In February, several reports were released which allowed us to form a clearer picture of how the ad market closed in 2020. Which channels fared well, which struggled, and what we might expect to see in 2021.
The industry staple, AA/WARC’s review of 2020, stated that the UK ad market shrank £23.2bn (7.9%), which is less than some had originally feared, and was buoyed by two hero factors – a rise in e-commerce and the consequential increase in digital ad spend.
The pandemic accelerated the e-commerce trend by 3 to 5 years as we saw 28% of retail sales in the UK in 2020 happen online, up 10% from 2019.
The summer was a particularly strong period for on-line platforms. Internet advertising grew by 10.1% to £4.2bn, influenced heavily by a 14.5% rise in search spend. Interestingly, some of the big on-line platforms, such as Amazon, did not increase their ad spend.
On the contrary, Amazon decreased advertising spend for the first time in a decade as people flooded to their platform by default.
It was the main ATL channels that felt the biggest negative impact of Covid in 2020. The expected decline in cinema and outdoor advertising rose to 80% and 45% respectively. The market for newsbrands was down 28%, radio 16% and magazines 12%. April and May were particularly tough trading periods for the UK TV ad market, with a 50% collapse in the £4bn-a-year sales numbers.
Things are starting to look up, though. With the onset of a national vaccine rollout and a Brexit deal done, there is hope for strong growth in 2021. AA and Warc predict the UK ad market to grow by 15.2% this year with most media sectors expected to see double-digit growth.
This will impact on market inflation, however, as post-pandemic advertising picks up. ECI Media Management’s Annual Media Inflation Report is forecasting 3.4% inflation in media in the UK this year.
So whilst we will all be extremely happy to see media channels and sectors regaining ground and delivering growth once again, we must keep an eye on the prize.