Strong rebound from pandemic forecast for UK ad market

Gabby Fernie

The latest Expenditure Report from the Advertising Association/WARC - the only source to collect advertising revenue data across the entire media landscape - forecasts that UK ad spend will grow by 15.2 per cent this year to reach a total of £27bn.

This will recover the entirety of 2020's £1.8bn decline and is expected to precede a 7.2 per cent rise in 2022, when the market is predicted to be worth a record £29.0bn. 

Additional forecasts suggest the UK is on course to achieve the strongest ad trade recovery of any major global market this year, putting the UK economy in a position to bounce back strongly post-pandemic, as every pound invested in advertising generates £6 in gross domestic product (GDP). 

The key findings for 2020 show a strong shift by advertisers into online video, social media and search markets, in a move part-reflective of the rapid acceleration of eCommerce, as lockdowns forced consumers to purchase goods and services from home. Spend on paid search went up 7.1 per cent, online display rose by 10.4 per cent, and TV video on demand was up 15.7 per cent.

The UK's advertising industry was well-positioned for the challenges of the lockdown, as it already had one of the most developed digital ad markets in the world. The UK's average weekly value of eCommerce spend rose 47.1 per cent in 2020, to £2.1bn, which equated to 27.9 per cent of all retail sales latest year. 

In fact, for the first time, the UK was the country with the largest eCommerce share as a percentage of total retail spend.

Unsurprisingly, digital out-of-home advertising saw a sharp decline, with a decrease of -40.2 per cent, as advertisers pulled their budgets for billboards, posters etc as there were fewer people on the streets to see them. 

"The data from 2020 were unlike any we have seen in our 40 years of market monitoring. Save for a flock of online pure-players, the majority of media owners surveyed by WARC experienced their worst trading climate in living memory," said Head of Data Content at WARC, James McDonald. 

"Agile formats with short lead times were seen to flourish last year, particularly within social media and eCommerce environments, the latter benefitting greatly from stay-at-home orders and well-established logistical networks. Media owners in these spaces are expected to build on good 2020 results this year, though the situation will be more challenging across the remainder of the landscape as ad investment continues to favour performance marketing."