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Zenith: UK ad spend will grow 13.5% in 2021 and bypass pre-pandemic levels

An extraordinary recovery in UK adspend is under way as growth estimates hit 13.5% for 2021

Media agency Zenith has sent expectations through the roof for an adspend recovery of historic proportions in its latest forecast, with estimates of as much as 13.5% growth for 2021 – 8.5% above where industry found itself at back in 2019.

Should this transpire, adspend will be significantly north of where it was in the pre-pandemic era before the year is out, with e-commerce-related activity across multiple display and search channels being credited for the boomerang rebound.

E-commerce and online video pour oil on the adspend party

  • The remarkable recovery in sentiment is being attributed to e-commerce and online video sectors, which will contribute an estimated 11.2% growth in global adspend this year.

  • Total advertising expenditure will hit £522bn this year, a healthy £31bn more than before the pandemic.

  • There is no end in sight to the bounty, with further growth of 6.9% forecast for 2022 and a further 5.6% in 2023.

Britain booms

  • In the UK, the picture is even brighter, with growth projected to weigh in at 13.5% this year – a full 8.5% higher than the level recorded in 2019 – courtesy of a greater embrace of the surging digital ad market.

  • While digital advertising accounts for a 58% slice of the global market in 2021, up from 48% in 2019, the UK picture is markedly more skewed with digital accounting for an overwhelming 75% of all UK adspend this year, rising further to 77% in 2023.

New money floods social media and search

  • The flood of data is contained within the latest Advertising Expenditure Forecasts report, authored by Zenith, which highlights how behind the stellar picture lies a shift from physical shopping to e-commerce, with brands now following suit en masse in the form of new direct-to-consumer operations and performance-driven advertising on social media and paid search.

  • These trends prompt Zenith to pencil in a 25% uptick in social media advertising to hit £107bn, leapfrogging paid search for the first time, which will grow by just 19%, leaving it on £105bn.

  • Further growth comes from small businesses entering the market for the first time in a desperate bid to redirect cash allocated to procuring prized shelf space toward display and search ads of their own.

  • Looking ahead to 2022, Zenith expects social media to grow a further 13% and search to expand by 12%.

  • Illustrating the scale of transformation, social media and online video have left static display in the dust with digital advertising growing 19% in 2021 even as the latter falls 15%.

Video changes

  • The average cost of TV advertising is 5% higher this year than the year before, exceeding an adspend growth rate of just 1% as ratings decline.

  • In contrast, online video advertising is the hottest ticket in town, surging 26% to hit £49bn in 2021.

  • Mounting media inflation, under way for well over a year, is fueling a spike in prices, particularly in television, but the phenomenon is also seen in online video, where inflation is running at 7%.

What does Zenith say?

  • “It’s great to see brands coming back to advertising full-throttle having realized its centrality to growth, however with great power comes great responsibility,” said Richard Kirk, chief strategy officer at Zenith UK.

  • “As spend continues to follow fragmenting attention across channels and demographics, marketers are going to have to be focused on understanding where the incrementality is coming from. Fail to solve this challenge and the danger is brands will simply erode their margins advertising to consumers who were on their way to buy anyway.”

  • Jonathan Barnard, head of forecasting at Zenith, added: “After a very tough year last year, the ad market is enjoying rapid and broad-based recovery, and will end this year well above the level it achieved in 2019. Digital advertising is becoming a more effective tool for brand growth as media and commerce continue to move online, attracting greater investment from large brands and small businesses alike.”

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