Pandemic drove UK advertising spending to record high

Advertising spending in the UK reached a record high of £31.9 billion in 2021 as businesses sought to reach customers online following the coronavirus pandemic.

The latest figures published in the Advertising Association’s UK Advertising’s Adspend Review: The Pandemic Effect report showed the sector saw 34.3% year-on-year growth compared with the previous financial year.

While part of the increase came from increased costs, key forms of online advertising saw higher than expected growth as businesses adapted to changing consumer behaviours brought about by the coronavirus pandemic. Online advertising has grown 11.7% from pre-pandemic levels in 2019, and now accounts for almost three-quarters of all advertising spend, reflecting the fact that UK shoppers are some of the most avid when it comes to online purchasing, spending $2,648 per capita each year.

WARC, a global authority on advertising and media effectiveness, partnered with the Advertising Association on the report. James McDonald, Director of Data, Intelligence & Forecasting at WARC, explained how the advertising landscape changed in 2021:

“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.

“Be that as it may, economic headwinds create uncertainty ahead; the consumer is being stretched further than at any other time since the Second World War, conflict in Europe has stoked market volatility and has exacerbated supply chain pressures, and the prospect of a UK recession cannot be ignored. Given the market’s current momentum, however, we do not yet see this translating into an advertising recession over the coming quarters.”

Stephen Woodford, Chief Executive, Advertising Association, said:

“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.

“While lockdowns saw sharp declines in spend across some sectors, the pandemic presented our industry with opportunities to innovate and meet the public health challenges. The UK Government remained in pole position as the largest advertiser. Cover wraps in our print media informed the nation with ‘Stay Home’ public health messages; direct mail brought testing kits and essential deliveries to households up and down the country; and billboards showed the everyday heroes in our NHS.

“Such innovation, creativity and responsiveness will be critical in the years going forward, as we build a sustainable future for our industry, and help businesses, large and small, build relationships with their customers.”