Out-of-home (OOH) advertising is set for a major – largely digital-driven – recovery this year following a dive in fortunes during the coronavirus pandemic, with further growth forecast for 2022 according to new research.
The latest quarterly Advertising Association/WARC Expenditure Report, which collects advertising revenue data across the entire media landscape, predicts that overall UK adspend will grow by 18.2% this year to reach a total of £27.7bn.
This is an upward revision from the 15.2% rise forecast in April and includes an estimated 54.7% rise during the second quarter of the year – by far the highest on record albeit coming on the back of a major downturn due to the pandemic.
Advertising Association/WARC said this overall growth will recover the entirety of 2020’s £1.8bn decline and is expected to precede a 7.7% rise in 2022, by when the market will be worth a record £30bn.
Ancillary forecasts from WARC also suggest that the UK is on course to achieve the fastest ad trade recovery of any major European market this year, and one of the strongest growth rates across 100 global markets.
Advertising Association chief executive Stephen Woodford said: “These are hugely encouraging figures for the UK advertising industry and reflect the strong outlook in the wider economy.
“Advertising is a vital engine for growth, with each £1 invested in advertising delivering £6 back to GDP. The upward growth revision in spend growth this year – to reach a record of 18.2% – would mark an exceptional recovery, after the record declines in 2020.
“If the AA/WARC expenditure estimates turn out as forecast, then the ad industry will contribute strongly to the nation’s economic resurgence this year and into next.”
OOH looks to be one of the star performers, with a 29.3% increase forecast for 2021 as a whole and a further 21.3% rise forecast for 2022. This is driven by digital OOH formats, however, which are forecast to achieve a 43.7% increase in 2021 and a 27.1% increase in 2022.
OOH advertising revenue was worth £699.1m in 2020, with digital accounting for £414.9m of this, but in Q1 2021 the format was worth just £96.9m overall – down 64.9% on Q1 2020, with digital making up £59.3m of this, a fall of 59.8%.
A WARC spokesperson told Printweek: “The UK’s lockdown was responsible for out-of-home’s major decline in Q1 and as this has since ended and foot traffic has recovered, a strong OOH recovery is expected – driven by digital formats, which was the main area of growth pre-pandemic.”
Direct mail advertising revenue, which was worth £909m in 2020, is forecast for a 10% recovery for 2021 as a whole after its value fell by 16.5% in Q1 2021 to £244.5m, but a decline of 7.2% is forecast in 2022.
WARC said direct mail’s forecast 2021 growth “is largely because of a steep decline last year with businesses now reopening, and a decline in 2022 is expected as things begin to return to normal”.
Advertising revenue for newsbrands experienced a decline in Q1 2021, with national newsbrands down by 18.7% to a value of £176.2m, and regional newsbrands falling by 22.4% to £116.8m. Magazine brands, meanwhile, dropped in value by 13.8% to £110.8m.
Small declines of 2.4% and 1.7% are forecast for regional newsbrands and magazine brands, respectively, in 2022, following growth in 2021 of 11.7% and 18.2%, while national newsbrands are expected to grow by 2.8% in 2022 following forecast growth this year of 12.3%.
Growth in all of these areas is again being driven by online formats.
“Print growth is expected for national and regional newsbrands, plus magazine brands, this year as a rebound from 2020’s steep cuts. Decline in print advertising is expected in 2022 though this is projected to be more modest than historical levels,” the WARC spokesperson commented.
Other non-print formats forecast for major growth in the report include cinema, with its advertising revenue predicted to increase by 315.6% in 2021 and a further 50.7% in 2022, and TV, which is expected to increase by 15.1% in 2021 and 3.4% in 2022.