Spend on advertising fell 7.2% to £23.5bn in 2020, according to the latest dataset, but rose 2.6% in the fourth quarter.
Advertisers shifted spend into online video, social media and search in 2020, according to the data, partly reflecting the growth in e-commerce as people purchased from home.
The estimated growth in ad spend for 2021 would recover the £1.8bn decline seen in the market last year, but full recovery of the market is not expected until 2022, according to the analysis.
The Advertising Association and WARC forecast that the media channels most adversely affected by the pandemic will experience the biggest growth this year – cinema (+266.8%), digital out of home (+52.3%) and traditional out of home advertising (+14.5%).
Online display, including social media and online video, and paid search, are forecast to grow and account for two-thirds ( 66.4%) of UK ad spend.
However, other media, including TV, direct mail, national news, regional news and magazine brands, are not expected to recover 2020’s losses this year.
Stephen Woodford, chief executive, Advertising Association, said: “Advertising investment has mirrored the rapid changes seen across the economy over the last year, primarily the acceleration provided by lockdowns towards e-commerce across all sectors able to sell online.
“The predicted growth this year of 15.2% is good news. With every £1 of advertising spend generating £6 of GDP, this will be a welcome boost for jobs and growth in the wider economy.”
The review includes the AA/WARC’s quarterly survey of national newspapers and regional newspaper data collated with Local Media Works and magazine statistics from WARC’s panels. Data for other media channels are compiled in conjunction with UK industry trade bodies.
The report combines data from the discontinued print publications the Quarterly Survey of Advertising Expenditure and the Advertising Forecast.
James McDonald, head of data content, WARC, said:“Save for a flock of online pure-players, the majority of media owners surveyed by WARC experienced their worst trading climate in living memory. This was true at both the financial and the human level – many will not witness a full recovery until 2022 at the earliest.
“Agile formats with short lead times were seen to flourish last year, particularly within social media and e-commerce environments. Media owners in these spaces are expected to build on good 2020 results this year, though the situation will be more challenging across the remainder of the landscape as ad investment continues to favour performance marketing.”
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 it’s 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 enables 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.”
Leigh Gammons, EMEA CEO of Wunderman Thompson Technology
“The forecast certainly shows some positive signs for recovery and reflects what we’re starting to see with our clients as things open up again. As people have shifted their lives online throughout the past 12-18 months, businesses have had to double down on the digital experience. What will be interesting to see now is how brands reconnect their customers with the in-store experience and how they can join the dots between in-store and online customer engagement. As lockdown continues to be lifted, consumers will expect their favourite brands to be delivering the seamless online experiences they have become accustomed to everywhere.
So we believe that online and digital channels will continue to dominate now and into the future. Businesses that ensure their customer experience is personalised and consistent across all channels, will be in the best position for growth.”
Bloomberg Media: Duncan Chater, Head of Sales, Europe
“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 £29bn 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 a 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.”