AA/WARC: Ad market set for strong rebound

The latest Advertising Association/WARC Expenditure Report, collecting revenue data across the media landscape, forecasts UK adspend will grow by 15.2% this year to reach a total of £27bn. This will recover 2020’s £1.8bn decline, with a 7.2% rise anticipated in 2022, which would make the market worth a record £29bn. 

Ancillary forecasts suggest the UK is on course to achieve the strongest ad trade recovery of any major global market this year, putting the UK economy in a position to bounce back strongly post-pandemic, as every pound invested in advertising generates six in GDP. 

Adspend growth forecast for all media in 2021 

The strongest results are expected for the media most adversely affected by the pandemic, namely cinema at +266.8%, digital out of home at +52.3%, and traditional out of home at +14.5%. Online classified investment is set to rise by a fifth (20.4%), supported by increased recruitment activity due to brighter economic prospects this year.

Other media are not expected to recoup 2020’s losses until next year, however. This is true of TV (up 8.8% in 2021), direct mail (up 6.4%) and publishing disciplines encompassing national news (up 7.3%), regional news (up 3.9%) and magazine brands (up 6.8%).

Online display – inclusive of social media and online video – is set to see growth accelerate this year (+13.4%), as is the case for paid search (+18.4%). Taken together, these two sectors are expected to account for two-thirds (66.4%) of all UK advertising spend this year, up 10 percentage points from a share of 56.2% in 2019. 

The full picture in 2020

The latest dataset includes final figures for Q4/FY 2020, which show spend on advertising declined by 7.2% to a total of £23.5bn last year. In a positive end to last year, spend rose 2.6% during the final three months, resulting in the highest quarterly total on record (£7bn).

The key findings for 2020 show a strong shift by advertisers into online video, social media and search markets. IAB UK’s 2020 Digital Adspend report identified social display as the fastest-growing ad format of 2020, up 19%. Elsewhere within the display market, video display also outgrew the market at 19%. Search continued to attract the largest share of spend across formats, up 7% year-on-year to account for 51% of all digital ad spend - growth that coincides with the explosion of the ecommerce market.

Commenting on the latest AA/WARC report, Stephen Woodford, Chief Executive at the Advertising Association said: “Advertising investment has mirrored the rapid changes seen across the economy over the last year, primarily the acceleration provided by lockdowns towards ecommerce across all sectors able to sell online. The pandemic accelerated trends that were already changing the market, evident for several years. The UK’s sophisticated online advertising marketplace helped to keep the economy moving and, no doubt, supported businesses, large and small, to stay connected with consumers who were no longer on the high street. SMEs that had little or no online presence quickly adapted to serve their customers via online platforms and more sophisticated online businesses increased their investment behind these.

“Across the economy that advertising serves we saw remarkable innovation and agility, which helped to lessen the economic impact as firms adapted to keep serving their customers, despite the disruption. The predicted growth this year of 15.2% is good news, with every £1 of advertising spend generating £6 of GDP, this will be a welcome boost for jobs and growth in the wider economy.”