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AA/Warc: brands to spend £1bn more on Christmas advertising this year

Christmas spend is to increase by £1bn according to the AA/Warc report

The latest Advertising Association and Warc expenditure report has forecast that brands will spend nearly £1bn more on Christmas advertising than in 2020 – a sign that marketers are looking to make up for the pandemic slump.

According to the quarterly report, ad spend in 2021 Q4 will hit a record £7.9bn, 14% more than 2020. Search advertising will be one of the quickest-growing areas, increasing by 15.3% to £2,715m. Meanwhile, TV ad spend is on track to see its largest Q4 increase in over a decade, up 9.0% to £1,564m, with BVoD up by a quarter.

Industry commentators expect brands will go big on Christmas this year, despite supply chain issues disrupting media plans. James Coulson, managing partner at analytics firm Kepler EMEA, said he expects “major blockbuster Christmas campaigns,” which could become “a blueprint for future seasonal marketing.” Analytic Partners senior director Maren Seitz added there will be a “‘more is more’ approach with high-frequency ads aiming for huge reach.”

On the creative side, Rachel Clarke, founding partner at Strat House, said: “We can expect more stories about doing things together outside the immediate home, as the circle of connections may be far wider this year.”

But Jem Lloyd-Williams, chief executive officer at media agency Mindshare UK, said: “This must surely be one of the trickiest times ever to produce advertising that chimes with the mood of the nation over the holidays.”

There were rumblings over where the increased spending was coming from. Clarke said the increase was in part due to supply chain issues forcing brands to spend for longer to push the message to order earlier. Meanwhile, Seitz attributed a portion of Q4 spend to marketers spending more adding back pre-pandemic channels, such as cinema and OOH.

Dan Chorlton, co-founder and chief exec at martech platform GOA Marketing, rejected comparisons to Q4 2020.

“Companies’ outlook for 2022 shouldn’t be an immediate champagne pop from their performance at the end of this year. It would be smarter to use 2019 as a benchmark for performance, to get a more accurate reading of progress ahead of the new year,” he said.

End-of-year forecast and 2022 projections

The yearly forecast shows ad spend will grow by 24.8% this year to reach a total of £29.3bn, surpassing July’s +18.2% projection by 6.6%.

Posting revised projections for 2022, the AA and Warc expect a 7.7% increase year-on-year, growing to more than £31.5bn. Continuing its post-pandemic recovery, cinema advertising is on course to increase by an impressive 123.2%. Search is also set to rise by 11.4%.

OOH is set to increase by 27.7% in 2022, which is good news for the media channel after the IPA’s quarterly Bellwether report revealed 11.9% of firms said they’d reduce OOH spend in Q4, outweighing the 9.9% that revised upwards, resulting in a net balance of -2.0%. There is a negative perception about the medium that execs are trying to combat.

“UK advertising’s recovery goes from strength to strength, following the sharp shock of the pandemic,” said AA chief exec Stephen Woodford. “The forecast of strong online performance is further evidence of the UK’s position as the world’s most digitally-advanced advertising market and Europe’s biggest.”

James McDonald, head of data content at Warc, added: “The latest data demonstrates bullish trade in the UK’s advertising sector, despite potential inflationary headwinds and supply chain disruption in the run-up to Christmas.

Confirmed figures for Q2 2021 were published in the report showing ad spend rose 86.5% year-on-year to reach £7.7bn.

There were strong recoveries in all media types in Q2 including OOH (+276.8%), digital magazine brands (+155.5%), and direct mail (+104.0%). The report did flag the news brands were slower to grow – just +22.2% national digital and +28% regional digital.

Additional commentary

  • Digital OOH: “It’s exciting to see significant growth predicted in DOOH and digital radio, a reflection of the democratization of precision targeting across the entire media landscape. Where brands have been expected to demonstrate clear ROI in digital display for many years, we can now expect marketing teams and their agencies to be held accountable for addressability across every channel,” said Verra Budimlija, chief strategy officer at Wavemaker UK.

  • TV and VoD: Bill Wise, chief exec of advertising tech company Mediaocean, said: “For brands and retailers looking to capture sales during this peak shopping period they’ll have to engage consumers across a fragmented media landscape.” He added that TV and video-on-demand were the “sweet spots” this Christmas season and advised taking an omnichannel approach this year.

  • OOH: Kinetic’s chief exec Alistair MacCallum said OOH growth is “testament” to its “resilience and enduring appeal.” He added: “The ongoing recovery and positive forecasts are driven by clients keen to take advantage of the sector’s ongoing investment in digital technology, automation and data optimization to make OOH smarter, faster and more adaptable. Richer real-time insights into audience mobility and behavior have enabled us to provide brands with more targeted, flexible and creative approaches that have maximized the impact of OOH.”

  • Audio: “The main omission from the AA/Warc report is that audio is simply classified as ‘radio’ or ‘online radio’ – without taking into account the huge number of digital audio advertising opportunities today. It only shows that, more than ever, advertisers need to incorporate audio into the media mix as an attributable player – and take advantage of the many formats, from podcasts to music streaming, that audiences love to engage with,” said Pierre Naggar, senior vice-president global demand at AdsWizz.

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