There’s a general sense of relieved surprise meeting the reporting of annual results as we come to – what we hope will be – the conclusion of the most turbulent part of the COVID-19 pandemic. While some sectors have been hit extraordinarily hard – travel, entertainment and, to a lesser degree, insurance – some have suffered much less than initially feared and in some cases, have thrived.
After the early days of the pandemic saw major brands slash spend and adopt a holding pattern for their marketing, there was a fear that this period would see a significant dip in advertising investment. The latest Advertising Association/WARC Expenditure Report, the only source to collect advertising revenue data across the entire media landscape, would suggest that those fears were largely unfounded.
It forecasts UK adspend will grow by 15.2% this year to reach a total of £27.0bn. This will recover the entirety of 2020’s £1.8bn decline and is expected to precede a 7.2% rise in 2022, by when the market will be worth a record £29.0bn.
In fact, ancillary forecasts suggest the UK is on course to achieve the strongest ad trade recovery of any major global market this year, and this puts the UK economy in a position to bounce back strongly post-pandemic, as every pound invested in advertising generates six in GDP.
Struggling businesses expected to find a turnaround
In anticipation that consumers will return to businesses shuttered by lockdowns, particularly strong results are expected for cinema at (+266.8%), digital out of home (+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 arising from brighter economic prospects this year.
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 ten percentage points from a share of 56.2% in 2019.
Overall, ad spend declined 7.2% to a total of £23.5bn in 2020. Naturally, much of the spend went into social media, online video and search. Online news saw a small increase but other media experienced a sharp decline.
An ad industry fit for the future
“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,” stated Stephen Woodford, Chief Executive, Advertising Association.
“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,” he added.
Report author, James McDonald, Head of Data Content at WARC revealed: “The data from 2020 was unlike any we have seen in our 40 years of market monitoring. Save for a flock of online pure-players, the majority of media owners surveyed by WARC experienced their worst trading climate in living memory. This was true at both the financial and the human level – many will not witness a full recovery until 2022 at the earliest.”
He noted that formats with short lead times that were able to change direction quickly, including social media and ecommerce were particularly central to most marketers’ ad strategies during the pandemic: “Media owners in these spaces are expected to build on good 2020 results this year, though the situation will be more challenging across the remainder of the landscape as ad investment continues to favour performance marketing,” he warned.
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