The star power of festive favourite Michael Bublé and singer Christina Aguilera will not be enough to arrest a £150m slump in Christmas TV advertising spending, as the cost of living crisis and the pull of alternative media tempers the traditional big-budget marketing showdown in the biggest shopping quarter of the year.
UK companies are set to spend a record £9.5bn on marketing in the run-up to Christmas, known as the “golden quarter”, which many retailers rely on to drive annual profits and sales. That figure is up more than £400m overall on last year.
However, as broadcasters weather the worst advertising downturn in 15 years, traditional TV advertising is receiving the Grinch treatment, with brands rethinking expensive campaigns as audiences shrink. There has been a 2.6% drop in viewing on linear channels this year.
Last month, Channel 4’s chief executive, Alex Mahon, said the macroeconomic conditions were such that broadcasters were in “market shock territory”, and forecast that traditional TV ad spending would plummet by 14% this year, while ITV boss Carolyn McCall has called it the worst slump since the 2008 financial crisis.
Media agency sources estimate that fourth-quarter spending on TV will fall about 7%, from £2.04bn to £1.89bn year on year, more than the decline recorded when the nation was in the grip of lockdowns in 2020.
“John Lewis pioneered the anthemic campaign reveal but it does now feel like we are at a point where Christmas ads have possibly lost a bit of their festive lustre,” says Anthony Freedman, founder and chief executive of the ad agency group Common Interest. “Audiences have fragmented: Christmas is not like a Super Bowl advertising moment.”
While there is the usual smattering of big-name, big-budget star power – Christmas crooner Bublé for Asda, Aguilera for Just Eat and 1980s pop hero Rick Astley for Sainsbury’s among them – advertisers are honing their marketing plans for a low-budget festive season.
Soaring inflation means that shoppers are expected to spend less in real terms this year, trading down and buying fewer gifts, while 2.7 million people will have to choose between buying food or presents, according to National Debtline.
However, a bright spot for traditional broadcasters is their burgeoning video-on-demand services, led by ITVX and Channel 4’s streaming platform, which will see ad revenues surge by a fifth year on year in the fourth quarter as marketers aim to tap the youth migration to newer viewing options.
But these fast-growing revenue streams remain small, at £268m – not enough to bridge the decline in the £1.5bn-plus traditional TV ad sector.
Other media, such as digital and traditional billboards and poster sites, are expected to benefit from double-digit-percentage increases in spending in the fourth quarter, targeting high street shoppers and commuters.
Social media channels can prove to be cost-effective, although the widely reported potential brand safety issues at Elon Musk’s X make the platform formerly known as Twitter a “very, very tricky one to handle”, according to one executive.
“Once you remind a client of the potential contextual placement issues, quite often in our risk-averse ad world, it’s much easier for them just to just say no,” says the executive.
Nevertheless, “newer” platforms are gaining traction. Coca-Cola is opting to split its approach between its traditional “Christmas is Coming” ads on TV while also creating a big-budget “holiday movie” series for digital distribution.
It is funding the Santa Stories short films, which feature A-list Hollywood talent, including Creed II director Steven Caple Jr, Jurassic World’s Bryce Dallas Howard, Star Trek’s Colm Meaney and Academy Award winner Octavia Spencer. They have been released on Amazon’s Prime Video streaming service and Coca-Cola’s own YouTube channel.
“Brands are still spending, but with audiences and media consumption now more fragmented, they are recognising different ways to build that engagement,” says Simon Davis, founder of the agency Walk-In Media. “Long gone are the ‘spray and pray’ days of a traditional 30- or 60-second TV ad.”
