Christmas TV ad boom goes cold over cost of living and Qatar concerns

There will be no Christmas TV advertising boom this year as jitters over associating with the World Cup host Qatar’s human rights record and the cost of living crisis put paid to the annual battle of the big-budget extravaganzas that traditionally bombard the public over the festive season.

UK companies will still spend a record £9.5bn in the run-up to Christmas, known as the “golden quarter”, when many retailers make the lion’s share of their annual profits and sales, but the amount targeted at traditional TV, newspaper and radio outlets will decline this year.

And as austerity increasingly bites, advertisers are reining in the traditional Christmas blowout budget.

The 4.5% year-on-year growth in spending forecast for the final quarter is the smallest in a Christmas period in almost a decade – excluding 2020, when the nation was in the grip of a pandemic lockdown – according to the Advertising Association and the research firm Warc.

Larger retailers will begin to launch their Christmas campaigns in the next fortnight including Marks & Spencer, Sainsbury’s, Boots and John Lewis.

However, prices for TV spots at prime times are as much as 20% more expensive than usual – as the Black Friday discount period, the World Cup and the buildup to Christmas all coincide – drawing in companies that do not usually buy spots during the season, such as gambling firms and sports brands.

As a result, traditional Christmas advertisers are honing their TV ad schedules to fit their budget and looking for other outlets, such as cinema and social media.

Social media channels can also prove a more cost-effective way of reaching consumers. M&S, for example, is beefing up its team of shop-floor social media influencers, including an AI-created personality, Mira, who will have her own Instagram account.

Retailers and brands are hoping families will want to celebrate after the Omicron variant of Covid put a dampener on last Christmas, which was supposed to be a return to normal after 2020’s lockdowns.

However, Britons are expected to spend £4.4bn less on non-essentials before Christmas as inflation cuts into their cash reserves.

With smaller celebrations and fewer presents on the cards, retailers’ marketing budgets are expected to be trimmed as they focus efforts on keeping prices down.

Charlotte Rogers, the associate editor of the trade journal Marketing Week, said: “A lot of brands have switched focus towards value and price. Brands have got to walk a tightrope of having to make it festive and not being tone-deaf. Understanding that it will be a difficult Christmas for many families, they don’t want to be too indulgent.”

With the UK about to enter another age of austerity, glitzy Christmas campaigns are out and targeted digital marketing is in.

The AA/Warc report forecast that spending on search advertising, including Google and the increasing amount spent on promotions by companies targeting Amazon shoppers, will rise 7.3% year-on-year in the fourth quarter to £3.4bn – twice the amount budgeted for TV spending this Christmas.

“Higher costs are carving into advertisers’ margins and household budgets alike, and trading conditions are at their worst since the Covid outbreak, leading to muted expectations for the Christmas quarter,” said James McDonald, Warc’s director of data, intelligence and forecasting.

Historically, the football World Cup is a bonanza for commercial TV with advertisers clamouring to pay up to £500,000 for a 30-second slot in a high-profile England game.

But this year, which marks the first time a World Cup has been held so close to Christmas, it is not proving to be advertising gold. The amount forecast to be spent on traditional TV advertising will instead fall by 0.6% year-on-year in the final quarter, with some companies wary of a backlash from being too closely associated with Qatar.

“There would normally be much more advertiser interest but unless a brand has specific links with the World Cup the ethical question, and the cost inflation, has left some clients questioning whether it is worth spending that money,” said a senior executive at one media agency, which advises and buys ad space for clients.

“If England does well then I’d wager there will be late money into TV and other media, but for a lot of advertisers Father Christmas is a much less controversial target for ad budgets.”

Last month, the Danish sportswear brand Hummel released the national team’s World Cup kit with its branding all but faded out in protest at the event being held in Qatar.

Hummel tweeted:

In the UK, spending on broadcaster video-on-demand services (BVOD) in the final quarter – which as the commercial broadcaster airing the World Cup predominantly means ITV’s new streaming service, ITVX – rise by 4.2% year-on-year. However, this is less than half the forecast in July of 9.4% final-quarter growth.

And the increase in online TV spending will not be enough to prevent the total £1.7bn UK TV ad market experiencing a flat Christmas year-on-year.

Overall spending on newspapers is also forecast to fall 4.2% in the final quarter, despite a small bump in online spending, while radio ad spending will fall 0.6%, again despite a small increase in online budgets.

“The [newspaper] industry is definitely having struggles getting ads booked against World Cup coverage,” said a source at one national newspaper publishing group.

The AA/Warc has also significantly cut its forecast for spending on social media – which is commonly targeted by advertisers, as football fans tend to use their phones to interact while watching matches – down from 11.5% growth to 6.9% growth in the fourth quarter.

Some of the reduction in the social media spending forecast is owing to Apple’s decision to block the cookies that advertisers use to target users on its devices, which has cost companies including Facebook, Snap, Twitter and Google’s YouTube an estimated tens of billions of dollars in ad revenues to date.