Pandemic recovery fuels record advertising growth

Advertising Association and WARC Forecasts see UK adspend rise to £32bn in 2021.

Georgie Moreton

Deputy Editor, BITE Creativebrief


Each and every area of life was impacted greatly by the pandemic and the advertising industry was no different. Yet, according to a new report published today by the Advertising Association and WARC titled ‘UK Advertising’s Ad Spend Review: The Pandemic Effect’ post-pandemic recovery has helped the advertising industry back on its feet to experience immense growth.

The UK ad market reached a record £31.9bn in 2021 which equates to growth of 34.3% year on year. The latest full-year figures reveal the 2021 ad market emerged with an additional £8bn of revenue, when compared to April 2020’s original forecast of £24bn set at the beginning of the Covid-19 pandemic. 

This bullish growth can be attributed partly to inflationary pressures on the cost of advertising but also to a higher-than-expected growth of online advertising as habits formed during the pandemic appear to stick.

An ecommerce driven recovery

Figures show that search, inclusive of e-commerce, proved to be the strongest category in 2021, beating the projection made in April by £3.7bn with spend amounting to £11.7bn. 

The UK is one of the most active online shopping countries with online retail spend of $2,648 per capita, the report found a strong correlation between internet retail spend and online ad spend.  To meet this demand, the UK ad industry is experiencing a heightened search for talent with a focus on digital skills.

As the pandemic brought with it significant behavioural change, the advertising market will note an emerging structural shift that sees retail media poised to play a more prominent role.

TV also surpassed early expectations by almost £1bn, while online video overperformed by approximately £2bn and social media by £2.3bn in relation to the forecasts made at the start of the pandemic. 

“The Covid-19 recovery last year was buoyed in part by the release of pent-up investment on established online platforms – as well as maturing ones such as TikTok – and in part by the emergence of retail media as a major contender for marketing budgets. The latter trend bears the hallmark of a new era in advertising, one which is set to fuel growth over the forecast period and beyond.” explained James McDonald, Director of Data, Intelligence & Forecasting, WARC. 

The year ahead

The year ahead presents further positive news for advertisers as the report suggests the industry will continue to grow, upgrading previous forecasts for 2022. Now, the UK's ad market is forecast to grow by 10.7% this year to £35.3bn. A growth said to be driven by a strong start to the year, higher CPMs and the upcoming opportunities presented by the FIFA World Cup. 

“The UK has held its position in 2021 as the largest advertising market in Europe through the pandemic and is now the third largest in the world, behind the USA and China. While further growth is forecast, inflationary pressures on the cost of advertising, and more generally, due to the ongoing geo-political uncertainties, mean we should be cautious.” added Stephen Woodford, Chief Executive, Advertising Association.

While the report predicts an additional 5.4% year-on-year growth to reach £37.2bn in 2023, with economic hardship on the horizon due to the rising cost of living and supply chain disruption, it seems that change is set to be a mainstay and that adaptability remains crucial for the industry to maintain growth. 

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