Interviews, insight & analysis on digital media & marketing

AA/WARC Expenditure Report Q4 2020: Industry Reaction

UK ad spend is on course to bounce back stronger than any of the world’s other major markets on the other side of the COVID-19 pandemic, growing 15.2% this year to reach £27 billion in spend, according to the latest Expenditure Report from the Advertising Association and WARC.

This momentum is predicted to continue into 2022 when the market grows a further 7.2% to hit a record yearly expenditure of £29 billion.

To get an insight into how the wider industry feels about the report, we’ve gathered comment from a collection of Bluestripe Communications (owned by Bluestripe Group, owner of NDA) clients and other industry executives. 

Duncan Chater, Head of Sales, Europe, Bloomberg Media

“The last 12 months have provided a stark reminder that businesses must remain nimble and be able to adapt fast to unforeseen events. It’s particularly encouraging, as highlighted in this latest AA/WARC report, that the industry is witnessing an acceleration of innovation and adaptability. Learning that UK ad spend is forecast to reach a record £29 billion in 2022 provides the optimism and motivation the industry needs after a challenging 12 months. It also mirrors the success we’ve seen in digital ad spend at Bloomberg Media.

“As the past year has shown, brands are now – more than ever – looking for more than just advertising. The need an agile, consultative partner who can help them authentically connect with the right audiences. As ad spend continues to grow, I expect such requirements from brands will only increase. Ultimately, brands will continue to look for partners who can help them best connect and engage with audiences over the long term, leveraging unique insights and data.

“At Bloomberg Media, we’ve seen brands shifting towards purpose-driven content over the last year. We expect this to continue as the desire by brands to engage around diversity, the environment and other societal issues grows. In the last 18 months, we’ve launched two new editorial verticals, Bloomberg Equality and Bloomberg Green, to connect audiences with deep and rich content that reflects the issues facing modern society.”

Craig Tuck, CRO, The Ozone Project

“These latest forecasts make for great reading for the UK’s advertising industry, with a very strong outlook projected for the rest of the year and into 2022. Media owners across the country will be relieved and reassured to see the projected growth across all channels – a sign that will be welcomed by everyone who believes in the need for a quality, competitive media ecosystem to deliver best results for our advertiser clients.

“Forecasting ahead, Ozone’s unique single view of UK-wide online content consumption also points to a corresponding growth in consumer confidence as restrictions are lifted. We’ve seen significant growth in reader engagement with ‘big ticket’ advertiser areas – such as automotive, home improvement and travel content – suggesting that this increase in marketers’ media investment will be met with greater consumer spending. The Bank of England has already suggested that UK households have built up record levels of excess savings during lockdown and our savings content has been accounting for an ever-growing proportion of personal finance page views. Advertisers would be wise to capitalise on this consumer demand by advertising in trusted, quality environments that will deliver the best outcomes for their brands.”

Tim Geenen, Managing Director, Addressability Europe, LiveRamp

“The reassuring rise in ad spend this year, and the projections of record-breaking growth in 2022, shows that the industry is well on its way to a strong recovery.

“Evolving global privacy regulations, the countdown to the demise of third-party cookies and other device identifiers, including the IDFA, means that this has been a challenging year for marketers even before we consider the impact of the pandemic.

“As a result, smart marketers have used this period of disruption to embrace the opportunity to transform the way they approach digital advertising. It’s a known fact that third-party cookies are an imperfect solution, and marketers have migrated their strategies towards a more sustainable set of technologies.

“Today, marketers want to reach consumers based on authenticated identity attributes — supplied actively and with permission — which enables greater addressable reach, improved measurement, and better ROI. The time has therefore never been greater to build an ecosystem whereby consumers authenticate in exchange for trusted and valued engagements.”

Brian Kane, Chief Operating Officer, Sourcepoint

“These are incredibly encouraging trends for digital advertisers, revealing an undeniable shift in optimism since the beginning of the pandemic.

“As budgets return, we must remember that the changes to our ecosystems, such as IDFA and the countdown to cookieless remains an enormous challenge for advertisers and publishers alike. Additionally, with changes to consumer behaviour driven by the prevalence of e-commerce and the shift to an online experience during lockdown, consumer hunger for personalisation is heightened.

“Despite these disruptive times, the challenges we now face provide fruitful ground for the industry to determine how best to optimise their ad spend for accurate measurement, and increase its focus on data ethics and compliance. As we continue to move forward into a privacy-first world, this period of testing and learning is one that the entire ecosystem must embrace to build stronger relationships with consumers. Only by taking the time to educate audiences on the data value exchange will it be possible to avoid the negative effects of data depreciation and maintain the competitive edge.”

Austin Scott, Head of Video Market Development, EMEA, Xandr

“2020 was a tumultuous year, so the report’s results are reassuring for all parties in the digital ecosystem. Matching the findings in the report of a strong shift to online video, we’ve seen total digital video spend on Xandr’s platform grow by 75% year-over-year in Q1 2021. Indeed, the primary driver of this video spend is CTV.

“With streaming, smart TVs and device use exploding amongst consumers, especially Gen Z and millennial audiences, CTV presents a wealth of opportunities for advertisers in the coming months. What separates CTV from linear TV is that it’s more dynamically addressable at an impression level, so advertisers should look to work with audience authentication partners and media owners that will enable them to target individual households or viewers. A further benefit is that it allows for converged analytics and attribution analysis, so advertisers can support buying against known performance outcomes.

“To reap the rewards of this channel, advertisers need to act now and partner with the best-in-class CTV experts. Only then will they be able to build valuable relationships with key audiences and stand out against competitors.”

Harry Hughes, Account Director at Incubeta

“Digital marketing channels have undoubtedly experienced a growth in spend throughout 2020. Brands have switched their investment away from more traditional marketing channels, and tailored their strategy to support the pandemic-induced shift in consumer behaviour away from traditional, to online.

“With companies suffering volatile changes in their business performance and marketing budgets under greater scrutiny, we saw an adjustment to focus on online performance channels where there is a high degree of measurability, such as paid search and display.

“Looking forward, the easing of lockdown restrictions will be a welcome respite for the recovery of offline marketing channels. Although it’s great to see the shift to online is expected to be maintained with the continued growth in investment in digital channels into 2021 and 2022. For brands performing well online we are seeing a greater interest from our clients in experimenting with platforms such as TikTok or Video on Demand to reach new audiences beyond traditional platforms such as Facebook and Instagram.”

Lina Adelt, Communications and Marketing Manager at A Million Ads

“The latest AA/WARC Expenditure Report tells a positive story for the advertising industry as we move through 2021. Advertisers should take advantage of this opportunity by turning to innovative new solutions to continue to engage effectively with their audiences.

“Over the past year, consumers have become accustomed to personalised, emotive and thoughtful ads from brands. They are looking for a personal touch and in the coming months brands should identify ways to reach their customer base directly with messages they will care about.

“Dynamic audio and video enable brands to adapt their messaging at a global, regional and local level. For instance, messaging on opening times or deliveries can be edited in real time without having to rework the creative from scratch, saving money and connecting with consumers on a more personal level.”

“In a year when brands should be looking to reconnect, dynamic audio and video advertising provides an opportunity for advertisers to build better connections with their customers.”

Justin Taylor, Managing Director UK, Teads

“It’s fantastic to see recovery across all sectors, so now is a really interesting time as longer term planning starts in earnest. In the past few months, there has been lots of discussion surrounding what a ‘return to normal’ actually looks like for the general public and working culture. The question is what will it look like for marketers?

“Over the past 18 months, there has been huge innovation, adaptation and testing going on. There are some certainties looking ahead, for example we know that when it comes to data, cookieless is the future. But lots more is uncertain and it will be interesting to see what the new media mix looks like as we emerge on the other side of the pandemic.

“Brands must apply their learnings from the past year to adapt to the changing demands of consumers. Those brands who have struggled throughout the pandemic will also be hoping for recovery, and as a result will be leaning on platforms which can guarantee results in a responsible manner, while aligning with consumer values.”

Elizabeth Brennan, Head of Advertiser Strategy, Permutive

“Innovation in digital will continue as advertisers build their strategies ahead of some major changes in the advertising industry. It’s positive news that e-commerce continues to gain momentum, not only because it saw brands adapt or accelerate their online offering, but it will also set them up for a future without third-party cookies. Having a digital presence is an important step for brands to start gathering or building valuable first-party data and insights on their consumers.

“It’s unsurprising to see brands pivoting spend into media channels with very clear measurement frameworks during these difficult economic times. Areas such as social and paid search in particular have benefitted from this because as budgets tightened the need to prove return on ad spend heightened.

“The growth of online video and video on demand is reflective of the change in consumer behaviour during 2020. However, it’s really exciting to see digital OOH and cinema channels starting to bounce back to life following the pandemic.”

Charlie Smith, Managing Director Europe, Blis

“It’s positive to see a recovery across all sectors and shows the resilience of the digital industry.

“As the UK returns to some semblance of normality the heavy investment in digital will not be forgotten. Consumer behaviour has been altered significantly in the past year, increasing their expectation of the online experience, and marketers will need to uphold this. 

“In parallel to this elevated expectation, the industry is at a major inflection point, as we move away from targeting based on IDs and personal data. As the iOS 14.5 updates continue, we will see a depletion in data, which could cause havoc for some businesses if they are unable to target effectively.

“Now, it’s more important than ever before to take steps to prepare for a privacy-first world by working with partners that are still able to drive key business outcomes through personalised and high-performing digital advertising in a privacy-compliant way.”

Lee Lythe, Chief Investment Officer, Spark Foundry

“It’s great to see that the UK media market is accelerating into 2021 with an expected growth of 15%, a strong bounce back from an extremely tough year.  Despite the challenges faced in 2020, a decline of 7% across the year really demonstrates the resilience of the UK advertising industry. Consumer behaviour changed dramatically and advertisers were able to keep pace by investing heavily into digital platforms, a trend very much set to continue.

“In 2021 the continued growth within Video on Demand comes as no surprise (+14.3% vs. a buoyant +15.7% the previous year), as audiences continue to seek out quality content, advertisers will inevitably follow. It does however seem that news and magazine brands are in for a tough year, forecasted up they are still some way off their 2019 levels. Whilst, it is encouraging to see increased support for their digital offerings, the overall level of investment feels like a lost opportunity for advertisers given their strong editorial content, trusted environments and access to first party data.

“Finally, it’s been a tough 12 months for OOH, but the media owners have been far from idle, using this time to accelerate their offering by creating flexible trading mechanics fuelled by data, and as a result, brands are relishing the opportunity. Beyond H2, the future looks bright.”