Comment: Industry reacts to AA/WARC adspend report for 2021

aa/warc adspend report industry reaction - orig Image by Gerd Altmann from Pixabay

Today’s AA/WARC adspend report has proved that the global advertising market has staged a stunning recovery with record high spend and a doubling in forecast.

So what does the media, marketing and advertising world make of it, especially against the headwinds of a very steep and sudden rise in the cost of living, Russia’s invasion of Ukraine and creeping inflation?

We’ve been scouring the sector for reaction and how you all see the coming months and years in this record-breaking sector…

Harriet Durnford-Smith - AdverityHarriet Durnford-Smith, Chief Marketing Officer at Adverity 

“This may look like good news, but in reality, it means that marketers are going to have even more competition to stand out and be heard.

“With 3 in every 4 pounds now being spent online, the competition for share of attention is massive. The question now is, whether this increase in money is actually increasing performance?

“It is essential that marketers are delivering on increased budgets, and accurately reporting where and how they are utilising them.

“This all starts with data. Marketers that have already achieved a level of data and analytical maturity are in a far stronger position to communicate activity to clients and demonstrate the value of the increased spend on effectiveness.”

Emre AtalayEmre Atalay, Co-Founder and CEO, BcnMonetize   

“Privacy restrictions rolled out by Google and Apple are hampering the ability to personalise campaigns and measure their effectiveness. 

“These frustrations will be helping to drive the growth in new forms of digital advertising as marketers look beyond the walled gardens. 

“Brands are making use of partnerships with smartphone manufacturers and app creators to unlock exclusive inventory that can deliver the kind of performance platforms like Meta are now struggling with.”

Vicky Bullen CPBVicky Bullen, CEO, Coley Porter Bell

“It’s not often that a set of figures showing such positive growth in the UK marketing and advertising world would be greeted with caution but in these perilous times that’s a necessary response. 

“A record £31.9bn in adspend is significant – but so too is 7% inflation, not seen since 1992; growth of more than 34% is impressive, but this is against the backdrop of the Covid-19 slump. 

“However, what the figures do reveal is how entrenched the changes in our branding and advertising landscape are. Online advertising dominates – securing almost three quarters of the market. 

“Covid escalated every brand’s need for ecommerce – online retail spend among Brits is the highest per capita in the world – and correspondingly search was 2021’s top performer. 

“Structural changes in advertising media are mirroring behavioural changes in shoppers and brands are responding with immersive brand building that extends across media and the multiple touchpoints of the purchasing journey.

Charlie Johnson - Digital ElementCharlie Johnson (she/her), Vice President, International, Digital Element

“With such a boom in UK adspend – particularly online – finding trusted, quality data sources is now more important than ever. 

“It’s crucial this additional investment isn’t wasted on bad data, which will ultimately limit further growth in the sector. 

“Alongside this online growth, the lifting of pandemic restrictions in the UK means in-store-visits are on the cards again. 

“Advertisers must make sure they don’t leave shoppers hitting the shops behind. 

“Mobility data will be crucial in the coming months as brands continue to monitor shoppers’ real-time habits and determine the best way to link online and offline in a new digital era.”

Jamie CarasJamie Caras, Exec Reg. Director & Head of Commercial Strategy: UK & Ireland, FreeWheel 

“The TV ecosystem has gone through a tremendous evolution in the past decade, opening up new opportunities for both the sell and buy side. 

“The increased adspend on TV is certainly a positive outcome of this. Online video viewing is continuing to grow, with streaming services in particular surging in popularity and smart TV sets driving growth thanks to the variety of content and flexible viewing options they offer when used to access connected TV platforms. 

“Viewers have more choices than ever, and new offerings continue to be launched – including ad-supported services allowing consumers to enjoy premium video content without the price tag. 

“As technology advancements make buying connected TV inventory even easier and more efficient, we can expect exciting times ahead for brands who want to be involved in the TV space.”

Clare Dove - Future plcClare Dove, UK Group Commercial Director at Future plc 

“The cost of living crisis is ushering in an extended period of uncertainty for consumers, so it is vital that publishers provide them with high quality, verified and trusted information to help them navigate the changing economic environment.

“Publishers should utilise their teams of editorial experts to deliver the most relevant insights and up-to-date deals to their readers. 

“This will not only help them navigate soaring market costs, but will also provide advertisers with the most valuable spaces to reach consumers. 

“For example, we know that consumers tend to base e-commerce purchases on their current needs and passions. 

“In-house experts can check deals every 10-20 minutes, and publishers, keeping a close eye on consumer purchasing trends, can adjust their articles in response — a practice that will also mean the best performing products can be given standalone spotlights on websites and within editorial content.”

“Looking at specific ecommerce products bought across our media portfolio between 6 December 2021 and 7 January this year as an example, we saw that wireless earbuds were the most popular item in the technology vertical, with sales order value (SOV) of £112.7k, while gaming chairs were the best-selling product in gaming, with £32.7k SOV. 

“This data gives publishers and advertisers the opportunity to focus content around highly popular verticals and passion-based products, to drive the most effective campaigns.”

Alex Charkham - FuseAlex Charkham, Chief Strategy Officer, Fuse

“While there are clearly concerning macro factors and a general air of uncertainty that cannot be ignored, the latest AA/WARC figures show a very robust UK advertising market that has faced the challenge of the pandemic and coped. 

“Even taking inflation into account, £31.9bn – making the UK the third largest ad market in the world – is significant. 

“And with the FIFA World Cup kicking off in Qatar in November this year, there will be a much bigger advertising spend boost at the tail end of the year than we’d normally get from Christmas alone. 

“Despite the unusual timing and concerns from some corners about the location, the tournament is a global sporting phenomenon and we can expect to see a corresponding surge in advertising support across all media as brands look to capitalise on worldwide – and the ever hopeful English – audiences focused intently on the football.

We anticipate the sport and entertainment sponsorship market to have grown in a similar way to advertising, with sponsorship becoming an increasingly appealing solution to mitigate the increasing cost of advertising and help brands find a point of difference within a cluttered media landscape

“The anticipated uplift delivered by the FIFA World Cup once again shows that sport is one of the few, mass ‘appointments to view’ left on free to air TV. 

“With media fragmentation and growth of ad-less streaming services causing an ongoing headache for advertisers, sport provides an incredibly powerful platform for brands that can be activated in a number of ways, from advertising to sponsorship, media partnerships to talent deals.”

mike gordon globalMike Gordon, Chief Commercial Officer, Global

“The extraordinary ad market growth last year is testament to the industry’s determination and adaptability to changing consumer behaviours – and that creativity is continuing on. 

“With inflation and geo-political pressures ushering in a new wave of uncertainty, marketers are still innovating and experimenting to make the most of their budgets.

“During the pandemic, the UK Government set a great example for this; they experimented with different media formats to deliver important messages, efficiently and at scale. 

“The ‘Stay Home’ campaign used a variety of channels, including outdoor, audio and direct mail to reach people multiple times throughout the day, at home and/or on-the-go. 

“And whilst the same marketing mix won’t work for every brand, experimenting with a variety of channels will help to discover what works best and help prepare for any future industry or economic changes.”

Lori meakin JointLori Meakin, Founder, Joint

“It’s great news for the industry that UK ad spend has experienced such extraordinary growth, up 34.3% year-on-year. 

“And that should be a good sign for the economy – although a disruption in the link between ad spend and GDP and a looming cost of living crisis may well give us pause. 

“With nearly three quarters of all UK adspend now online in some form, including BVOD, it will be interesting to watch the continuing digital/real life interplay, as people continue to research and shop online as well as off, engage in social media and entertainment in ways new and old, and demand both information about and an escape from the harsh realities of life. 

“Because however much our industry still loves to differentiate between online and offline, above and below the line, real humans are decidedly omnichannel creatures!

“And of course, it’s the people this ad spend is targeting that really matters, not just the amount of spend.

“Who are we targeting with these billions of pounds of spend, and what do they really care about, that brands and advertisers can help them with? 

“Despite having more data on audiences, users and consumers than ever, our industry still has too little real understanding of the diverse lived experiences and priorities of those people. 

“For instance, 80% of purchase decisions are driven by women and yet adland can still be heard trading in “housewives with kids” as if we’re in the 1950s, and filling space with work that’s simply Brandsplaining and doesn’t leave valuable under-represented audiences Feeling Seen.

No matter how much any of us in our industry pays to get in front of people, it’s only when we truly respect them and contribute something of real value to them that we do our audiences and ourselves justice. And that, ultimately, is the big win.”

Alison HardingAlison Harding, VP Data Solutions, EMEA, Lotame 

“The increase in online spend shows that marketers and publishers are now in a better position for the retirement of third-party cookies. 

“This is due to the introduction of more identity testing and maybe even the adoption of identity solutions as part of the marketing mix. 

“Businesses may also be pivoting spend into online advertising as they are being boxed out of the Apple mobile universe, and are moving budgets to fill this gap. 

“Our data supports this move to investing more in data-informed, data-enriched strategies and identity solutions – in 2021 we saw spend on high quality data increase 40% over 2020. 

“It will be worth brands and advertisers keeping a close eye on how the ongoing situation in Ukraine is affecting their budgets, and their planning, from Q2 onwards.”

Gill Huber - OysterCatchersGill Huber, Managing Partner, Oystercatchers

“While we are seeing positive advertising growth and pandemic related risks receding, there are ongoing tough market drivers which mean consumers will continue to err on the side of caution with their spending. 

“However, the UK ad industry is well placed to cope with tough market factors – with adversity being a great driver of creative opportunities. 

“If brands can grasp these opportunities well, it can help them prosper despite future pressures.

“Brands will have the tough job of continuing to adapt to changing behaviour and will need to approach a variety of consumers – from those who want to spend post-lockdown, to others who are tightening their belts because of cost-of-living constraints – with sensitive communications. 

“Brands that develop their ‘north star’ to optimise their strategies will flourish, because despite the continued uncertainty, strong optimism and increasing opportunities for the year ahead means brands need to prepare for continued growth.

“As we move out of the short-term reactivity created by the pandemic, strong client:agency partnerships will be essential to help navigate changing consumer needs as well as identifying the best way to reallocate budgets to build brands and ensure those brands are showing up on the right media.“

David Kells - RaconteurDavid Kells, Director, Strategic Partnerships, Raconteur  

“The latest WARC UK Adspend Review is exciting…at this rate we’ll all be retired by 2023! 

“With growth in spend comes increased innovation and creativity, so creating new opportunities for brands to reach their audiences. 

“This is demonstrated by the notable increase in spend across multiple digital formats in the UK. 

“While the outlook for the year is very strong, media owners will remain cautious given the rate of disruption during the past three years. 

“As noted in the report, the UK’s ad market is forecast to grow by 10.7% this year to £35.3bn after a strong start, however economic and political instability will undoubtedly have an impact on the forecast as the year continues.

“The numbers remain strong however, and no matter what the ramifications of wider global issues, the demand for effective advertising will continue to boom.”

Bridget ArikBridget Arik, COO, Redmill Solutions 

“Great news that media spending has recovered in the UK but the market should be aware of the inflationary elements that have helped with these and 2022 will be a year to watch.  

“Last year was an unusual year but it has defined the shape of media, and ecommerce and retail spending are powerhouses for the future. Rising inflation, the cost of living, and supply chain issues are all impacting brand advertising spend. 

“For media agencies, servicing their brand clients is also becoming harder to manage; agencies are having to pay more to retain staff due to the ongoing talent leak, and brands are beginning to request longer payment terms. 

“To tackle these pressures, brand advertisers should be taking full control of their media data to get good visibility of their commitments across all aspects of the marketing funnel, and make shifts in spend depending on what’s working. 

“For example, retail is flagged as a growth area, but it is vital that companies are able to track these alongside more traditional paid-for advertising, and consider their overall marketing investments in the round.”

Rhys Cater, Managing Director, Precis Digital LondonRhys Cater, Managing Director, Precis Digital London

”It’s exciting to see advertisers continue to show confidence in the critical role of digital in their marketing strategies. 

“The AA/Warc report shows that as spend grows, so does complexity. While growth in Search as the leading channel is strong, mobile formats and visual channels such as Display, Social, and Video are accelerating rapidly.

“To succeed in an increasingly competitive market, and as budgets grow, advertisers will more than ever need to make sure that they have the capabilities and strategy to make their investments count. 

“Digital-first creative is a must-have to maximise the effects of the visual channels. A modern approach to data, analytics, and attribution will be critical to understand the value of investments across an increasing number of channels. 

“All of this must be done with data privacy and customer experience firmly in mind. 

“Advertisers’ expectations for digital growth might be high, but so too are the expectations of consumers when it comes to the ads they’re served and the ways in which their data is used.”

Tony Ayaz - Scuba AnalyticsTony Ayaz, CEO, Scuba Analytics 

“Whilst online ad spend continues to grow it needs to be measurable in order for brands to continue to justify their investment. 

“Alongside this consumers expect personalised experiences and to deliver this marketers need to be able to understand their behaviours in an increasingly fragmented, omni channel environment. 

“As cookies are sailing into the sunset marketers are turning to their first party-data. 

“To be able to leverage this data though and understand the impact of their campaigns they need access to real-time insights that can drive business decision making. 

“Siloed, stale data systems will hold marketers back, ad impact will be hampered and budget wasted.”

Andy Ashley - SmartFrame TechnologiesAndy Ashley, Global Marketing Director of SmartFrame Technologies 

“While such an increase in ad spending is phenomenal to see for the industry, it’s important that advertisers don’t rest on their laurels and continue to carefully consider their strategies. 

“Prominent issues such as the geo-political conflicts and the cost of living crisis remain front of mind for consumers, and advertisers must ensure they are ready to adapt to any resulting changes in behaviour. 

“By remaining agile and investing in tools that promote flexibility, such as contextual targeting solutions, brands can ensure their placements are in the most suitable and effective environments. 

“But that is not enough; advertisers must also prioritise solutions that help in the battle against fake news by delivering ample context into the heritage of content. 

“In doing so, they can protect their brand and limit the monetisation of misinformation at a time when truthful content is at its most valuable.”

Melabie Welsh - Strat houseMelanie Welsh, Founding Partner, Strat House

“We’ve long known the glory days of television-focused advertising, when brands had the luxury of time and attention to land multiple messages, are gone. 

“In this many channelled world, advertisers may only have three seconds to best convey their brand essence – so we’ve moved to simpler, more defined work to tell brand stories on digital platforms. 

“But move we have – as these figures show with almost 75% of UK adspend now online. And when media and creative teams work closely together, interesting media buys can lead to great creative ideas that do not have TV as the centre of their universe. 

“What has always mattered most – and will continue to matter most, regardless of relative share of media spend – is strong brand identity and strong brand positioning. 

“With this a business can weather inflation, conflict, supply chain constraints and much more.”

Verity Brown, Managing Director, The Specialist WorksVerity Brown, Managing Director, The Specialist Works

“The brilliant economist, JK Galbraith, said ‘the only function of economic forecasting is to make astrology look respectable’. 

“Forecasting future trends is tough. Last week the CEO of EON said that up to 40% of homes may experience fuel poverty in Q4 and predicting the effect of the Ukraine war on already stressed supply chains is difficult.

“Smart data-driven planning, accountability and flexibility will continue to drive investment. More brands are direct to consumer and judicious investment will generate demand.

“We expected to see predicted growth in shorter-term, performance-focused digital channels. Equally we agree with increases in more accountable, data-driven channels like BVOD, we’re excited about the launch of ITVX.

“Direct Mail is forecast to decline in 2022 and 2023, possibly due to print costs, however these can be mitigated by smart planning. 

“The coalescence of home working and flight from cities will not be reversed and underlines the importance of targeting. Retail clients are exploring omni-channel solutions, direct to home media is important in driving both footfall and e-commerce.

“Q4 could be tough, a perfect storm of an atypical World Cup, energy price cap increasing again in October and supply chain issues affecting pre-Christmas production. 

“We expect clients will want to spend but will focus on channels that they can commit later and where there is a greater chance of immediate return. 

“We also expect to see a greater focus on targeting older audiences, who may have greater disposable incomes.

WARC allude to significant growth of retail media, McKinsey forecast $100bn spend with Retail Media Networks by 2024, because of improved accountability and performance. 

“We expect brands to focus spend into channels that drive immediate uplift, whether instore or at home.

“In a challenging couple of years, smart data-driven planning, accountability, and flexibility will continue to drive investment.”

Sivan Tafla - Total Media SolutionsSivan Tafla, CEO, Total Media Solutions

“The widespread optimistic outlook from marketers is reflected amongst our publisher and advertiser clients, as we see a return to relative normalcy. 

“While online spending confidently increases, there are still challenges to be faced such as ongoing supply chain issues, the cost of living crisis and war in Ukraine. 

“Publishers that diversify their business models, adopt new business strategies, and expand product offerings will be in the best position to attract ad dollars and navigate these fluctuations.”

Tom Roberts - TribalTom Roberts, CEO, Tribal Worldwide

“Pandemic economic recovery has certainly bounced back extraordinarily well when looking at these figures. 

“With online advertising leading the way at an incredible £11.7bn in ad spend, it is clear to see that brands are tapping into the UK’s significant $2,648 per capita online retail spend. 

“With this continual increase in demand for ecommerce, it will be important for brands to not only provide their customers with a seamless, blended retail experience as they shop across multi-channels, but they will also need to work on retaining a workforce that meets the increased demand for digital skills and expertise.

“Supporting employees as we continue to experience economic uncertainty along with the current volatile geo-political situation, will be essential to help brands continue to innovate and build good relationships with their customers.”

Allan Blair, Head of Strategy, VaynerMediaAllan Blair, Head of Strategy, VaynerMedia

“The increase in ad spend shouldn’t come as a surprise to anyone. As we emerge from the pandemic, people are rediscovering lost freedoms, indulging new passions discovered during lockdown and slipping back into old habits. 

“Consumer spending is on the rise. However, the cost-of-living crisis is taking hold, so people are becoming more discerning about how, where and when to part with their hard-earned cash. Brands are having to fight harder to win a more cost sensitive audience.

“In this environment, of course brands are turning to digital media. Not only do they see it as a quicker, more cost effective and direct way to reach consumers, but they increasingly see it driving deeper and more powerful brand engagement and influence. 

“Again, this shouldn’t be a surprise. We have spent the past two years stuck at home with little more to do than waste hours on Instagram, surf Netflix trying to decide what to watch or browse ASOS planning the perfect party outfit for when we are finally free. 

“Digital was a mainstream behaviour before the pandemic, it’s now as vital as oxygen.

“Many commentators will claim this is a post-lockdown blip, that things will level off to pre-pandemic levels. They will pull out well-worn charts declaring the power of traditional media is stronger than ever. 

“Yet every day we speak to clients keen to shift ad money online, who want to build their brands from social and who see digital as not just a channel for efficient media, but one to build equity, engagement and consumer influence in an organic and natural way as they have never been able to before.”

Mari Kim Novak, Chief Marketing Officer, Yieldmo Mari Kim Novak, Chief Marketing Officer, Yieldmo 

“The increased investment in online formats highlights that marketers are not going back to the old “normal” and it’s time to embrace change. 

“As the UK has the world’s most avid online shoppers, they will expect brands to provide integrated seamless advertising experiences. 

“Online ad formats need to be designed with the consumer in mind – responsive to user behaviour, and maximise engagement. 

“This can be achieved by offering frictionless shoppable ad units that utilise more granular,  intelligent predictive real-time data sets.”