The UK advertising market is on course to achieve the strongest recovery of any major global market this year, according to research from the Advertising Association and WARC.

The report underlines that the rebound from the coronavirus crisis is driving ad spend growth across all media in 2021. The figures will be welcome news for the industry and suggests that the recovery will not be the ‘dead cat bounce’ feared by some commentators, who suggested the 2021 recovery could be stalled.

Stephen Woodford, Chief Executive of the Advertising Association, pointed to the resilience and adaptability of the industry in the face of an uncertain start to the year: “The economy is bouncing back strongly, and the advertising industry reflects the health of the wider economy. We have seen real positive momentum.”

He continued: “Advertising is there to help businesses to grow and what we are experiencing now is sustainable growth.” This growth agenda is backed by two key commitments by the Advertising Association: Ad Net Zero to address the climate crisis and the All In initiative designed to keep inclusion at the top of the business agenda. 

An experience-led recovery

The report brings with it some welcome relief to parts of life which have been forced to temporarily close by the pandemic. Notably a particularly strong recovery is forecast for cinema (+266.8%) digital out of home (52.3%) and traditional out of home (14.5%). The value of real-world media in an experience-deprived world is clear to see.

Woodford points to the way in which consumers have returned to pubs and restaurants as a signal for what lies ahead for cinema, with the Oscars highlighting their pivotal role in culture and society. “There is a desire to go and see these films, to return to the theatre,” he adds. Brands have the opportunity to be part of this vital cultural rebuild as consumers take the opportunity to reconsider the value of these in-real life experiences that have been so conspicuous by their absence.

Recruitment rebound

The recruitment market is also showing strong signs of recovery. Online classified advertising is also expected to increase, rising by a fifth (20.4%) supported by increased recruitment activity arising from the green shoots of recovery signalled by 2021.

The figures underline however that not all media channels can automatically count on recouping 2020 losses. Some channels are predicted not to rebound fully until next year; TV (up 8.8% in 2021), direct mail (up 6.4%) and publishing disciplines encompassing national news (up 7.3%), regional news (up 3.9%) and magazine brands (up 6.8%).

Online display, inclusive of social media and online video, is set to see growth accelerate this year (+13.4%), as is the case for paid search (+18.4%). Taken together, these two sectors are expected to account for two-thirds (66.4%) of all UK advertising spend this year, up ten percentage points from a share of 56.2% in 2019. It’s a rate of growth which would undoubtedly equate to a growing slice of market share for online and social video, a trend which shows no sign of abating as online channels took on a greater significance and share of voice. 

James McDonald, Head of Data Content, WARC, explained: “Agile formats with short lead times were seen to flourish last year, particularly within social media and e-commerce environments, the latter benefiting greatly from stay-at-home orders and well-established logistical networks.”

The ecommerce explosion

The data shines a light on the scale of the UK’s market-leading adoption of e-commerce platforms.  The UK's average weekly value of e-commerce spend rose 47.1% in 2020, to £2.1bn, which equated to 27.9% of all retail sales latest year, ahead of key international markets.

For the first time, the UK was the country with the largest e-commerce share as a percentage of total retail spend. China’s equivalent figure was 24.9%, the EU was 20.0%, and the US was 14.0%.

The Advertising Association’s Woodford says the acceleration of ecommerce is being driven by both big brands and SMEs presenting a significant opportunity for the industry. “It’s much more of an egalitarian marketplace,” he explains pointing to the way in which the ‘convenience factor’ will change commerce in the long run.

By individual product categories, Government adspend grew 37.2% during 2020 as public health messaging was deployed in the effort to combat COVID-19. As normality returns, this spend is expected to fall back in 2021, with growth instead expected across the other main consumer categories, notably services (up 22.0%), industrial (up 19.8%) and financial (up 20.2%).

Build back better

The latest data also includes the final figures for 2020, enabling the industry to look back on the scale of the coronavirus crisis, which saw spend on advertising decline by 7.2% to a total of £23.5bn last year. With the exception of online-pure players, the majority of media owners experienced their worst trading climate in living memory. 

It’s a scale of decline which WARC’s McDonald notes was truly unprecedented and the worst trading climate in living memory for the majority of media owners. He notes: “This was true at both the financial and the human level. Many will not witness a full recovery until 2022 at the earliest.”

Yet it is equally true that on a human level across the industry the response to the pandemic has built the foundations for unprecedented collaboration. As the Advertising Association’s Woodford explains: “One of the things that really struck me is the way in which this crisis has brought people together. The concern leaders across the industry have had around mental health, when we look back on what came first it was leaders really making sure their people were OK.”

He believes that the pandemic has broken down barriers between different parts of the industry and forged strong partnerships between brands and agencies. “What we have seen is a real sense of people getting through it together and when you look at the second half of last year and the strong bounce back in 2021 it is clear how resilient the industry is,” he says.

The reset moment of hybrid working 

This resilience is being matched by a commitment to hold on to the positive shifts in business as a result of the pandemic particularly when it comes to hybrid working. Woodford notes that the economy is changing rapidly as it responds to an ecosystem in which people work in a more hybrid way. “Where you have the choice, most people are looking for a hybrid way of working and living,” he explains. It’s a shift which means that consumers and employees alike may well become more rooted in their local communities.

It also means that the environmental impact of travel and advertising production alike can be fundamentally assessed. “Imagine a world in which every ad is a green ad. The number of ads that are creating sustainable messaging is increasing,” he adds.

Pointing to WPP’s ‘significant’ commitment to reach net zero emissions by 2025 Woodford notes the “collective endeavour across the industry” to stimulate sustainable buying behaviours amongst consumers and underline the role of the advertising industry as part of the solution. 

Building back better

The economic and emotional cost of the coronavirus crisis combines to place the industry at a unique moment in time, one which presents a unique opportunity to reset. The Advertising Association’s Woodford says that the response to the pandemic has led to two key areas of focus, with the industry wanting to take this moment to create change when it comes to both inclusion and sustainability.

To this end the key focus areas for the Advertising Association are the industry wide response to the climate crisis (Ad Net Zero) and inclusion (All In). “Inclusion and sustainability are fundamental to trust. Advertising has to earn trust. We know from research that people want to see modem Britain in all its diverse glory. This is a big moment for the industry, and Ad Net Zero and All In are key to this,” he explains.

Just as the smartest leaders across the industry were quick to identify their first responsibility was to their people as the crisis broke, as we emerge it is those same people nurturing these green shoots of recovery. It’s a period of recovery and rebuild which progressive leaders and industry bodies alike are increasingly rooting in the triple bottom line of people, purpose and planet.

The All In summit is being held on 10^th June 2021 from 9am to 12pm. Register now to attend