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UK ad industry reacts to 34.3% year-on-year revenue growth

The ad industry has reacted to the  release of the latest Advertising Association/WARC Expenditure Report, which revealed that the UK ad market grew by 34.3% year-on-year.

Rhys Cater, Managing Director at Precis Digital London commented: ”It’s exciting to see advertisers continue to show confidence in the critical role of digital in their marketing strategies. The AA/Warc report shows that as spend grows, so does complexity. While growth in Search as the leading channel is strong, mobile formats and visual channels such as Display, Social, and Video are accelerating rapidly.

“A modern approach to data, analytics, and attribution will be critical to understand the value of investments across an increasing number of channels. All of this must be done with data privacy and customer experience firmly in mind. Advertisers’ expectations for digital growth might be high, but so too are the expectations of consumers when it comes to the ads they’re served and the ways in which their data is used.”

Allan Blair, Head of Strategy, VaynerMedia, believes the increase in ad spend shouldn’t come as a surprise to anyone. He said: “As we emerge from the pandemic, people are rediscovering lost freedoms, indulging new passions discovered during lockdown and slipping back into old habits. Consumer spending is on the rise. However, the cost-of-living crisis is taking hold, so people are becoming more discerning about how, where and when to part with their hard-earned cash. Brands are having to fight harder to win a more cost sensitive audience. Digital was a mainstream behaviour before the pandemic, it’s now as vital as oxygen.

“Many commentators claim that things will level off to pre-pandemic levels. They will pull out well-worn charts declaring the power of traditional media is stronger than ever. Yet every day we speak to clients keen to shift ad money online, who want to build their brands from social and who see digital as not just a channel for efficient media, but one to build equity, engagement and consumer influence.”

Melanie Welsh, Founding Partner, Strat House, agreed: “As these figures show, almost 75% of UK adspend is now online. And when media and creative teams work closely together, interesting media buys can lead to great creative ideas that do not have TV as the centre of their universe. What has always mattered most – and will continue to matter most, regardless of relative share of media spend – is strong brand identity and strong brand positioning. With this a business can weather inflation, conflict, supply chain constraints and much more.”

Proceed with caution?

Gill Huber, Managing Partner, Oystercatchers, believes that while we are seeing positive advertising growth and pandemic related risks receding, there are ongoing tough market drivers which mean consumers will continue to err on the side of caution with their spending. She said: “The UK ad industry is well placed to cope with tough market factors – with adversity being a great driver of creative opportunities. Brands will have the tough job of continuing to adapt to changing behaviour and will need to approach a variety of consumers – from those who want to spend post-lockdown, to others who are tightening their belts because of cost-of-living constraints – with sensitive communications. 

“As we move out of the short-term reactivity created by the pandemic, strong client:agency partnerships will be essential to help navigate changing consumer needs as well as identifying the best way to reallocate budgets to build brands and ensure those brands are showing up on the right media.” 

Alex Charkham, Chief Strategy Officer, Fuse argues that the latest AA/WARC figures show a very robust UK advertising market that has faced the challenge of the pandemic and coped: “Even taking inflation into account, £31.9bn – making the UK the third largest ad market in the world – is significant. And with the FIFA World Cup kicking off in Qatar in November this year, there will be a much bigger advertising spend boost at the tail end of the year than we’d normally get from Christmas alone. Despite the unusual timing and concerns from some corners about the location, the tournament is a global sporting phenomenon and we can expect to see a corresponding surge in advertising support across all media as brands look to capitalise on worldwide – and the ever hopeful English – audiences focused intently on the football.

“We anticipate the sport and entertainment sponsorship market to have grown in a similar way to advertising, with sponsorship becoming an increasingly appealing solution to mitigate the increasing cost of advertising and help brands find a point of difference within a cluttered media landscape.”

Tom Roberts, CEO, Tribal Worldwide, said: “With this continual increase in demand for ecommerce, it will be important for brands to not only provide their customers with a seamless, blended retail experience as they shop across multi-channels, but they will also need to work on retaining a workforce that meets the increased demand for digital skills and expertise. Supporting employees as we continue to experience economic uncertainty along with the current volatile geo-political situation, will be essential to help brands continue to innovate and build good relationships with their customers.”

Exciting times

David Kells, Director of Strategic Partnerships, Raconteur, believes the latest WARC UK figures are “exciting”. He said: “With growth in spend comes increased innovation and creativity, so creating new opportunities for brands to reach their audiences. This is demonstrated by the notable increase in spend across multiple digital formats in the UK. While the outlook for the year is very strong, media owners will remain cautious given the rate of disruption during the past three years. 

As noted in the report, the UK’s ad market is forecast to grow by 10.7% this year to £35.3bn after a strong start, however economic and political instability will undoubtedly have an impact on the forecast as the year continues.The numbers remain strong however, and no matter what the ramifications of wider global issues, the demand for effective advertising will continue to boom.’

Lori Meakin, Founder, Joint, said  of the WARC figures: “With nearly three quarters of all UK adspend now online in some form, including BVOD, it will be interesting to watch the continuing digital/real life interplay, as people continue to research and shop online as well as off, engage in social media and entertainment in ways new and old, and demand both information about and an escape from the harsh realities of life. Because however much our industry still loves to differentiate between online and offline, above and below the line, real humans are decidedly omnichannel creatures!

“Despite having more data on audiences, users and consumers than ever, our industry still has too little real understanding of the diverse lived experiences and priorities of those people. For instance, 80% of purchase decisions are driven by women and yet adland can still be heard trading in “housewives with kids” as if we’re the 1950s, and filling space with work that’s simply Brandsplaining and doesn’t leave valuable under-represented audiences Feeling Seen.”

Verity Brown, Managing Director, The Specialist Works, commented: “We expected to see predicted growth in shorter-term, performance-focused digital channels. Equally we agree with increases in more accountable, data-driven channels like BVOD, we’re excited about the launch of ITVX. 

“Direct Mail is forecast to decline in 2022 and 2023, possibly due to print costs, however these can be mitigated by smart planning. The coalescence of home working and flight from cities will not be reversed and underlines the importance of targeting. Retail clients are exploring omnichannel solutions, direct to home media is important in driving both footfall and e-commerce”.

Q4 could be tough, warns Brown, given a perfect storm of an atypical World Cup, energy price cap increasing again in October and supply chain issues affecting pre-Christmas production. She said: “We expect clients will want to spend but will focus on channels that they can commit later and where there is a greater chance of immediate return. We also expect to see a greater focus on targeting older audiences, who may have greater disposable incomes. We also expect brands to focus spend into channels that drive immediate uplift, whether instore or at home, including Retail Media.”

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