The COVID 19 pandemic has drastically changed the way people do business. While some major industries showed an increase in demand, most sectors were adversely affected — and advertising was forced to the back of the line while marketers scrambled to adapt their campaigns for a strange new world.

It's fair to say that advertising budgets in the post-pandemic era will vary from 2019 forecasts. The world after coronavirus will be a very different place. Brands are focusing on better understanding what consumers want and need during this time of transitioning to the “new normal”. As a result of lockdowns and social distancing, advertisers have been motivated more than ever to find new ways to engage with audiences.

It isn’t all bad though, the national vaccination rollout raises hope for economic recovery. While no one can predict the future, the latest Advertising Association/WARC Expenditure Report predicts a 15.2 percent increase in UK ad spend this year to £27.0 billion. This will make up for the £1.8 billion drop in 2020, which will be followed by a 7.2 percent increase in 2022, where the market will be worth a record £29.0 billion.

According to ancillary estimates, the UK is on track to see the fastest ad trade turnaround of any big global market this year, putting the UK economy in a good position to rebound strongly post-pandemic, as every pound spent on ads produces six in GDP.

This year, online display – which includes social media and online video – is expected to rise at a faster pace (+13.4 percent), as is paid search (+18.4 percent). Together, these two markets are projected to account for two-thirds of all UK ad spend this year (66.4 percent), up ten percentage points from 56.2 percent in 2019.

The media most negatively affected by the pandemic was predicted to do particularly well, with cinema scoring +266.8%, digital out of home scoring +52.3 percent, and traditional out of home scoring +14.5 percent. Increased recruiting activity resulting from better economic opportunities this year is expected to boost online classified spending by a fifth (20.4 percent).

Other media, on the other hand, aren't expected to make up for 2020's deficits until next year. This is true in TV (up 8.8% in 2021), direct mail (up 6.4%), and publishing disciplines such as national news (up 7.3%), regional news (up 3.9%), and magazine brands (up 3.9%). (up 6.8 percent).

The advertising industry in the UK was well-prepared for the demands of the lockdown, as it already had one of the world's most advanced digital ad markets. The average weekly volume of e-commerce spent in the UK increased 47.1 percent to £2.1 billion in 2020, accounting for 27.9% of all online transactions last year – ahead of key foreign markets. For the first time, the United Kingdom has the highest proportion of overall retail spend spent on e-commerce. China had 24.9 percent, the EU had 20.0 percent, and the United States had 14.0 percent.

While it is too early to say exactly how the pandemic will affect ad spend, global ad agencies are predicting faster economic recovery than previously expected. Research from WARC indicates the outlook in the UK for the year ahead is positive, due to greater certainty around Brexit and the ability of the vaccination campaign to unlock the economy. In these conditions, the ad market can overcorrect and surpass its 2019 high, though large parts of the industry remain vulnerable.

Source: AA/WARC Expenditure Report, April 2021

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