UK ad spend is on course to grow by 18.2% this year, reaching £27.7 billion, as the industry recovers the entirety of its 2020 pandemic-fuelled decline, according to the latest Expenditure Report from the Advertising Association and WARC. Should spend grow by the predicted 18.2% this year, it would be largest increase on record.
The UK ad market is expected to recover the entirety of the £1.8 billion decline it suffered last year, before growing a further 7.7% to reach a record £30 billion in 2022.
“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,” said Stephen Woodford, Chief Executive at the Advertising Association. “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. The UK is the global hub for advertising and will also benefit from faster growth in major export markets for UK advertising services. If the AA/WARC expenditure estimates turn out as forecast, then the ad industry will contribute strongly to the nation’s economic resurgence this year and into next.”
The strongest growth is expected to come in the areas that have been hit the hardest during the pandemic, namely cinema (+315.6%) and out-of-home (+29.3%), of which digital out-of-home is forecast to grow 43.7%. And online classifieds are set to see an investment increase of 21.5%.
In the online world, search is on course for a growth of 19.7% and online display of 17.2%. Meanwhile, TV ad spend is heading toward a 15.1% jump, thanks to the increased in advertising activity during the recent delayed Euro 2020 football tournament.
“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 e-commerce trade,” said James McDonald, Head of Data Content at WARC.
“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.”
The latest report also includes actual ad spend figures from the first quarter of this year, where spend rose by 0.8% to £6.5 billion.
The continuation of the UK’s lockdown and social distancing rules meant that overall out-of-home spend fell by 64.9%, while cinemas – which were closed for the for the entire quarter – obviously lost the entirety of their ad investment. Declines were also experienced in direct mail (-16.5%), national newsbrands (-18.7%), and regional newsbrands (-22.4%).
On a more positive note, there was double-digit growth within the online space for video-on-demand (+12.9%), online display (+12.6%), and search (+11.6%).