The UK’s advertising market is expected to recover from Covid-19 faster than the US, China and the rest of Europe this year with the vaccine rollout and greater certainty around Brexit allowing an “overcorrection” despite continuing fragility.
Ad spend in the UK is anticipated to grow by 15.2% in 2021 to a new high of £26.7bn – up from £25.2bn in 2019.
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This is an improved projection from the 14.4% anticipated in October but still down from the estimated 16.6% growth forecast in July.
The Advertising Association and marketing agency Warc, which publish a quarterly ad expenditure report, said on Tuesday that the UK is expected to see more growth this year than China (10.3%), Germany (9.3%), Europe excluding the UK (8.8%), and the US (3.8%).
National newsbrand ad spend is estimated to grow by 13.8% over the next year (14.7% online), regional newsbrands by an estimated 12.3% (15.4% online) and magazines by 14.6% (16.1% online).
Advertising Association chief executive Stephen Woodford said the UK’s growth projections show the overall decline in 2020 “may be less than feared” and that 2021’s recovery looks set to 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,” Woodford said.
Warc previously described the second quarter of 2020 as the worst ever recorded with ad spend down 33.8%, but has now revealed a “marked improvement” in Q3 which saw many sectors opened fully for the first time since the UK’s first lockdowns starting in March.
The UK market saw a drop of 3.3% and a total value of £5.9bn last summer – far better than the 17.9% fall forecast in October due to better-than-expected internet growth.
Internet ad spend rose by 10.1% in Q3 to £4.2bn which Warc and the AA said was buoyed by a 14.5% rise in search spend – this in turn was driven by e-commerce advertising.
Excluding direct mail, which fell by 36%, the UK’s ad market fell by just 1.5%, or £84m, in Q3.
The UK Government was the biggest growing advertiser for the second quarter in a row.
National newsbrands, regional newsbrands and magazines were all badly hit with falls of 32.3%, 39.5% and 38.1% respectively.
Of these totals, national newsbrands fell by 7.9% online, regionals fell by 29.6% online and magazine brands fell by 28%.
Radio fell by 5% overall but grew by 6.4% online.
Warc and the AA now predict that 2020 will see an overall downturn of 7.9% – on a par with the 2009 downturn in absolute terms with a loss totalling about £2bn.
James McDonald, head of data content at WARC, said: “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, as e-commerce’s share of all UK retail value rose by 8.4 percentage points to 27.6%. This rate was ahead of China (24.9%) and double that of the US (13.4%) last year.
“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.”