The UK ad market broke a new record in 2021, falling just shy of shattering a £32bn adspend ceiling and achieving growth of 34.3% compared with lockdown-struck 2020, according to the most recent Advertising Association/Warc Expenditure Report.
But while continued growth seems a certainty, marketers and agencies should take heed – there are tumultuous times ahead.
Even so, given UK adspend is the highest it has ever been, there is much cause for jubilation, with the findings surpassing already record-breaking estimates made in January, when the AA/Warc forecast £30bn in adspend for the year, equating to growth of 24.8%.
While 2021’s rise was in part due to inflation hitting the cost of advertising, it was also fuelled by "higher-than-expected growth in key forms of online advertising during the past year”, the AA/Warc said.
Adspend splurge equals digital surge
Digital advertising in its many forms was by far the biggest beneficiary of the adspend surge. Of every £4 spent on advertising in the UK, £3 went online, with the UK’s weighting towards digital similar only to that of China, from a global perspective.
Internet adspend hit £23.5bn in 2021, accounting for 73.5% of total adspend and marking a leap of 11.7 percentage points from pre-pandemic levels in 2019.
Other media to experience significant hikes in spend included TV, which was up 24.1% overall to £5.46bn (of which BVOD accounted for £732m and grew 44%). Out of home (not surprisingly, given people were finally leaving their homes) grew an impressive 28.9% to £901m (more than half of which was DOOH); radio grew by 24.5% to £718m; magazines were up 20.3%; and, again thanks to a return to relative normality, cinema enjoyed a bounce back of 86.6% to £103m.
National news brands fared less well, with adspend growth of 13.7% to £846m, while regional counterparts grew just 8.8% to £511m. Direct mail was up 19% to £1.1bn.
Richard Kelly, Mindshare UK’s chief revenue officer, noted that his agency was seeing “investment in online formats continue to flourish and further establish its influence in reaching once untapped audiences”.
He added: “We’re also seeing TV stand the test of time and outperform expectations, proving the naysayers wrong. Excitement surrounding the future of TV has been re-ignited as opportunities continue to develop and diversify, as exemplified by Netflix announcing the integration of ads onto the platform, means it’s certainly going to be an exciting year for the space, as the arms race between live and on-demand TV rages on without an end in sight.”
Commenting on OOH’s resurgence, Ali MacCallum, Kinetic UK’s chief executive, asserted that “brands recognise that out-of-home audiences are back in full force, and it’s no surprise they’re turning to a combination of classic and digital OOH inventory to target existing and future customers”.
He continued: “OOH consistently provides tangible value to brands and, with the continued regulation and decline of previously effective online advertising strategies, we are feeling ever-more optimistic about the future of OOH.
"We expect this upward trend to continue as brands build familiarity to get through the potentially hard times ahead as cost-of-living rises. We are glad to see this optimism reflected in the report this quarter.”
Government comms in rude health
There was also dramatic change on a sector-by-sector basis, although anyone paying attention during lockdown would have been able to predict the narrative.
The UK government became the UK’s largest advertiser with its numerous campaigns to effect mass behavioural change around topics such as the NHS, social distancing, vaccinations and testing – although, of course, while much of its messaging resonated among the British public, it fell on deaf ears for some of its instigators. Government comms experienced 97% growth compared with 2019.
Business and industrial advertising also rallied – up 67% on 2019, thanks to companies that capitalised on WFH with remote and hybrid working initiatives. Clothing and accessories grew 43% mostly because retailers promoted online shopping experiences due to a dearth of in-store shoppers. Pharma and healthcare grew 32%, while food advertisers helped feed consumer appetites and increased spend by 31%.
Football and ill winds
Casting its eye towards the future, the AA/Warc data initially looks promising compared with previous forecasts for 2022.
The overall UK advertising market is expected to grow 10.7% to £35.3bn thanks to a strong year start, higher CPMs (cost per thousand ad impressions) and boosted demand kicked off by the Fifa World Cup in Qatar.
Further ahead, into 2023, growth is forecast at an additional 5.4% year on year (reaching £37.2bn).
However, such buoyant predictions are subject to review, with ill winds mustering in the guise of continuing cost-of-living hikes, exacerbated by the Ukraine war, and Brexit-induced supply chain disruption, factors highlighted in the recent IPA Bellwether Report.
Stephen Woodford, chief executive of the Advertising Association, noted that the UK held fast to its position as the “largest advertising market in Europe through the pandemic and is now the third largest in the world, behind the USA and China”.
But he added: “While further growth is forecast, inflationary pressures on the cost of advertising, and more generally, due to the ongoing geo-political uncertainties, mean we should be cautious.
“While lockdowns saw sharp declines in spend across some sectors, the pandemic presented our industry with opportunities to innovate and meet the public health challenges. The UK government remained in pole position as the largest advertiser.”
He commended “cover wraps in our print media [that] informed the nation with ‘Stay home’ public health messages”, direct mail’s ability to bring testing kits and essential deliveries to households and “billboards [that] showed the everyday heroes in our NHS” (pictured below).
He added that such “innovation, creativity and responsiveness” will be crucial to the future.
The Advertising Association, Warc and Credos have also published a complementary report. The UK Advertising’s Adspend Review: The Pandemic Effect. This collates the 2021 full-year Advertising Association/Warc Expenditure Report figures, while reflecting how Covid lockdowns have shifted the tectonic plates underlying the UK’s advertising landscape.
It includes observations and reactions from Warc, thinktank Credos and Google, Tesco, News UK, UM, ISBA and Thinkbox, among others.
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