UK Ad Spend to Recover Faster Than Expected in 2021
The latest Advertising Association/WARC Expenditure Report provides positive news for the UK advertising ecosystem with forecasts expecting the UK ad market to grow faster than expected. The positive news is attributed to an economic boost from Brexit certainty and a vaccine rollout scheme.
UK ad spend growth is forecast at 15.2% in 2021, an upgrade of 0.8 percentage point since October's forecast. The new forecast show that the UK’s ad market will make up for the decline in 2020, accelerating above the previous high of GBP25.37 billion recorded in 2019.The new forecasts show that the UK ad market will reach a total of 26.69 billion in 2021, making up for a turbulent 2020.
Fast growth is forecast for all media in 2021 with double digit growth expected in most categories. Particularly strong results are expected in cinema at 228.4% which is reflective of the fact the sector was closed for most of 2020. Digital out of home at 53.6%, traditional out of home at 37.7%, and video on demand at 21.2% are forecast to see some of the fastest growth.
Moreover, the UK’s adspend growth is ahead of key international markets. The global forecast is set at 8.3% and China is the only other market seeing double digit growth at 10.3%. The US is expected to grow 3.8%, Germany 9.3%, and Europe (excluding UK) 8.8%.
Stephen Woodford, Chief Executive, Advertising Association commented: “The latest figures from the AA/WARC Report come as welcome news at the beginning of the year. Not only does the data show the overall decline expected in 2020 may be less than feared, but the recovery in 2021 will be stronger than we would have dared hope even a few months ago. With the vaccine rollout accelerating and a Brexit trade deal in place, the 2021 business outlook is brightening, reflected by these new forecasts showing a stronger and quicker recovery in adspend, with a stronger rebound than in other large economies. With every £1 of advertising spend generating £6 of GDP, this is good news for jobs and growth in the wider economy.”
James McDonald, Head of Data Content, WARC comments “The outlook for the year ahead is bullish, reflecting greater certainty around Brexit and the potential for the vaccination programme to unlock economic growth. We now believe that the ad market can overcorrect in these circumstances to top its 2019 peak, though large parts of the industry remain in a fragile state.”
The report also provides preliminary estimates for growth in 2020. The decline seen in the UK's ad market in the past year now stands at -7.9% and is estimated to be softer than the global rate (-10.2%) and that of the rest of Europe (-13.7%).
The key findings show that UK adspend fell 3.3% to £5.9bn in Q3 2020. This was far better than the -17.9% forecast in October 2020, owing mostly to better-than-expected internet growth. Internet spend rose 10.1% to £4.2bn during the quarter, buoyed by a 14.5% rise in search spend (which in turn was driven by e-commerce advertising). Overall, UK adspend was down 11.1% over the first nine months of 2020, at £16.2bn.
McDonald comments “The latest market data show that the largest online properties were shielded from the worst of the industry downturn last year. Indeed, with consumption and commerce migrating online during the pandemic, the results show that ad money followed to these platforms’ benefit. “Paid search – which accounts for over a third of all advertising spend in the UK – was the format that gained most from a surging e-commerce sector. Ancillary research by WARC shows that online sales recorded a six-year leap in penetration in 2020”.
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