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UK AD SPEND TO RECOVER FASTER THAN KEY INTERNATIONAL MARKETS IN 2021

/ January 26th 2021
Advertising and the Economy

An upgraded forecast of 15.2% growth comes in the latest AA/WARC Expenditure Report published today, which also indicates better-than-expected results for 2020

London, January 26, 2021: The latest Advertising Association/WARC Expenditure Report expects the UK’s ad market to grow by 15.2% this year, an upgrade of 0.8 percentage points from the last forecast in October 2020. The preliminary estimate for growth in 2020 now stands at -7.9% with adspend of £23.17bn – a marked improvement (+6.6 percentage points) since the last outlook, owing mostly to brighter prospects for online platforms.

The new forecasts show that the UK’s ad market will make up for 2020’s decline and accelerate further into growth this year, reaching a total of £26.69bn – above the previous high of £25.37bn recorded in 2019. Further, the decline seen in the UK’s ad market during 2020 is estimated to be softer than the global rate (-10.2%) and that of the rest of Europe (-13.7%). The UK’s projected ad market growth in 2021 is also expected to be ahead of key international markets, with the US expected to grow 3.8%, Germany 9.3%, Europe (excluding UK) 8.8%, and China 10.3%.

Internet adspend leads to stronger Q3 2020 performance

The latest dataset includes actual figures for Q3 2020 and predictions for the coming eight quarters. 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.

Fast growth forecast for all media in 2021

Double-digit growth is expected across most media sectors in 2021 – and even triple-figure growth in the case of cinema. Particularly strong results are expected in cinema at 228.4% and 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%.

Stephen Woodford, Chief Executive, Advertising Association commented:

“The latest figures from the AA/WARC Expenditure 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 commented:

“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.”

Media page2image20166528

Q3 2020 year-on- year % change

9M 2020 year-on- year % change

2020 estimated year-on-year % change

Percentage point (pp) change in

2020 forecast vs October

2021 forecast year-on-year % change

Search

14.5%

page2image19985152

2.5%

page2image19972864

page2image13951072

5.5%

page2image13951520

+13.0pp

page2image20067840

19.5%

page2image20065152

Online display*

12.0%

4.3%

6.0%

+9.1pp

9.3%

TV

-4.5%

page2image20159808

page2image20182720

-15.1%

page2image13955552

-9.0%

+3.0pp

page2image20184832

11.6%

of which VOD

11.9%

page2image20007552

0.3%

4.3%

+2.9pp

21.2%

Online classified*

-23.0%

-29.4%

-26.0%

+6.7pp

16.7%

Direct mail

-35.9%

page2image19936192

-38.4%

page2image13927856

-35.7%

-6.0pp

page2image19927552

7.5%

Out of home

-49.5%

page2image19970688

page2image19968768

-46.5%

page2image13906288

-44.2%

-4.7pp

page2image20104512

37.7%

of which digital

-42.1%

-40.0%

-38.1%

-3.1pp

53.6%

National newsbrands

page2image20108736

-32.3%

-27.7%

page2image20110656

-25.7%

page2image13901248

-0.7pp

13.8%

page2image20113152

of which online

-7.9%

-4.7%

-3.4%

+4.1pp

14.7%

Regional newsbrands

-39.5%

page2image19947968

-36.0%

page2image14009776

-35.3%

-2.2pp

page2image19952192

12.3%

of which online

-29.6%

page2image20089664

-25.8%

page2image13795888

-26.3%

-1.9pp

page2image20091776

15.4%

Magazine brands

-38.1%

-33.6%

-32.7%

-4.0pp

14.6%

of which online

-28.0%

-32.3%

-31.2%

-4.2pp

16.1%

Radio

-5.0%

page2image20101184

-18.6%

page2image20101760

page2image13907072

-15.0%

page2image13900352

+7.0pp

page2image20116032

12.5%

page2image20116992

of which online

6.4%

-11.2%

page2image20267392

-8.4%

page2image13925584

+7.5pp

15.0%

page2image20268736

Cinema

-96.2%

page2image20270272 page2image20270656

-73.7%

page2image20271616

-75.8%

page2image20272384

-11.3pp

228.4%

TOTAL UK ADSPEND

-3.3%

page2image20102912 page2image20119296

-11.1%

page2image20251008

-7.9%

page2image13769168

+6.6pp

15.2%

Note: Broadcaster VOD, digital revenues for newsbrands, magazine brands, and radio station websites are also included within online display and classified totals, so care should be taken to avoid double counting. Online radio is display advertising on broadcasters’ websites.
Source: AA/WARC Expenditure Report, January 2021

Forecast year-on-year % change

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Search

14.1%

10.6%

42.3%

17.5%

15.3%

9.8%

Online display*

10.2%

8.1%

24.4%

4.4%

4.9%

4.3%

TV

6.7%

-0.9%

55.5%

9.6%

1.7%

4.3%

of which VOD

14.4%

10.6%

58.3%

14.0%

17.6%

11.6%

Online classified*

-16.0%

page3image20308992

-14.0%

64.0%

28.2%

6.2%

page3image14036800

2.3%

Direct mail

-28.0%

-18.0%

85.0%

15.0%

-8.0%

-8.0%

Out of home

-38.7%

-43.5%

295.7%

76.8%

47.8%

55.3%

of which digital

-34.1%

page3image20207424

-33.0%

278.0%

89.8%

60.9%

page3image14154064

59.5%

National newsbrands

-20.7%

-11.7%

52.6%

22.6%

9.9%

7.4%

of which online

-0.4%

1.5%

43.5%

13.6%

7.4%

7.7%

Regional newsbrands

-33.3%

-21.4%

52.2%

22.8%

16.9%

7.4%

page3image20189888

of which online

-28.0%

-18.7%

50.8%

21.2%

22.1%

11.1%

Magazine brands

-30.0%

page3image20234816

-20.5%

46.5%

31.8%

14.3%

page3image14050608

2.0%

of which online

-28.3%

page3image20240192

-11.3%

43.2%

23.3%

13.4%

page3image14053296

2.9%

page3image20244608

Radio

-5.0%

-7.7%

60.1%

7.6%

10.8%

3.9%

of which online

-1.0%

page3image20194880

-4.6%

page3image20195456

54.1%

5.4%

17.3%

page3image14080800

12.4%

page3image14081248

Cinema

-80.0%

page3image20221312 page3image20221696

-76.9%

page3image20222656

2,227.1%

page3image20223616 page3image20224000

484.8%

315.1%

page3image20225152

TOTAL UK ADSPEND

0.4%

page3image20226880 page3image20227264

0.1%

page3image14084944

46.6%

15.7%

page3image20228608 page3image20228992

10.3%

7.6%

page3image20229760

Note: Broadcaster VOD, digital revenues for newsbrands, magazine brands, and radio station websites are also included within online display and classified totals, so care should be taken to avoid double counting. Online radio is display advertising on broadcasters’ websites.
Source: AA/WARC Expenditure Report, January 2021

Market

2018 year-on-year % change

page3image14088080

2019 year-on-year % change

2020 estimated year-on-year % change

2021 forecast year-on-year % change

China

page3image20400768

12.1%

5.2%

page3image20402112

-3.5%

10.3%

United States

page3image20244992

10.2%

4.7%

page3image20245760

-4.1%

3.8%

Canada

3.1%

page3image20247488

page3image14054864

6.3%

-5.6%

page3image20249408

4.2%

United Kingdom

8.1%

7.1%

page3image14057216

-7.7%

15.5%

Germany

page3image14119840 page3image20385536

8.9%

page3image14115584 page3image20386880

0.5%

page3image20387648 page3image20388032

-10.6%

page3image20388608 page3image20388992

9.3%

page3image20389568

Europe (excl. UK)

8.0%

3.0%

-13.7%

8.8%

Global

page3image13998880 page3image20392448

8.0%

page3image20393984 page3image20394368

page3image14001344

4.1%

page3image13998992

-10.2%

page3image20396288

8.3%

Note: Adspend growth measured in Purchasing Power Parity units.

Source: WARC Data

The Advertising Association/WARC quarterly Expenditure Report is the definitive guide to advertising expenditure in the UK with data and forecasts for different media going back to 1982.

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