AA/WARC: UK ad spend to grow 18.2% this year as recovery gathers pace

The latest Advertising Association/WARC Expenditure Report, collecting advertising revenue data across the entire media landscape, predicts that UK ad spend will grow by 18.2% this year to reach a total of £27.7 billion. This is an increase from the 15.2% rise forecast in April and includes an estimated 54.7% rise during the second quarter of the year – by far the highest on record, but notably following an exceptional downturn due to the pandemic.

This growth will recover the entirety of 2020’s £1.8bn decline and is expected to precede a 7.7% rise in 2022, which would make the market worth a record £30 billion. The projected figure of 18.2% growth this year would be the largest rise on record, surpassing the previous high of 15.9% growth set in 1988.

Ad spend growth is forecast for all media in 2021. Online display – inclusive of social media and online video – is set to see growth accelerate by +17.2%, while search will grow by +19.7%. 

Particularly strong results are expected for the media most adversely affected by the pandemic, namely cinema at +315.6%, out of home at +29.3%, of which digital out of home at +43.7%. Online classified investment is set to rise by +21.5%.

The picture in Q1 2021

UK advertising spend rose 0.8% to £6.5bn during the first three months of the year, just behind the 1.8% rise estimated in April. Online formats – mostly notably search, online display and BVOD – were seen to grow by double-digits during the quarter. 

Commenting on the results, James McDonald, Head of Data Content at WARC said: “Seventy pence in every pound spent on UK advertising is invested in digital formats, a rate which accelerated greatly last year and is now surpassed only by China. It is these formats that will lead absolute growth over the coming terms and none more so than paid search, which is seen to be benefitting from burgeoning ecommerce trade.

“Our forecast update since April is demonstrative of the current strength of this sector in particular, though it is notable that online formats across the board are set to see growth after a tumultuous 2020. That the ad market will generate more value this year than before the crisis is testament most to its role within the lives of the connected consumer.” 

Stephen Woodford, Chief Executive at the Advertising Association, said: "The upward growth revision in spend growth this year – to reach a record of 18.2% – would mark an exceptional recovery, after the record declines in 2020. UK ad spend growth also looks set to race ahead of European markets, reflecting the success of the vaccine rollout and fast-rising corporate and consumer confidence."