The latest AA/WARC Expenditure Report published this week reveals that the UK ad market reached the milestone of a record £31.9bn last year. The report – which gives the figures for the whole of 2021 – also provides upgraded forecasts for 2022’s growth, despite the backdrop of inflationary pressures, supply chain issues and the war in Ukraine.
PMW’s round-up of commentary on the findings from industry experts reveals mixed degrees of caution and optimism mixed with messages of the need for clear measurement and focus on business impact.
“The metaverse has sparked interesting conversations on digital advertising’s future”
Richard Kelly, Chief Revenue Officer of Mindshare UK: “The idea of the metaverse has sparked many interesting conversations surrounding the future of advertising and we expect to see digital formats continue to dominate as brands move away from more traditional advertising and begin to dip their toes into new uncharted territory.
“We’re also seeing TV stand the test of time and out-perform expectations, proving the naysayers wrong. Excitement surrounding the future of TV has been reignited as opportunities continue to develop and diversify, as exemplified by Netflix announcing the integration of ads onto the platform. This 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.”
Tom Roberts, CEO, Tribal Worldwide: “With this continual increase in demand for e-commerce, it will be important for brands to not only provide their customers with a seamless, blended retail experience as they shop across multi-channels, but they will also need to work on retaining a workforce that meets the increased demand for digital skills and expertise. Supporting employees as we continue to experience economic uncertainty along with the current volatile geo-political situation, will be essential to help brands continue to innovate and build good relationships with their customers.”
Tim Sleath, VP Product Management and Data Protection Officer, VDX.tv: “Evidently, advertisers have realised the continued benefits of CTV advertising especially as ad spend within the TV space has continued to surpass expectations, this year by almost £1bn, while online video overperformed by approximately £2bn. We can expect that digital video consumption will continue to rise and marketers will need to continue to focus their attention on these platforms because ultimately this is where the most engaged audiences will be found.
“The opportunity here is for advertisers to demonstrate ROI of their CTV activity by targeting and measuring via first-party, household and even device-level data.”
“Maintaining advertising investment through a crisis will pay dividends later on”
Louis Connor, Business Development Director, Kepler EMEA:“Post-pandemic optimism has been curtailed by the rising cost of living, compounded by war in Ukraine - but fortune favours the brave. Brands have learnt that maintaining their advertising investment through a crisis will pay dividends later on and several economic downturns have proven this to be the case.
“It’s fantastic to see this immense growth in adspend as investment continues to flow into digital channels and the rise of retail media continues to prove itself as a huge opportunity. However, with consumer spending anticipated to reduce, advertisers and marketers will benefit from re-aligning budgets towards brand-building from sales activation. Beyond the economic picture there remains persistent industry challenges - adapting to a post-cookie world, staying on-top of data-privacy obligations, and unlocking opportunities in commerce media to name only a few.”
Michele Szabocsik, VP of Marketing, BlueConic: “The pandemic revealed a lot about what was working for companies, and what was broken about them to begin with – including the inability to adapt to rapid shifts in the environment, which was incredibly problematic for a lot of organisations. Those that were able to adapt quickly did so by prioritising the customer experience and optimising their marketing and advertising spend to ensure value is delivered to customers across all channels and at every stage of the customer lifecycle.
“Forecasts of continued ad spending increases aren’t all that surprising, as a relentless focus on creating mutual value exchanges is what drives growth for businesses in spite of rising inflation, supply chain disruption, and other macroeconomic factors.”
Paul Thompson, UK Country Manager, Seedtag: “No doubt we will see strong headwinds this year with an unprecedented rise in the cost-of-living impacting consumers’ pockets, the Ukraine war weighing heavily on public consciousness and the decoupling of the global supply chain.
“However, marketing practitioners and brands have plenty of empirical evidence, gained over many years, to support ongoing investment to build brands and to take market share from those that pull back or reduce investment. Against this macro backdrop contextual targeting within digital advertising will continue to flourish and growth will outstrip nearly all other digital channels as more ad tech companies pivot into this space with the added upside of consumer privacy and no need for PII data.”
“Digital media driving deeper and more powerful engagement”
Allan Blair, Head of Strategy, VaynerMedia: "In this environment, of course brands are turning to digital media. Not only do they see it as a quicker, more cost effective and direct way to reach consumers, but they increasingly see it driving deeper and more powerful brand engagement and influence. This shouldn’t be a surprise. We have spent the past two years stuck at home with little more to do than waste hours on Instagram, surf Netflix trying to decide what to watch or browse ASOS planning the perfect party outfit for when we are finally free. Digital was a mainstream behaviour before the pandemic, it’s now as vital as oxygen.
“Many commentators will claim this is a post-lockdown blip, that things will level off to pre-pandemic levels. They will pull out well-worn charts declaring the power of traditional media is stronger than ever. Yet every day we speak to clients keen to shift ad money online, who want to build their brands from social and who see digital as not just a channel for efficient media, but one to build equity, engagement and consumer influence in an organic and natural way as they have never been able to before.”
Sophie Wooller, Director of Transformation, Croud: “The results from the Advertising Association/WARC Expenditure Report prove how strong the industry is in the face of hardship and economic downturn. However, as we brace ourselves to battle through another period of economic difficulty, advertisers would be wise in seeking diverse strategies to help emerge from this phase in a strong position.
“It is hugely encouraging that search, inclusive of e-commerce, has proven a standout performer in 2021, offering brands an effective means in ensuring continued growth though times of difficulty. But as we look ahead - and with a backdrop of inflationary pressures - advertisers are assessing the ability of paid channels to continue to drive profitable growth. Getting the right balance of paid and organic media investment will be crucial in driving incrementality. This means organic will be propelled to the top of advertisers' priorities once again, a trend I expect to continue for the coming few years."
Josie Klafkowska, Global Marketing Director, Wunderman Thompson Technology: "This latest upgrade to 2022 forecasts comes at a time of sinking consumer confidence, a rising cost of living and inflationary pressure in the sector. So while it's great to see that further growth is expected on top of the peak of 2021, we should proceed with some caution.
"However, one positive continues to be the flourishing ad spend across online channels – from search to social and, of course, e-commerce – as a way for brands to provide a consistent, frictionless and unforgettable customer journey. It's why we saw the rise of TikTok over lockdown as people looked to share, like and engage with their favourite products and services at the click of a button.
"An important lesson learned over the past two years is that to stay ahead, authenticity, innovation and creativity must course through every single step of the customer experience. And that agility is actually what makes a business robust - you have to be able to pivot quickly and respond to whatever the world throws at you."
Mari Kim Novak, Chief Marketing Officer, Yieldmo: “The increased investment in online formats highlights that marketers are not going back to the old “normal” and it’s time to embrace change. As the UK has the world’s most avid online shoppers, they will expect brands to provide integrated seamless advertising experiences.
“Online ad formats need to be designed with the consumer in mind – responsive to user behaviour, and maximise engagement. This can be achieved by offering frictionless shoppable ad units that utilise more granular, intelligent predictive real-time data sets.”
Rhys Cater, Managing Director, Precis Digital London: “To succeed in an increasingly competitive market, and as budgets grow, advertisers will more than ever need to make sure that they have the capabilities and strategy to make their investments count. Digital-first creative is a must-have to maximise the effects of the visual channels. A modern approach to data, analytics, and attribution will be critical to understand the value of investments across an increasing number of channels.
“All of this must be done with data privacy and customer experience firmly in mind. Advertisers’ expectations for digital growth might be high, but so too are the expectations of consumers when it comes to the ads they’re served and the ways in which their data is used.''
“Brands that develop their ‘north star’ will flourish”
Gill Huber, Managing Partner, Oystercatchers: “Brands will have the tough job of continuing to adapt to changing behaviour and will need to approach a variety of consumers – from those who want to spend post-lockdown, to others who are tightening their belts because of cost-of-living constraints – with sensitive communications. Brands that develop their ‘north star’ to optimise their strategies will flourish, because despite the continued uncertainty, strong optimism and increasing opportunities for the year ahead means brands need to prepare for continued growth.
“As we move out of the short-term reactivity created by the pandemic, strong client:agency partnerships will be essential to help navigate changing consumer needs as well as identifying the best way to reallocate budgets to build brands and ensure those brands are showing up on the right media.”
Charlie Johnson, Vice President, International, Digital Element: “With such a boom in UK adspend – particularly online – finding trusted, quality data sources is now more important than ever. It’s crucial this additional investment isn’t wasted on bad data, which will ultimately limit further growth in the sector. Alongside this online growth, the lifting of pandemic restrictions in the UK means instore visits are on the cards again. Advertisers must make sure they don’t leave shoppers hitting the shops behind. Mobility data will be crucial in the coming months as brands continue to monitor shoppers’ real-time habits and determine the best way to link online and offline in a new digital era.”
“FIFA World Cup will mean bigger advertising spend boost at the end of the year”
Alex Charkham, Chief Strategy Officer, Fuse: “Even taking inflation into account, £31.9bn – making the UK the third largest ad market in the world – is significant. And with the FIFA World Cup kicking off in Qatar in November this year, there will be a much bigger advertising spend boost at the tail end of the year than we’d normally get from Christmas alone.
“Despite the unusual timing and concerns from some corners about the location, the tournament is a global sporting phenomenon and we can expect to see a corresponding surge in advertising support across all media as brands look to capitalise on worldwide – and the ever hopeful English – audiences focused intently on the football.”
Verity Brown, Managing Director, The Specialist Works: “Smart data-driven planning, accountability and flexibility will continue to drive investment. More brands are direct to consumer and judicious investment will generate demand.
“Q4 could be tough, a perfect storm of an atypical World Cup, energy price cap increasing again in October and supply chain issues affecting pre-Christmas production. We expect clients will want to spend but will focus on channels that they can commit later and where there is a greater chance of immediate return. We also expect to see a greater focus on targeting older audiences, who may have greater disposable incomes.”
Kevin O’Farrell, Associate Vice President, Analytic Partners: “Yes, we have experienced a rising cost of advertising, which we anticipate spiralling into an all-time high as the FIFA World Cup fights for ad space amid Christmas traffic later this year. We have also seen a significant demand for online and out of home advertising ourselves and are pleased to see the latter predicted a further 31.5% increase through 2022.
“With more people looking to experience real life events as we continue the return to norm trajectory, we are anticipating seeing more brands entering sponsorship partnerships to capture this growing audience. But with great spend comes great responsibility: now is the time for brands to get their measurement in order to make the right, effective investment decisions.”
“The way we show up in media is critical”
Verra Budimlija, Chief Strategy Officer, Wavemaker UK: “Firstly, it’s an exciting time to be a media planner. We’re operating in a growth landscape because our clients recognise that media can be an extraordinary growth driver. Strong growth in online companion media highlights the migration of consumers within these platforms and how the traditional boundaries are blurring between channels and between commerce and media. This means that the craft of media planning is even more critical. With this level of choice and complexity, the way we show up in media is critical. It will be the clients who value and embrace ecosystem thinking and are prepared to be brave who win.
“Looking ahead, there’s a lot to be gained in 2022, in spite of economic uncertainty and conflict in Europe. The Qatar World Cup at the end of the year will boost the market, specifically if TV and OOH continue to perform ahead of expectations. However, a resurgent industry deserves – and needs – robust analysis. The industry is having a moment with attention, but whilst that is a far superior metric than media metrics, it’s still a proxy for influence and a long way from business impact. Clients should be interrogating plans with knowledge of platform dynamics.”
David Kells, Director of Strategic Partnerships, Raconteur: “The latest AA/WARC UK Adspend Review is exciting…at this rate we’ll all be retired by 2023! With growth in spend comes increased innovation and creativity, so creating new opportunities for brands to reach their audiences. This is demonstrated by the notable increase in spend across multiple digital formats in the UK. While the outlook for the year is very strong, media owners will remain cautious given the rate of disruption during the past three years. The numbers remain strong however, and no matter what the ramifications of wider global issues, the demand for effective advertising will continue to boom.”
Melanie Welsh, Founding Partner, Strat House: “We’ve long known the glory days of television-focused advertising, when brands had the luxury of time and attention to land multiple messages, are gone. In this many channelled world, advertisers may only have three seconds to best convey their brand essence – so we’ve moved to simpler, more defined work to tell brand stories on digital platforms. And when media and creative teams work closely together, interesting media buys can lead to great creative ideas that do not have TV as the centre of their universe. What has always mattered most – and will continue to matter most, regardless of relative share of media spend – is strong brand identity and strong brand positioning. With this a business can weather inflation, conflict, supply chain constraints and much more.”
Lori Meakin, Founder, Joint: “With nearly three quarters of all UK adspend now online in some form, it will be interesting to watch the continuing digital/real life interplay, as people continue to research and shop online as well as off, engage in social media and entertainment in ways new and old, and demand both information about and an escape from the harsh realities of life. Because however much our industry still loves to differentiate between online and offline, above and below the line, real humans are decidedly omnichannel creatures!
“And of course, it’s the people this ad spend is targeting that really matters, not just the amount of spend. Who are we targeting with these billions of pounds of spend, and what do they really care about, that brands and advertisers can help them with? Despite having more data on audiences, users and consumers than ever, our industry still has too little real understanding of the diverse lived experiences and priorities of those people. For instance, 80% of purchase decisions are driven by women and yet adland can still be heard trading in “housewives with kids” as if we’re the 1950s, and filling space with work that’s simply brandsplaining and doesn’t leave valuable under-represented audiences ‘feeling seen’.”
“Structural changes in advertising mirroring shoppers’ behavioural changes”
Vicky Bullen, CEO, Coley Porter Bell: “It’s not often that a set of figures showing such positive growth in the UK marketing and advertising world would be greeted with caution but in these perilous times that’s a necessary response. A record £31.9bn in adspend is significant – but so too is 7% inflation, not seen since 1992; growth of more than 34% is impressive, but this is against the backdrop of the COVID slump.
“However, what the figures do reveal is how entrenched the changes in our branding and advertising landscape are. Structural changes in advertising media are mirroring behavioural changes in shoppers and brands are responding with immersive brand building that extends across media and the multiple touchpoints of the purchasing journey.”
Tony Ayaz, CEO, Scuba Analytics: “Whilst online ad spend continues to grow it needs to be measurable for brands to continue to justify their investment. Alongside this consumers expect personalised experiences and to deliver this marketers need to be able to understand their behaviours in an increasingly fragmented, omni channel environment.
“As cookies are sailing into the sunset, marketers are turning to their first-party data. To be able to leverage this data though and understand the impact of their campaigns they need access to real-time insights that can drive business decision making. Siloed, stale data systems will hold marketers back, ad impact will be hampered and budget wasted.”
Clare Dove, UK Group Commercial Director at Future plc: “The cost of living crisis is ushering in an extended period of uncertainty for consumers, so it is vital that publishers provide them with high quality, verified and trusted information to help them navigate the changing economic environment.
“Publishers should utilise their teams of editorial experts to deliver the most relevant insights and up-to-date deals to their readers. This will not only help them navigate soaring market costs, but will also provide advertisers with the most valuable spaces to reach consumers. For example, we know that consumers tend to base e-commerce purchases on their current needs and passions. In-house experts can check deals every 10 to 20 minutes, and publishers, keeping a close eye on consumer purchasing trends, can adjust their articles in response — a practice that will also mean the best performing products can be given standalone spotlights on websites and within editorial content."
Ali MacCallum, CEO, Kinetic UK: “Brands recognise that out of home (OOH) 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. In our recent Mobile Pound research, we found that UK adults spend £179bn a year via mobile devices while out of home, and therefore there is ever greater evidence of the power of OOH to drive online and physical sales.
“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.”
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