The UK ad market reached a record £31.9bn in 2021, equating to a year-on-year growth of 34.3%, with digital channels accounting for nearly three in every four pounds spent as brands followed the money – and consumers – online.
So says a new report – UK Advertising’s Adspend Review: The Pandemic Effect – marking the definitive full year 2021 Advertising Association/WARC Expenditure Report figures, which show the extraordinary adspend growth seen during the recovery from the Covid-19 pandemic.
The figures reveal the 2021 ad market emerged £8bn larger than April 2020’s original forecast of £24bn set at the beginning of the Covid-19 pandemic. This growth is in part due to inflationary pressures on the cost of advertising but also a higher-than-expected growth in key forms of online advertising during the past year.
In line with the IAB/PwC report published earlier this week, the data shows Internet spend totalled £23.5bn in 2021, equivalent to 73.5% of all UK budgets and a jump up of 11.7 percentage points from pre-pandemic levels in 2019.
Notable shifts were seen in adspend, sector by sector, during the pandemic with the UK Government quickly becoming the UK’s largest advertiser to drive mass behaviour change.
The latest AA/WARC data presents an upgrade to the previous forecasts for 2022. The UK’s ad market is forecast to grow by 10.7% this year to £35.3bn, driven by a strong start to the year, higher CPMs and higher demand ahead of the FIFA World Cup.
In 2023, this is set to add an additional 5.4% year-on-year to reach £37.2bn, though economic headwinds – particularly in relation to cost of living pressures and supply chain disruption – mean this is liable to review.
Search, including ecommerce, proved to be the strongest performer in 2021 – at £11.7bn it beat April 2020’s projection (made during the onset of the Covid-19 pandemic) by over £3.7bn.
According to advertising thinktank Credos, the UK now has the world’s most avid online shoppers, splashing out over £2,114 per capita.
Meanwhile, online display grew 47.2% to £10.8bn, TV was up 24% to £5.5bn, online classified grew 8% to £1.05bn and direct mail more than held its own with a 19% surge to £1.08bn.
Advertising Association chief executive Stephen Woodford said: “The UK has held its position in 2021 as the largest advertising market in Europe through the pandemic and is now the third largest in the world, behind the US and China. 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.
Woodford believes the pandemic presented the industry with opportunities to innovate and meet the public health challenges.
He added: “The UK Government remained in pole position as the largest advertiser. Cover wraps in our print media informed the nation with ‘Stay Home’ public health messages; direct mail brought testing kits and essential deliveries to households up and down the country; and billboards showed the everyday heroes in our NHS.
“Such innovation, creativity and responsiveness will be critical in the years going forward, as we build a sustainable future for our industry, and help businesses, large and small, build relationships with their customers.”
Meanwhile, WARC director of data, intelligence and forecasting James McDonald maintains that the changes seen in the advertising market during the pandemic allude to an emerging structural shift, one which points to a new era of advertising with retail media poised to play a more prominent role in future.
He explained: “The Covid-19 recovery was buoyed in part by the release of pent-up investment on established online platforms – as well as maturing ones such as TikTok – and in part by the emergence of retail media as a major contender for marketing budgets. The latter trend bears the hallmark of a new era in advertising, one which is set to fuel growth over the forecast period and beyond.
“Be that as it may, economic headwinds create uncertainty ahead; the consumer is being stretched further than at any other time since the Second World War, conflict in Europe has stoked market volatility and has exacerbated supply chain pressures, and the prospect of a UK recession cannot be ignored. Given the market’s current momentum, however, we do not yet see this translating into an advertising recession over the coming quarters.”
Digital spend soars but IAB chief warns ‘don’t get cocky’
Ad recovery continues but there will be bumps ahead
Ad budgets up again but the fat lady’s not singing yet
‘Data-driven ads will be key’ as spend finally recovers
Marketing budgets still on life support in the Covid ward
Online spend proves Teflon-coated against Covid cuts
Put your foot down: Brands gear up for road to recovery