AA/WARC Q3 2020 Expenditure Report - the industry reacts

Tyrone Stewart

Following the release of the latest UK ad spend figures from the Advertising Association and WARC, industry experts share their thoughts on the news that UK ad spend is on course to recover faster than other major global markets this year

Ali MacCallum, CEO UK, Kinetic Worldwide
“It's really welcome news to start the year that not only was last year's decline gentler than feared, but that recovery is set to be stronger than we had imagined. The current lockdown has – inevitably – set us back, but we're confident that brands and agencies now have robust enough plans in place to move quickly when the worst is over, the vaccine comes into play and we can return to our normal lives.

“The technological advancement and digital innovations in the past year puts OOH in a hugely strong position for brands when it comes to flexibility and rapid responses to mass audiences. With millions of people not being able to work from home, OOH is still reaching targeted audiences with optimised messaging. This agility will be a key aspect of the sector’s recovery this year as more and more brands will want to reconnect with their audience once lockdown restrictions have been lifted.”

Anne Stagg, UK CEO, Merkle
“As we've now come to expect, the latest insight into the health of the sector is a real mixed bag. Search and online display continue to grow, as consumers rely even more on platforms where they can find brands in lockdown. There's a cautious optimism following last week's IPA Bellwether report on budgets too. Clearly, the months ahead may not be smooth sailing, but tentatively, we can expect 2021 will be stronger than we could have imagined mere months ago as brands are better prepared and willing to adapt to the change required to make a difference. No single year has brought about more change to consumer behaviour than the last, and with the shift in consumer engagement channels and media, and the notable lack of physical interactions – brands must be hyper-focused on delivering value to customers in an increasingly nimble way, meeting them with relevant content in a meaningful way wherever and however they decide to engage.”

Niall Moody, UK Trading Director, Nano Interactive
“The latest AA/WARC shows a lot of promise for the advertising sector in the forthcoming year, particularly for digital advertising. Despite this positivity, there are still a lot of challenges ahead. With just one year until the third-party cookie is phased out, digital advertisers will need to focus on exploring privacy-centric alternative solutions. Whilst many will switch focus to first-party data, the open web consists of many non-identifiable users across desktop and mobile devices that advertisers will miss out on. An effective solution to consider is via identity-free intent based targeting, which combines live (intent) signals with deep on page intelligence (meaning, sentiment and brand safety) to target without any need for user identification. Through this, brands will extend their reach in real time with relevant, effective targeted advertising that is 100 per cent identity free.”

Justin Pahl, CEO, VMLY&R London
“After a pretty dark year, the latest AA/WARC forecast will come as bright news to all of us in the industry who have felt the economic strain brought on by the pandemic. With the UK ad market set to recover, we are now looking at an opportunity to double down on our learnings from the last year and re-examine our approach to effective marketing.

“But whilst the numbers may be optimistic, we aren’t operating in the same consumer landscape as before the pandemic. We are now in a world where demands are constantly shifting and adapting, and our marketing efforts need to reflect that. Those that are set to thrive this year will have already modernised their approach across all media and placed connecting with the consumer at the heart of their strategies to mitigate against this whiplash. Our marketing investments must now root themselves in human needs to bring true value to the consumer, which in turn will help the industry to ride this wave of optimism to economic health.”

Ged Glover, Chief Revenue Officer, Alight Media
“Forecasting anything, let alone ad revenues, is a tough assignment right now, but the industry will take comfort from the positivity within the AA/WARC numbers.

“These figures point to an opportunity for out-of-home. We know brands need to connect with people more than ever and our medium has continued to show real resilience as the place where big brands land big ideas and make a public statement.

“As a sector, with digital at scale and audience data much enhanced, OOH can now make that impact even smarter.  By delivering on the promise of becoming a truly digital-first medium, we have every reason to join the AA/WARC in their optimism.”

Charlotte Williams, Founder, SevenSix Agency
“These forecasts are brilliant news for the industry, giving a real injection of positivity as marketers plan for the rest of 2021 and beyond. From a social media perspective, it’s been good to see the power of influencer marketing staying strong throughout the pandemic, as brands looked for ways to connect in a personal manner with consumers. The connections built over the last year leave many brands in a strong position, able to build on those conversations as life continues to evolve for their customers.

“However, as an industry we need to ensure that as wider advertiser confidence bounces back, we don’t neglect the issue of diversity and inclusion. Months on from the resurgence of Black Lives Matter and momentum has slowed. There has been some progress, but some isn’t enough, and it will take a collective and concerted effort from all parts of the ecosystem to really move the dial. I’m looking forward to working with more and more marketers to make a change, but my message to all parties is this – keep fighting the fight.”

Craig Tuck, CRO, The Ozone Project
“The latest AA & WARC Expenditure Report points to positive growth in the year ahead, with the UK’s bounce back outperforming much of the global ad market. Media owners across the country will be reassured to see at least double-digit projected growth across all channels - a sign that will be welcomed by everyone who believes in the need for a quality, competitive media ecosystem to deliver best results for our advertiser clients.

“Demonstrating the wider responsibility of our sector, the AA rightly points to the benefit to the nation’s economy of £6 GDP generated from every £1 of advertising spend. As the first nine months of 2020 saw actual internet spend increase by 10.1 per cent, it has never been more critical for advertisers to continue to question and challenge where their digital ad spend ends up. Investing in quality, trusted environments will deliver better outcomes as we re-emerge from the pandemic while ensuring brands are not unknowingly fuelling the misinformation economy.”

Christopher Kenna, CEO, Brand Advance
“This forecast will be welcomed news for marketers and shows us that after a difficult last year, there is light at the end of the tunnel. Yet there are still improvements that can be made, especially when it comes to brands reaching diverse audiences and achieving this with authenticity.

“Brands are missing out on a rich untapped market by not catering to diverse audiences, and by failing to do so are missing out on a massive growth opportunity. As we move ahead, those brands that focus on diversity as part of their marketing strategy have the best chance of success and making the most of their ad spend. If 2020 taught us anything, it is that diversity is now an imperative and can no longer be an afterthought.

“As marketeers were mandated to help our clients to reach the most consumers possible, we can only do this when everyone in society has a fair chance of seeing our ad.”

Anthony Botibol, VP of Marketing, BlueVenn
“With the UK vaccination programme in full swing and trade deals around Brexit becoming clearer, the forecast of the latest report indicates that marketers can be cautiously optimistic about a return to growth. Our recent research echoes this, with over a third (37 per cent) of Brits saying they will be more likely to shop in-store once vaccinated, providing some hope for a return to normality for a number of brands. With this in mind, many businesses are currently analysing budget needs for the year ahead, trying to find a balance between cost and benefit for all resource requirements, including ad spend.

“Ad wastage is still a huge problem within the industry. Understanding how to use their own first party data and invest in systems that can enable them to better identify and authenticate online users will help to significantly reduce this waste.

“The pending removal of third-party cookies has only amplified the need for businesses to be smarter about data and start acquiring their own.

“This owned data will give brands a better understanding of the synergy between offline and online channels, and how their consumers like to shop. Our research indicates that being able to identify these differences will only become more important with the rise of the ‘hybrid consumer', a customer that jumps regularly between channels. It will also enable brands to provide a more engaging and personalised experience.” 

Andy Ashley, International Marketing Director, Digital Element
“With bad news still the norm, it is fantastic to read a report forecasting a positive way forward for the industry. These latest findings prove that the UK advertising market is resilient and, with recovery on the horizon, it is great to be able to prepare for a brighter time ahead.

“However, the flexibility the industry learnt in 2020 must remain. While consumer behaviours will start to return to ‘normal’ in some areas, its important brands and advertisers stay nimble to accommodate the lasting impact of the pandemic. With this in mind, it is not enough to simply use insight-driven decision making. The absolute priority should be to ensure the data used to gain these insights is as up to date and accurate as possible. Those who continue to adapt will be those seeing success as the recovery draws nearer.”

Filippo Gramigna, Strategic Advisor, Audiencerate
“It’s encouraging to read the phrase ‘a strong year ahead’ in the latest AA/WARC Expenditure Report. While advertising budgets haven’t stabilised just yet, engaging and understanding consumers should still be the number one priority for brands, if they wish to end 2021 in a strong market position.

“To achieve this, especially in the current climate, marketers need powerful, flexible advertising strategies to enable them to respond to rapidly changing consumer needs and also technology evolutions. Therefore, data solutions, such as predictive audience modelling, identity resolution and analytics, should be on every marketers must-have list. Using sophisticated modelling capabilities like these will enable brands to identify which traits are most common in their target audiences, which respond best to upselling, and which are at risk of churning. From this granular data, brands will be able to boost both effectiveness and efficiency in their advertising campaigns through a stronger understanding of their audiences.”

Chris Hogg, Managing Director EMEA, Lotame
“These latest figures demonstrate that marketers understand the value of online in driving their businesses, even in the most tricky of environments. They also mirror what we have seen in our business, where despite the early 2020 decline in spending due to the pandemic, we saw strong growth in our data enrichment in H2. This has been a good time for brands to build a panoramic view of the changing customer, optimise data enrichment strategies, and keep customers and prospects engaged with relevant messaging. Those that have done so will be in the strongest position to take advantage of the forecasted recovery.”

Nigel Clarkson, Chief Revenue Officer, Hivestack
“The latest AA WARC report shows real positivity returning to the market and it is encouraging to see big forecasted bounce backs in cinema and OOH, the two media channels most affected by the pandemic. Although revenues have been down for OOH, progress in programmatic connectivity in the UK and globally has accelerated during lockdown as the OOH industry has been able to utilise real-time audience data to target high footfall sites like retail areas, local hubs and supermarkets, and better understand reduced footfall in other OOH environments. There has never been a greater need for flexibility in OOH, and the ability to action OOH programmatically on the best digital sites. Digital OOH can now be planned and traded on an audience and impression basis in line with other channels, and UK OOH businesses have evolved their models in lockdown for a more agile and data-driven future.”