Optimism in the Air as UK Ad Spending Predicted to Rebound Enthusiastically

Over 50% of the UK population has received at least one dose of coronavirus vaccine and pub beer gardens are open. Outdoor advertising campaigns are jollying people along as they troop back to the high street. There’s something distinctly un-British in the air… and it smells like optimism.

And that upbeat mood is likely to be buoyed along further among the country’s advertising and media communities with today’s figures from the Advertising Association and WARC that predict that advertising spend is set to rebound sharply in 2021 and into 2022. The Advertising Association/WARC Expenditure Report, which collects data from across the entire media landscape, predicts ad spend will grow by 15.2% this year, reaching a total of £27bn. 2022 will see a further rise of 7.2%, reaching a total spend of £29bn. 

According to the Advertising Association’s chief executive Stephen Woodford, these figures aren’t just good news for adland.

“What these numbers are showing is how resilient and adaptable the UK economy is. I think we often make a mistake in advertising just thinking about the advertising industry. All we do is serve other industries, and we serve, primarily, consumer facing businesses. You think about the trends in the spend: crisis in Q1, Q2 is all about rebooting, re-thinking, and Q3 and Q4 are all about people getting back to work. People might have been working from home, their stores are closed, they’ve set up an online store or whatever - think about the millions of things that lots of businesses do. The decline wasn’t as severe as we thought, albeit a lot of big owners had a tough time.”

Stephen says that the economic stresses caused by Covid-19 are fundamentally different to the great financial crash in the mid-2000s. It took five years for the industry to get back to pre-crash levels, but that’s because systematic issues.

“That was an economic shock. The banking system almost collapsed. There was austerity. The financial sector was under massive pressure, and that impacted the whole economy. Covid-19 has been a very different sort of shock in terms of an external health shock. It’s a more severe, short, sharp shock, but the underlying economy, other than businesses that had to be closed and the pressure on hospitality, there’s nothing particularly wrong with the economy. Whereas in the financial crisis, a big part of the economy that was wrong was that the banking sector had just gone to rot.”

In comparison, the UK economy is predicted to see its fastest growth since WW2, and Goldman Sachs predicts that it will grow at a faster rate than the US economy.

Stephen says that the UK’s ability to navigate lockdown and a surge in e-commerce demand has been helped by the country’s relatively well-developed digital economy. “Looking at international comparisons, the UK was already a very e-commerce-centric market. In terms of the switch, most big businesses were selling some things online anyway, so it was about accelerating what they already had. And the businesses that weren’t online got online and started selling more quickly than they might have otherwise because of the infrastructure they have. We’ve seen that the UK is the leading online market in the world.”

While 2021 is set to see growth across all media channels, those that were hardest hit by pandemic lockdowns are set to see the most boisterous regrowth. Cinema spend is set to increase by 266.8%, digital OOH by 52.3% and traditional OOH by 14.5%. What this year has demonstrated to marketers is that, despite the trend towards more trackable online spending, they might have missed having access to those big marquee platforms. 

“Probably their absence has made advertisers and agencies appreciate what they do,” reflects Stephen. “As an example, cinema is brilliant at reaching young, engaged audiences. It’s phenomenally good. If you haven’t got access to that medium you can use other media, but perhaps it doesn’t have the same impact. I don’t know about you, but I'm desperate to get to the cinema to see some great films – I can’t wait to see James Bond!”

That spirit of optimism has been reflected in several big outdoor advertising campaigns for the likes of DIY chain B&Q (by Uncommon), beer brand Camden Town Brewery (by Wieden + Kennedy) and Samsung (by Iris). “We know, based on our research, that one of the things people like about advertising is its entertainment, when it tells a little story,” says Stephen. “And I think that’s particularly true when advertising tells a story about a brand or business but also engages in issues. At the moment it’s all about reconnecting and getting back out again, and the everyday things we take for granted we now really value. I hope we never get blasé about those things.”

Looking beyond the UK, Stephen also has high hopes for the advertising industry’s post-Covid exports. The Advertising Association has been working closely with the IPA and APA to market British advertising and production skills overseas, and the widespread adoption of remote collaboration platforms and tools means that UK advertising businesses are more accessible than ever. Even Brexit doesn’t seem to be dampening prospects – with a deal in place, businesses are facing less uncertainty.

“I think one huge potential barrier has been removed, which is geography. There have been global pitches where no one involved has ever met. If you’re a business in Singapore, and you want to hire an agency in London, you’re not going to have to be shuffling back and forth constantly. We know from research that we did with PWC that the creative reputation of the UK is the key driver of why international clients want to come here,” says Stephen.

What Stephen is keen to express is just how much of this optimism is due to the UK’s efficient and speedy vaccine deployment, which shows just how interconnected the advertising industry really is with the public sector as well as private, and with the whole of society. “As confidence returns, people are looking to gain share, launch new products and campaigns and so on. I think the fabulous thing that underpins those numbers – which none of us would have predicted back in January – is the success of the vaccine. It’s astonishing.”