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A Deeper Dive into the UK’s Promising Ad-Spend Numbers

Trends and Insight 83 Add to collection

As growth in 2021 looks set to make it the market’s strongest ever year, WARC data director James McDonald reflects on what the encouraging industry figures mean for the shape of British advertising in 2022

A Deeper Dive into the UK’s Promising Ad-Spend Numbers

Last week, the Advertising Association/WARC Expenditure Report outlined an even greater recovery for the UK’s advertising market than previously expected, with revised estimates for growth in 2021 standing at 26.4% to reach a total of £29.7bn. 

This upgrade to October’s projection for 2021 (+24.8%) by 1.6 percentage points means it’s set to be the strongest year in UK ad market history. This is supported by the actual data released for Q3 2021, showing ad spend of £7.3bn – the largest-ever summer spend on record. 

New forecasts also show total investment for 2022 is set to rise by 8.5% to £32.2bn – meaning the UK market will have expanded by more than a third since 2020. These figures come as welcome news for the British ad industry, giving many tentative hope of a positive post-pandemic recovery. To dig a bit deeper into what this data means, LBB’s Alex Reeves spoke to James McDonald, director of data, intelligence & forecasting at WARC.


LBB> The growth that the UK ad market has shown is generally really encouraging! But what part of the data do you think is most encouraging?


James> As a publisher I am always heartened by any growth recorded in that sector, particularly as advertising revenue has been in decline for a number of years now. This is partly structural – losses to print business stymie revenue growth while the industry transitions online – so I don't recall many occasions when our survey of UK publishers has recorded growth among magazines, regional and national titles in the same quarter. I find encouragement in those results that perhaps the worst days are now behind the industry.


LBB> What were some of the factors of the market in 2021 versus 2020 that led to this growth? Spend returning to cinema is encouraging to see, for example!


James> Arguably two of the historically biggest short-term factors influencing UK advertising spend – the hosting of a major football tournament and a new James Bond film – coalesced in the same year, which I think explains a large degree of underlying growth, growth which was already inflated to a degree by comparison to such a dire 2020.

At less than 1% of all spend, unfortunately cinema's fortunes do not hold a major bearing on wider industry trends, but it's great to see such a strong bounceback in a sector that really had to bear the brunt of Covid restrictions at the height of the outbreak.


LBB> In terms of ad spend by media, some of the trends are in line with what you'd expect instinctively due to how our lives have changed at different stages in the pandemic. But which trends in media ad spend do you think are more surprising?


James> I'd agree that some trends are to be expected – particularly the rise in investment for performance formats close to the point of purchase online, but I'm surprised by the rate of this growth at times. Advertising is entering a new era, driven by sales performance data, and globally we think investment in e-commerce spend will have doubled between 2020 (its watershed year) and 2023. 


LBB> As 2022 sees, hopefully, an even more open economy than 2021, where would the UK expect to see further growth in ad spend?


James> As above, the acceleration in e-commerce advertising will be to the benefit of formats such as search and certain online display formats including native advertising. Social commerce is a staple of Asian advertising and I'd expect it to gain prominence in the UK over coming years too, while influencer marketing is already well utilised. Finally, TV is set to sustain growth this year; many online-only (aka 'pure play') businesses rely on TV for brand-building, so demand hasn't been seen to wane in recent times.


LBB> The other thing to consider is inflation and the deepening cost-of-living crisis in the UK. How should advertisers and their agencies navigate that, considering the trends that we're seeing continuing into 2022?


James> Empathise. Understand the struggles people are experiencing, judge your tone and be seen to be helping. Also continue to stand against discrimination and be instigators of change by upholding DEI policies – WARC has a panoply of knowledge on this topic to support the industry.


LBB> In your view, what's the single most optimistic detail in this Advertising Association/WARC Expenditure Report?


James> I think the most positive fact is that industry investment is already back well above pre-pandemic levels, and that millions of dependent jobs have been retained as a result. Given what we were facing, that outcome could have been a lot worse.


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Advertising Association, Thu, 03 Feb 2022 15:45:06 GMT