UK advertising spend is forecast to reach £35bn this year, with £10bn of that during the fourth quarter.
The latest Advertising Association/WARC Expenditure Report highlights a muted year end in spite of both the World Cup and Christmas.
The figures show a 9.2% year-on-year growth, but this is down from the previous forecast in July – due to high levels of inflation, squeezed margins and cost-of-living crisis.
“With the economic picture worsening amid ongoing political incertitude, the likelihood of a recession is now higher than when we last assessed market prospects in the summer. Indeed, we have downgraded UK ad market growth expectations for this year and next, in large part to reflect the waning climate,” said James McDonald, Director of Data, Intelligence & Forecasting, WARC.
“Higher costs are carving into advertisers’ margins and household budgets alike, and trading conditions are at their worst since the Covid outbreak, leading to muted expectations for the Christmas quarter. Against this deteriorating economic backdrop, a 9.2% rise in advertising investment this year would be impressive given that it is near double the average rate of expansion recorded prior to the pandemic.”
According to its figures, adspend rose 8.8% in the second quarter, to £8.6bn, with the first half of the year up 14.4% to £16.7bn.
It expects the market to grow a further 3.9% in 2023, to a total of £36.2bn.
By sector, online advertising’s share of total adspend is set to grow to a total of 74.0% for 2022 and is expected to cross the three-quarters threshold (75.2%) in 2023.
Out of Home was up 46.4%, while cinema saw a +2,208.2% rise – attributed to the post-Covid recovery.
Online classified advertising – representing recruitment advertising and property listings, among others – was up by almost a third.
The only medium to see a decline in investment during the quarter was television (-0.6%), however, video on demand was up +9.3%.
The publishing sector, including national news brands showed a +9.1% increase, magazines were up +3.3%, while regional news brands increased slightly to +0.6%.
The report suggests that search advertising – including eCommerce – is forecast to be one of the quickest growing media over the quarter, rising by 7.3% to a total of £3.4bn.
At £1.7bn, TV advertising spend is expected to remain flat during the quarter, but video-on-demand is set to rise ahead of the wider market with expected growth of 4.2%.
“It is encouraging to see strong figures in Q2, with media channels continuing their recovery from the COVID-19 pandemic,” said Stephen Woodford, Chief Executive, Advertising Association.
“Looking forwards, political and economic stability is much-needed, given the inflationary and recessionary forces impacting all businesses. As companies navigate these pressures, we see them continuing to prioritise advertising investment to protect their brands in exceptionally challenging market conditions.”
