Adspend hits a record high for the UK: does this spell growth for promotional merchandise?

Record 26.4% growth put market value at an estimated £30bn last year, with advertising spend now set to reach £32bn in 2022 spelling a UK wide confidence in marketing communications.

At the end of January, the latest Advertising Association/WARC Expenditure Report outlined an even greater recovery for the UK’s advertising market than previously expected, with revised estimates for growth in 2021 standing at 26.4% to reach a total of £29.7bn. The new findings upgraded October’s projection for 2021 (+24.8%) by 1.6 percentage points, equating to the strongest year in UK ad market history. This is supported by the actual data released for Q3 2021, showing adspend of £7.3bn – the largest-ever summer spend on record. New forecasts also show total investment for 2022 is set to rise by 8.5% to £32.2bn – meaning the UK market will have expanded by more than a third since 2020. A bright start to the year contributes to an upgrade of almost one percentage point for 2022 growth, while sectors especially hit by the Covid-19 pandemic – such as cinema and out-of-home – will expect to see a continued recovery.

In addition, these recovery projections are supported by international data from WARC which expects the UK’s bounce-back in 2021 to be the largest across any major international ad market – including the USA, France and China – while outstripping the global rate by more than 12 percentage points.^[1]

Best-ever summer confirmed in 2021

Actual figures released by AA/WARC confirm adspend rose 23.2% during Q3 2021 to a record £7.3bn – three percentage points and £183m ahead of forecast. All media recorded double-digit growth in Q3 2021 following the previous year’s decline, as the summer period saw the return of key sporting moments such as the Euros, Olympics and Paralympics along with the easing of Covid-19 restrictions.

Triple-digit growth was confirmed for cinema (+655.9%) to £20.2m, marked by the September release of James Bond’s No Time to Die, while out-of-home saw an increase of 62.6% to £270.4m

2022 market will have grown by more than a third since 2020

UK adspend is expected to continue to rise to £32.2bn this year as current projections anticipate 8.5% growth, including strong recoveries for cinema (+201.1%) and out-of-home (+26.8%). Continued growth is also expected as consumer habits gained during the pandemic are expected to be retained. The latest figures suggest Q1 2022 also looks to be stronger than expected (particularly within TV) and overall adspend is now forecast to grow 12.6% year-on-year, compared with 10.5% previously.

How does this impact the promotional merchandise industry? The BPMA are members of the Advertising Association and as part of the AA Council, see an overall increase in confidence which in turn drives overall spend across the country. CEO Carey Trevill noted “We see how compelling the upward trend behind investing in communications, events and more brings spend into our market. When adspend goes up and UK wide confidence grows, historically we start to track the same uptick in orders. As we start to come out the other side of the pandemic, the UK is head and shoulders ahead of other markets on our recovery path and we will see this reflected in orders over the coming weeks and months. The end of 2021 shook everyone and whilst no-one is complacent that we may still face some disruption, we are best placed to reinforce messages and sentiment through merchandise helping end users secure their own customer bases”

Stephen Woodford, CEO, Advertising Association commented “UK advertising has seen a remarkable recovery from the coronavirus pandemic, racing ahead of key international markets with spend expected to cross the threshold of £30bn this year. A strong advertising market is a key indicator of the UK economy’s growth, with every £1 spent on advertising generating £6 GDP. The latest AA/WARC report brings welcome news not just for our industry but for the wider economy, as advertising investment is a key lever for businesses to capture new markets and drive their recovery. It is all the more important therefore that the Government recognises the need to support industry-led skills training to complement the demand for digital skills required to keep this market booming.”

James McDonald, Director of Data, Intelligence & Forecasting, WARC noted “The latest verified data support our previous estimation that 2021 was the strongest year for the UK’s advertising market since monitoring began. Encouragingly this momentum appears to have sustained into the new year, with the impact of the Omicron variant on advertising trade appearing to be reasonably muted across the majority of sectors. While inflation is set to act as a headwind on both the consumer and media buyers alike in the coming months, we have little reason to believe that the UK’s ad market won’t achieve growth of 8.5% this year – well ahead of the average recorded during the decade preceding the outbreak.”

Media	Q3 2021 year-on-year % change	9M 2021 year-on-year % change	2021 forecast year-on-year % change	Percentage point (pp) change in 2021 forecast vs Oct	2022 forecast year-on-year % change
Search	18.7%	36.7%	31.0%	+0.9pp	11.1%
Online display*	20.5%	32.8%	26.9%	+1.5pp	8.3%
TV	28.9%	30.6%	26.1%	+3.2pp	5.3%
of which VOD	33.9%	39.4%	37.5%	+3.4pp	13.7%
Online classified*	36.8%	31.6%	25.8%	+1.2pp	3.9%
Out of home	62.6%	14.2%	25.4%	-2.2pp	26.8%
of which digital	68.7%	24.8%	35.7%	-2.4pp	35.4%
Direct mail	23.4%	21.0%	17.1%	+6.8pp	-6.8%
National newsbrands	25.4%	11.7%	10.9%	+3.3pp	1.4%
of which online	22.8%	22.4%	17.4%	+4.2pp	6.4%
Radio	30.7%	28.9%	21.7%	+4.0pp	4.0%
of which online	49.7%	54.5%	41.4%	+6.7pp	10.7%
Magazine brands	22.3%	24.4%	20.4%	-1.2pp	-3.0%
of which online	41.0%	62.2%	45.9%	+4.0pp	-1.0%
Regional newsbrands	22.4%	7.8%	7.8%	+0.4pp	-6.1%
of which online	55.7%	37.0%	33.2%	+8.2pp	0.9%
Cinema	655.9%	-57.0%	70.0%	-18.0pp	201.1%
TOTAL AD SPEND	23.2%	30.8%	26.4%	+1.6pp	8.5%
Note: Broadcaster VOD, digital revenues for newsbrands, magazine brands, and radio station websites are also included within online display and classified totals, so care should be taken to avoid double counting. Online radio is display advertising on broadcasters’ websites.  Source: AA/WARC Expenditure Report, January 2022

 

The Advertising Association/WARC quarterly Expenditure Report is the definitive guide to advertising expenditure in the UK with data and forecasts for different media going back to 1982.

The race for talent

One of the biggest barriers faced by industry across the UK is the lack of talent or those who are opting out of their usual career streams. Account management to creatives to sales and pretty much other role in between; every industry sector is reporting shortages in talent. The BPMA were a Kick Start gateway for members during 2021 and the scheme worked well but timing wasn’t great.

“For those who had success, some incredible new talent has been discovered and retained but for many, timing in and around lockdowns, uncertainty and work from home rules didn’t give us the right environment to work from” said Trevill. Noting the next stages of what the industry was doing to self start again, she said “We know there is a big push coming for apprenticeships from Government but we need to understand a lot more about why we have a talent shortage”.

Devised by the Advertising Association, the new Talent Taskforce has commissioned UK advertising’s think tank, Credos, to produce a Talent Report to assess the competitiveness of the industry as a career choice. The brief for the Talent Report covers:

1. The macro-economic picture for UK advertising and marketing – how the UK advertising and marketing services industry fares versus other industries in the UK job market.
2. A cross-industry analysis – looking at the challenges within advertising and marketing services across brands, agencies, media owners and tech companies to develop and retain the skills needed.
3. The hearts and minds of industry professionals – a combination of qualitative and quantitative research studies to better understand what is driving job satisfaction.

The Task Force will also work to raise Government awareness about the value and importance of supporting and investing in the practical skills training provided by industry trade bodies and professional associations. Devised by business leaders, they offer practical and state of the art skills training and should be a vital part of the UK’s overall skills strategy.

Alessandra Bellini, President, Advertising Association and Head of Customer at Tesco said: “From the moment I joined the association last Autumn, talent retention has come up time and time again as a common challenge we are all facing. We are a people industry, and it is thanks to our brilliant, skilled people that the UK ad industry is forecast for the fastest growth of any ad market around the world. But we have a role to play in supporting our people. I feel very passionate that we nurture and support progression, encourage diversity and ultimately continue to attract talent. This taskforce is the first step but has the potential to make a real positive difference across the industry.”

The Talent Taskforce will review the findings of the Credos report and aligned with the Inclusion Working Group, consider how best to boost the industry’s appeal to talent, presenting options to the Advertising Association’s Council this summer to form the next 3-year strategy for the AA membership and wider industry. It is expected Talent will grow as a critical workstream for the Advertising Association alongside Public Trust and delivery of the All In and Ad Net Zero Action Plans, helping the industry delivers on its economic and societal responsibilities to the UK, aid the COVID-19 recovery and transition to a net zero economy. The BPMA will be participating in discussions to address the challenges faced by the promotional merchandise industry on behalf of its suppliers and distributors.

Export Month: March

The BPMA recently joined the UKAEG, a collaboration between UK creative industries and Department of International Trade (DIT). To answer the drive from international companies looking to the UK for creative ideas and work, the BPMA will be engaging members in discussions and forums during March to highlight the opportunities in new markets whilst delivering outstanding case studies for the new UKAEG site, helping DIT local agents and international firms discover the immense talent and power of the UK promotional merchandise industry.

Look out for more information on Export Month at bpma.co.uk.