UK ad sector fights off Omicron to hit record growth

The UK’s advertising market has witnessed an even greater recovery than previously predicted, up 26.4% to an estimated record spend of £30bn last year, with budgets forecast to top £32bn this year.

The new findings – published in the latest Advertising Association/WARC Expenditure Report – upgrade October’s projection for 2021 (+24.8%) by 1.6 percentage points, equating to the strongest year in UK ad market history, and show fears that the Omicron variant would scupper the recovery proved unfounded.

This is supported by the actual data released for Q3 2021, showing adspend of £7.3bn – the largest-ever summer spend on record.

New forecasts also show total investment for 2022 is set to rise by 8.5% to £32.2bn – meaning the UK market will have expanded by more than a third since 2020. A bright start to the year contributes to an upgrade of almost one percentage point for 2022 growth, while sectors especially hit by the Covid-19 pandemic – such as cinema and out-of-home – will expect to see a continued recovery.

In addition, these recovery projections are supported by international data from WARC which expects the UK’s bounce-back in 2021 to be the largest across any major international ad market – including the US, France and China – while outstripping the global rate by more than 12 percentage points.

Actual figures released by AA/WARC confirm adspend rose 23.2% during Q3 2021 to a record £7.3bn – three percentage points and £183m ahead of forecast. All media recorded double-digit growth in Q3 2021 following the previous year’s decline, as the summer period saw the return of key sporting moments such as the Euros, Olympics and Paralympics along with the easing of Covid-19 restrictions.

Most of the channels hardest hit by the pandemic have seen a strong recovery. Triple-digit growth was confirmed for cinema (+655.9%) to £20.2m, albeit from a virtual wipeout, marked by the September release of James Bond’s No Time to Die, while out-of-home saw an increase of 62.6% to £270.4m.

Regional newsbrands saw online ad revenue overtake print for the second quarter running, as online revenue grew to £67.5m (+55.7%) with combined investment of £132.7m (+22.4%).

Direct mail also saw substantial growth, up 23.4% in Q3 and forecast to rise 6.8% for the year.

The latest figures suggest Q1 2022 also looks to be stronger than expected (particularly within TV) and overall adspend is now forecast to grow 12.6% year-on-year, compared with 10.5% previously.

AA chief executive Stephen Woodford said: “UK advertising has seen a remarkable recovery from the coronavirus pandemic, racing ahead of key international markets. The latest report brings welcome news not just for our industry but for the wider economy, as advertising investment is a key lever for businesses to capture new markets and drive their recovery.

WARC director of data, intelligence and forecasting James McDonald added: “2021 was the strongest year for the UK’s advertising market since monitoring began. Encouragingly this momentum appears to have sustained into the new year, with the impact of the Omicron variant on advertising trade appearing to be reasonably muted across the majority of sectors.

“While inflation is set to act as a headwind on both the consumer and media buyers alike in the coming months, we have little reason to believe that the UK’s ad market won’t achieve growth of 8.5% this year – well ahead of the average recorded during the decade preceding the outbreak.”

While these figures are for UK media spend, other industry sectors have escaped unscathed from the pandemic. According to the Worldwide Big Data and Analytics Spending Guide from IDC, UK companies are forecast to have spent more than £7.2bn on data and analytics in 2021.

The compound annual growth rate (CAGR) for global spending over the 2021-2025 forecast period will be 12.8%, meaning the market will be worth more than $390bn by then.

Meanwhile, the wholesale adoption of data science techniques is set to trigger exponential growth in the value of the global data science platform market, from $43.56bn (£33bn) in 2020 to $163.14bn (£124bn) in 2025, driven by a surge in organisations embracing data analysis and insight.