles.

Spend on magazines as a whole segment remained stable, declining by 9.8% to £595m, compared with 2015’s 9.2% contraction – the figures here propped up by spend in the consumer markets. In fact, advertising revenues among consumer magazine brands vastly outperformed the wider print market as a whole last year (-7.2% decline compared to -13.1%) and are forecast to do so again, at similar levels, this year and next. McDonald says that the main reason for this is that, by their very nature, consumer titles allow advertisers to reach a specialist audience, an audience that is quantifiable to a good degree of accuracy.

Business magazine brands struggled last year however, with ad revenues slumping to £189m, a decline of 14.6% compared to -12.4% in 2015. This year and next are forecast to ‘recover’ somewhat to spending declines of -11.5% and -12.5%. 

The report also shows that certain product categories have maintained their level of spending in printed press (both news brands and magazine brands); entertainment and leisure products for example, the largest category for print press advertising, spent around £189m last year, down only 2% on 2015. 

“I think this illustrates that for many advertisers, print is still a format that works,” states McDonald. 

Managing director at First Move Direct Marketing, David Amor, echoes this despite the report showing that DM appeared to fall off a cliff last year from a 1.5% spending uplift in 2015 (£1.9bn) to a massive 10.4% drop in 2016 (£1.7bn), the second worst fall in printed ad spend, behind regional news brands. 

“We are just not seeing that decline, we’re seeing an increase and in fact we’ve never been busier. We have a number of clients that are really proving that this medium works,” he says.

“The increasing amount of clutter in digital channels means it’s a challenge to make yourself heard above everyone else. Yes, there is a drop in certain segments, but there is an increasing realisation that the printed word still has a place in people’s marketing,” Amor says.

The DM data for the report is provided by Royal Mail and includes RM revenues as well as those of SMEs, although there is no indication of the cause of last year’s poor performance. Once again, however, this is expected to ease substantially over the next 24 months.

Amor says that some explanation for the poor DM figures must be pinned on the UK’s political and economic roller-coaster climate of late. 

“I think there was a big pause where people stopped to think and get clarity around Brexit, but I think that effect is over now,” he suggests. 

Amor’s thoughts are backed up by GI Solutions sales and commercial director Tushar Chavda.

“Everything took a hit after June 23 last year. Everyone put everything on hold, which had a significant impact not only on expenditure from our key clients but across the market as a whole,” he explains. 

But Chavda, like Amor, says that despite the shaky backdrop, DM activity is looking positive. “In terms of enquiries, we are at an all-time high. The emphasis is on making their money go further and certainly with DM projects people want more creativity,” he says. 

“People want to get noticed more and where their international markets may be a bit shaky because of what’s going on here, people are investing more in the UK market.”

Chavda says that a key concern in the market is price erosion and that margins are being eaten away – a trend he doesn’t forecast to stop for another six to 18 months. “It’s not easy but I think DM is reasonably healthy and I am optimistic,” he adds.

His thoughts chime with Warc’s forecasts for the coming two years. So perhaps print decline has indeed reached, and dare I say it, passed its terminal velocity and might soon find firm ground from which to prosper again.