Economy unlocked: Record ad spend growth driven by performance platforms

Green shoots ahead for the UK advertising market as those in the industry can expect the market to expand next year by more than a third since the pandemic-hit 2020.

Economy unlocked: Record ad spend growth driven by performance platforms

UK ad spend is estimated to reach its strongest growth on record in 2021, according to the latest Expenditure Report figures from the Advertising Association and WARC. 

The 26.4 percent growth now estimated for 2021 is an upgrade to previous projections in October of 24.4 percent and means the advertising market’s value last year is set to hit almost £30bn, making 2021 the strongest year in history. 

According to additional research from WARC, the bounce back of the UK market is set to forge ahead of other countries, including China, USA and France, while outstripping the global rate of growth by more than 12 percentage points. 

Annual growth for 2021 is set to be strong in virtually all digital advertising disciplines, including search (31 percent), online display (26.9 percent), online regional newsbrands (33.2 percent) and online magazine brands (45.9 percent). All saw an uptick in estimated growth from the October report. 

The latest growth projections mark a “remarkable recovery”, says the Advertising Association’s chief executive Stephen Woodford.

“A strong advertising market is a key indicator of the UK economy’s growth, with every £1 spent on advertising generating £6 GDP. The latest AA/WARC 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.”

Strongest summer spend in recorded history

The Expenditure Report also highlighted ad spend of £7.3bn for Q3 2021, a growth of 23.2 percent and second only to Q2 2021 for the largest quarterly growth on record. Spend in Q3 2021 was 21.8% higher than pre-pandemic times. 

All media recorded double-digit growth in Q3 after declines in 2020, owing to major sports events including the Euros football tournament, the Olympics and the Paralympics. The period also saw the most marked easing of Covid-19 restrictions in the UK, including ‘Freedom Day’ on 19 July 2021.

The largest growth was recorded in those areas particularly impacted by the pandemic in 2020, with cinema seeing a triple digit increase in spend of 666 percent and out of home up 62.6 percent to hit £270.4m - though digital out of home rose by 68.7 per cent. 

Across all other online media, rates of growth were slower owing to a comparatively stronger performance in Q3 2020. But online radio, magazine, and regional newsbrands convincingly outstripped their offline counterparts in terms of growth rate in Q3 2021. 

Entertainment and leisure brands were the biggest spenders in the quarter, with a combined spend of more £400m for the first time since the start of the pandemic. Travel and transport continues to recover by doubling in size year on year, but still remains almost £55m behind the spend in Q3 2019.

Media

Q3 2021 

year-on-year % change

9M 2021 

year-on-year % change

2021 forecast year-on-year % change

Percentage 

point (pp) 

change in 2021 forecast vs Oct

2022 forecast year-on-year % change

Search 

18.7% 

36.7% 

31.0% 

+0.9pp 

11.1%

Online display* 

20.5% 

32.8% 

26.9% 

+1.5pp 

8.3%

TV 

28.9% 

30.6% 

26.1% 

+3.2pp 

5.3%

of which VOD 

33.9% 

39.4% 

37.5% 

+3.4pp 

13.7%

Online classified* 

36.8% 

31.6% 

25.8% 

+1.2pp 

3.9%

Out of home 

62.6% 

14.2% 

25.4% 

-2.2pp 

26.8%

 of which digital 

68.7% 

24.8% 

35.7% 

-2.4pp 

35.4%

Direct mail 

23.4% 

21.0% 

17.1% 

+6.8pp 

-6.8%

  

National newsbrands 

25.4% 

11.7% 

10.9% 

+3.3pp 

1.4%

of which online 

22.8% 

22.4% 

17.4% 

+4.2pp 

6.4%

Radio 

30.7% 

28.9% 

21.7% 

+4.0pp 

4.0%

of which online 

49.7% 

54.5% 

41.4% 

+6.7pp 

10.7%

Magazine brands 

22.3% 

24.4% 

20.4% 

-1.2pp 

-3.0%

of which online 

41.0% 

62.2% 

45.9% 

+4.0pp 

-1.0%

Regional newsbrands 

22.4% 

7.8% 

7.8% 

+0.4pp 

-6.1%

of which online 

55.7% 

37.0% 

33.2% 

+8.2pp 

0.9%

Cinema 

655.9% 

-57.0% 

70.0% 

-18.0pp 

201.1%

TOTAL AD SPEND

23.2% 

30.8%

26.4%

+1.6pp

8.5%

Source: AA/WARC Expenditure Report, January 2022

UK market to expand by more than a third since 2020

The UK ad market is forecast to grow by 8.5 percent for 2022 to reach £32.2bn this year. The projections will mean that the UK ad market will have grown by more than a third since 2020.

Continued growth is expected for search (11.1 percent), online display (8.3 percent) and TV (5.3 percent) as consumers continue their perhaps Covid-adapted day to day habits. More immediately, Q1 2022 is forecast to grow by 12.6 percent year on year, an upgrade on previous growth expectations of 10.5 percent.


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