Interviews, insight & analysis on digital media & marketing

AA/WARC Expenditure Report Q3 2021: Industry Reaction

Last year, the UK ad market enjoyed its strongest ever year, according to the latest Expenditure Report from the Advertising Association and WARC. It’s estimated that the market grew by 26.4% to reach £29.7 billion.

We’ve collected comments from marketing experts across the industry, including Bluestripe Communications (owned by Bluestripe Group, owner of NDA) clients and other industry executives.

Justin Taylor, UK MD, Teads

“It’s fantastic to see the UK’s advertising market achieve record growth of 26.4% after what has been a rocky few years. While the pandemic is by no means over yet, and supply chain woes continue to rumble on, with advertising spend set to reach £32 billion the latest AA/WARC report is certainly a shining beacon of hope and optimism. We have witnessed this same sentiment across our clients and partners, as the industry gears up for recovery.  

“However, this doesn’t mean that the industry can slip into ways of the past. We all know by now that consumer behaviour has shifted, so it’s paramount that advertisers continue to utilise responsible media that put the user experience first. In turn, platforms and publishers that ensure sustainable data practices and create high-attention environments will be rewarded with customer loyalty.” 

Emma Morris, Managing Partner and Head of Investment, Starcom

“It’s undeniable that the UK’s 2021 ad spend recovery is nothing short of phenomenal, particularly with earlier market estimates and the ad spend performance of other markets around the globe in mind. In 2021 media agencies, media owners/platforms and clients worked more collaboratively than ever to drive business outcomes. The partnership ethos has definitely paid dividends (quite literally in many respects for media owners!). Enhanced flexibility for clients and innovation in terms of media owner offerings has really aided the growth of investment. The development of new opportunities and enhanced targeting solutions are continuing to change the market at pace, bringing new advertisers into the ad market as well as increased investment from returning advertisers too.

“2022 has got off to a strong start in terms of ad spend and whilst inflation is affecting several mediums in Q1, we have to remember that the market is simply course correcting following the COVID restrictions in force during Q1 2021. The UK ad market in 2022 should see stability return and the likes of Cinema and OOH revenues back to pre-pandemic investment levels. Fingers crossed!”

Nial Ferguson, Managing Director, UK & Ireland, Sourcepoint

“Marketers and agencies working in the ad industry have a lot to be optimistic about for 2022, with the UK predicted to enjoy record growth of £32 billion. In line with this increased ad spend, marketers need to take note of the evolving privacy laws across the globe and adapt accordingly. It’s been more than five years since the GDPR ruling began, and we are one year away from the deprecation of third-party cookies on all browsers, so there is no excuse for publishers that use non-essential third-party trackers or that don’t display a clear and concise consent message. 

“This influx of budget allows publishers and advertisers alike to address the impacts of privacy regulations on their properties, and crucially how they or their partners might compromise the privacy of their users. Those who invest in the privacy-first future will enjoy stronger partnerships and be rewarded with customer loyalty.”

Richard Robinson, Managing Director, Oystercatchers

“The latest data from AA/WARC’s excellent Expenditure Report brings into sharp focus thirty billion reasons why marketers are driving confidence in the UK’s post-pandemic economic recovery. Estimates are rising, records are tumbling & despite the cautionary handbrake of growing inflation the prediction for advertising spend in 2022 looks stronger than ever.

“Of particular note, predictions show investment in UK ad spend 12 percentage points higher than the global average which offers additional cheer as the financial effects of Brexit start to become clearer for non-UK based businesses buying UK-based commercial communications. The capability and creativity of the UK’s agencies remains on the balance sheet and at the top table of the world’s biggest brands & shows no signs of abating.”

Richard Williams, Commercial Director, A Million Ads

“It’s fantastic to see that 2021 was the strongest year ever for the UK ad market, with 2022 now set to rise by 8.5% to £32.2bn. It’s particularly encouraging to see that radio is well and truly on the rise and we expect this to continue with changing consumer behaviour. While we have seen other channels such as TV and online display grow rapidly, you can’t ignore the power that audio has over consumers.”

“Audio content has risen in popularity with many consumers, but particularly with Generation Z. Brands have the chance to take advantage of this and the technology now available to create better audio ad experiences for their consumers, using mediums such as dynamic audio ads.”

“Dynamic audio allows brands to tap into contextual data points such as location, time of day and personal preferences to create in-the-moment, personalised ad experiences. With ad spend set to reach £32bn in 2022, dynamic audio provides brilliant opportunities for brands to create meaningful experiences that will resonate with consumers.”

Rachel Clarke, Founding Partner, Strat House

“For the media business, these numbers look like great news. On the surface, it’s the biggest year ever with double digital growth across multiple channels and set to grow even more in 2022. But how good is this news, really?

“On the plus side, the industry has recovered from the bad times of 2020 and businesses seem confident that their advertising spend will have a payback. Consumers are back “in the shops”, even if many of the shops have shifted online, and those businesses that expanded their advertising choices in 2021, when opportunities were cheaper, are likely still putting out their messages.

“But why has spend gone up? Is the growth “real” in that we are seeing more advertisers, more ads, more channels and more opportunities to get the message to consumers? We know there is a people crunch, salaries are going up, rents are rising and energy costs are through the roof, so it’s worth asking if the surge in spend is real growth or is it, at least in part, due to the media channels driving up their charges to either cover their increased costs or just because they can? (When it’s a suppliers market, you need to pay to get you place.)

“The headlines may be bullish, but the underlying story may not be quite so clear cut and there may be many more surprises across this industry in the coming year.”

Brendan Judge, Planning Director, News UK

“It is fantastic to see we have come out the other side of the pandemic with 2021 as the strongest year ever for the ad market in the UK. This record 26.4% growth comes as no surprise, seeing a massive year on year rise for radio in particular, a channel which has seen soaring growth as a result of the pandemic. As we pivot from being ‘print first’ to a multimedia business, the exponential rise of online consumption of our content has created a massive opportunity for advertisers.

“Forecasts also show total investment for 2022 is set to rise by 8.5% to £32.2bn. In order to see this through, advertisers need to keep consumers at the heart of campaigns, following their latest interests and ensuring they are being seen in the right place at the right time. As ad budgets increase once again, I predict we will see larger ad campaigns return, with brands keen to make a splash in the post-pandemic world.”

Rik Moore, Managing Strategy Partner, The Kite Factory

“The AA WARC report numbers are fantastic and should be cause for celebration right across ad land. The fear in the depths of the original 2020 lockdown was how long lasting would the damage be felt. These figures give great encouragement: A buoyant market, resurging this soon, opens up a wealth of new opportunities.

“It also gives three big areas for reflection, around clients, consumers, and the industry as a whole.

“Firstly – how do we help our clients best navigate this resurgence? Higher levels of demand, leading to scarcity of inventory and inflationary prices, means greater competition as advertisers come back to spending. This necessitates smarter thinking and a greater focus on effectiveness. Whilst our industry is up, it doesn’t necessarily mean that is the case for all our clients’ respective industries. How do we help them rebound too, and set them up for success?

“Secondly – what situation are consumers in? For every affluent consumer who has been able to save through lockdown and is now positioned to spend, spend, spend as they make up for lost time, there will also be people for whom their financial situation is getting ever more desperate with the growing hunger crisis and rapid rise in energy bills. How do we engage the former, whilst ensuring, for all the industry’s talk of purpose, that we are not leaving the latter behind? What are brands doing to turn up and make a difference?

“Thirdly – this position of buoyancy and positivity through 2022 gives us a foundation to consider how we shape the industry for the better. What can we take forward from the rapid lessons learned during the pandemic? This is a fine time to assess how we can continue to embrace and champion inclusivity in what we do, making the industry as open as accessible as possible. It is also a critical time to reflect and act on how advertising can play its part in addressing the climate crisis.”

Elizabeth Brennan, Head of Advertiser Strategy, Permutive

“The AA/WARC report tells a truly optimistic story for our industry with the latest insights showing it has been the strongest year ever for the UK’s ad market. Following the pandemic, brands have been able to rebuild by honing in on the changing needs of consumers. This year, brands can continue to unlock the right audiences by developing strategic relationships with premium publishers that hold consented first-party data. With the era of third-party data coming to an end, brands can partner with publishers to tap into their audience’s interests, behaviours and trends, discovering what they engage with most online without compromising privacy.

“New forecasts also show total investment for ad spend in 2022 is set to rise by 8.5% to £32.2bn – meaning the UK advertising market will have expanded by more than a third since 2020. But with this huge expansion comes an increased need for responsibility in how we use consumer data, with privacy being the most pertinent issue facing brands today. There is an opportunity to build a sustainable advertising ecosystem with privacy at the core, one that enables direct relationships between brands, publishers and consumers via technology that protects those relationships. By collaborating with publishers on a privacy-first infrastructure, brands can access unique audience insights to achieve scale while maintaining privacy, and responsibly maximise ad campaigns in line with these positive forecasts.”

Sarah Baumann, Managing Director, VaynerMedia London

“The latest AA/WARC Ad Market predictions are very welcome and in line with what we’re seeing and anticipating for 2022. We’re feeling client confidence – no doubt helped by the fact we’ve avoided a national January lockdown. This is translating to big ambitions, strong budgets and of course, the shift towards digital across the board. We’re not resting on our laurels though – and suspect that volatility and change will continue to characterise the year for many of our clients as well as agencies, given inflation, supply chain disruption, ongoing Covid and Brexit impacts. But focusing on consumers and where their attention is, using digital channels for full funnel performance, being obsessed with relevance and business results are all essential to helping deliver the growth in the market this year.”

Matt Nash, Managing Director, Scibids

“The predicted growth of 32 billion in advertisement spend this year is remarkable and it echoes our direct experience in the market following a strong 2021. But while we enjoy the positive growth cited, an expansion such as this requires an equally great level of adaptation and strategy, especially as digital marketing continues to expand rapidly.

“The increased scale and digitisation we’re seeing in advertising is unprecedented, the global economy is becoming more digitized and more complicated with new technologies and rapidly changing consumer behaviour. Increased growth means increased pressure on the effectiveness of ad spend – marketing strategies will be rightly scrutinised by businesses if they underperform and campaigns will be judged more stringently on maximal return on ad spend (ROAS). In this case, marketers should look to further automate through sophisticated A.I. that isn’t reliant on third party cookies or PII. 

“A.I. is everywhere in the industry, and marketers across the board are investigating how best to incorporate the right AI into their approach. As with other industries adopting it, if you’re not using the best automation and decision-making tools, you will ultimately deliver suboptimal growth and miss opportunities to drive efficiency. The level of privacy-friendly customisation and adaptability offered by A.I. in 2022 will significantly help these positive predictions become a reality.”

Federica Bowman, Global CEO, FirmDecisions

“The recovery of the UK advertising market is very encouraging particularly for channels which were impacted significantly by the pandemic, such as Cinema and Out of Home.

“With this return to substantial growth comes a challenge for advertisers to ensure they have the right agency resourcing to manage this, particularly as Covid has changed consumer habits irrevocably towards the consumption of more digital channels, which will require more investment in people and skills industry-wide.

“In addition to the upskilling required, the last two years has seen substantive movement within agencies as they reduced their staffing levels to manage their costs in 2020, only to start the rehiring process in 2021 as demand for services increased. A key consideration for advertisers should be the importance of good corporate governance to validate that their agency partners have delivered as per their contractual obligations throughout this tumultuous period.”

Łukasz Abgarowicz, VP of Agencies, RTB House

“The latest AA/WARC report is hugely encouraging for the advertising industry. Most notably, ad spend for video on demand has increased by 3.4% which presents a plethora of opportunities for brands and advertisers this year.”

“Video consumption has accelerated since the pandemic and is showing no signs of slowing down. More and more people, especially Generation Z, now prefer consuming video content and as a result, marketers and brands need to utilise and leverage advanced video analysis tools powered by Deep Learning. This will improve the cost per completed view whilst reaching the right audience at the right time in the right context, enabling the highest level of attention from consumers.”

“With the cookieless future edging closer, marketers will be looking for solutions that can achieve better visibility within the same budget while being built to last in the new digital landscape.”

David Kells, Director of Strategic Partnerships, Raconteur

“Incredible figures from the latest AA/WARC report on the UK Ad industry’s fightback from the pandemic…. Was anyone nervous? Maybe a little. During an incredibly difficult two years, those working in Advertising had to push themselves harder than ever to be more creative. Not just with their ideas and content, but with decreasing budgets and unpredictable target audiences. So well done to everyone! Particularly pleasing to see a predicted increase in spend for Newsbrands and some sectors hit hardest by the pandemic such as OOH and Cinema. Increasing investment brings innovation in the sector, across B2C and B2B – so I can’t wait to see some brilliant campaigns in 2022!”

Ryan Afshar, Head of Publishers UK, LiveRamp

“While it’s great to see ad spend achieve record growth in the UK, the majority of ad spend is still going to the walled gardens. Publishers must continue to increase their first-party data to remain competitive, and use their increased addressability to unlock more advertiser investment and expand strategies to  garner consumers’ authentications. Some of the most commonly-used ways to do this include subscriptions, newsletters, or premium services. Ultimately, users are offered content, or premium experiences, in exchange for their personal data, via sign-ups or registrations.

“With the bolstered ad spend recorded by the AA/WARC report, leveraging these strategies will allow publishers to collect authenticated first-party data which in turn, increases their appeal,  offering marketers an alternative to the walled gardens. Publishers who want to maximise yields must invest in people and audience-based solutions, as it will continue to be one of, if not the most, effective tactic for the future of online advertising.”

Vicky Bullen, CEO, Coley Porter Bell

“As the devastating aftershock of the pandemic still ripples around the world and across all industries, it’s fantastic to see a glimmer of hope in AA/WARC’s Expenditure Report. Not only does it point to signs of economic recovery but blows all previous projections for 2021 out of the water. The UK’s advertising market is currently seeing a very strong bounce back – smashing all expectations and solidifying its position as the strongest year in UK ad market history.

“It confirms the decades long argument that for the economy to recover from the damage caused by global events, investment is key. With growth driven by the likes of the Euros, Olympics and, of course, Mr. Bond, we can expect the momentum to continue all the way through 2022 where investment is set to rise by a further 8.5% to £32.2 billion.

“The change in consumer habits during lockdown has had a direct impact on the increase in advertising spending. We saw digital first businesses spending billions in digital advertising, and the accelerated trajectory of ecommerce also had a positive impact. And finally, the global economy was in growth, with GDP growing by +5.9% in 2021.”

Claire Burgess, Director of Delivery, Incubeta

“It’s great to see that 2021 was the strongest year on record for the UK ad market which is reassuring after the rocky years we’ve had due to the pandemic. It’s also particularly encouraging to see continued growth in Q1 2022 for both search (+11.1%) and online display (+8.3%), indicating the adjustments in consumer behaviour towards e-commerce and online shopping observed during the pandemic are likely to remain going forward. 

“Marketers should remain vigilant of online trends as consumers acclimatise to shopping digitally. As life remains online, many marketers have done well to achieve a strong online presence, however it will be key for marketers to avoid getting too comfortable and allow this to stagnate. They should utilise the projected 8.5% ad spend growth to continue to test the performance of their campaigns, monitoring trends both online and offline. This can then inform the optimisations towards omni-channel purchasing habits, ensuring they’re able to target both the online and offline consumer and keep up with the evolution of consumer behaviour throughout 2022.”

Dominic Woolf, CEO, Azerion UK 

“The latest AA/WARC ad spend report paints an extremely positive picture for the UK’s advertising sector, as record growth of 26.4% shows the industry is in rude health once again. However, in the face of changing consumer habits drawn from the consequences of the pandemic, inflationary pressures and issues of social responsibility, brands are in greater competition than ever before.

“So, while it’s definitely encouraging to see the UK market is forecast to continue an upward trajectory, brands are going to have to work even harder to stand out from the crowd. To do this, brands must not only secure attention but also look to use creativity to improve brand perception and technology to deliver strong performance.”

Danny Clayman, General Manager, Northern Europe, Xandr

“The market is quickly growing but also becoming more complex as consumers continue to enjoy content from an increasingly diverse range of platforms. In order to more efficiently manage increasing complexity, and maximise the opportunities highlighted in the AA/WARC report, Marketers will look for Technology partners with strong omnichannel and measurement capabilities, allowing for better insights and allocation of Marketing spend as a result. This allows Marketers to meet consumers ‘in the moment’ – which when combined with relevant, thought-provoking messaging provides the perfect intersection between the application of technology and creativity.”

Charlotte Taylor, Head of Publishing & Audio, Spark Foundry

“The latest AA/WARC expenditure report highlights a stronger recovery than anticipated for 2021, with estimates now forecasting an excellent growth of 26.4% to reach a total of £29.7bn. This is very promising, despite the uncertainty that Omicron bought with it in the backend of the year. It’s excellent to see that momentum was sustained and advertisers’ budgets remained fairly unaffected by this.

“2022 is set to be another robust year, with the market expected to have grown a third since 2020! Equating to an 8.5% growth (£32.2 billion). This growth is anticipated across the board, with the exception of Direct Mail, Regional Press and Magazines.

“To be expected, both OOH and Cinema are very much still in a phase of recovery this year. With the easing of restrictions hopefully remaining, these both hold a brilliant opportunity for advertisers to gain real stand out in 2022.

“A continued strong growth in the TV market of +5.3% is expected, along with a +13.7% for VOD, as consumer viewing habits continue to shift. We also have a stellar year ahead for TV in terms of programming, with the World Cup set to bolster this in the back end of H2 2022. There are still advertisers returning to the market post pandemic, who didn’t come back in 2021, especially sectors such as cars (with the chip shortages) and travel brands (with ongoing travel restrictions) which could make the market more volatile as we progress through the year.

“With restrictions easing (and hopefully staying this way), I am personally looking forward to seeing the continued return of bolder and braver channel mix on advertising plans, with brands making use of the brilliant partnership opportunities available across the board along with growth again in the likes of OOH and Cinema.”

Inken Kuhlmann, Marketing Director, EMEA, HubSpot

“Not only did the UK reach record levels of ad-spend in 2021, but forecasts were also vastly below the real success we can now see from the latest Advertising Association Expenditure Report. Understandably, marketers are still operating with caution given the continued fluctuations in the UK economy, yet the figures are a reflection of not just how the industry is bouncing back, but perhaps an acceptance of a more innovative and resilient digital approach.

“Much of the increased spend we’re seeing from brands today is being channelled into content creation. We’re seeing more and more companies, in particular the Software as a service (SaaS) space, transforming into powerhouse media companies in their own right by investing massively in content creation to better serve and grow their audience and communities. Essentially, scale-ups and enterprises are feeling the fierce competition for attention. They want to stay relevant and front of mind with their audiences. Clearly, they’re willing to spend big on their own marketing to supercharge growth and win the battle – whether through blogs, certifications, newsletter subscriptions or podcasts. As restrictions are fully lifted in the UK for the first time in two years, it will be interesting to watch how this investment pans out. External advertising will always be of value, but brands now know how content creation transforms its customer experience and engagement – and that’s something that could mean big change for the industry moving forward.”