Adrian J Cotterill, Editor-in-Chief
The latest Advertising Association/WARC Expenditure Report shows that the UK’s ad market recorded a 6.1% increase in investment to a total of GBP 36.6bn in 2023; the 13th annual expansion recorded in the last 14 years. The new survey data also shows that online formats now account for over three-quarters of all UK ad spend for the first time.
New AA/WARC forecasts show advertising spend will rise by 5.8% to reach GBP 38.8bn this year, though this represents a minor (-0.1pp) downgrade from January’s forecast owing to prolonged inflationary pressures on the market. Further growth – of 4.5% – is expected in 2025, by when the UK’s ad market will be worth more than GBP 40bn.
Stephen Woodford, Chief Executive, Advertising Association said “The continued shift to online advertising formats reflects the changing shape of our economy, with people increasingly shopping online as well as on the high street, and businesses striving to provide the best customer experience in all scenarios. The UK advertising industry is much respected around the world, which is why we continue to see the exports of UK advertising services grow, an important source of additional revenue for many advertising businesses in a domestic economy that has little-to-no growth.”
When compared to Europe’s largest advertising markets, the UK’s advertising industry was seen to have outpaced Germany (-0.7%), France (+2.1%) and Ireland (+3.0%) last year, and is expected to repeat this in 2024. The UK’s ad market is on course to end the year some $20bn larger than those of its closest neighbours.
As estimated in January, online formats combined grew by 11% to reach a total of GBP 28.7bn in 2023, equivalent to 78.4% of all UK ad spend last year. Beyond this, out of home (+9.7%) was the only other advertising medium to record growth in 2023.
James McDonald, Director of Data, Intelligence & Forecasting, WARC said: “Our latest survey of media owners confirms 2023 as a challenging year for most, with few properties recording gains and spend instead further consolidating within search and online display formats – particularly social media. Combined, these digital staples are on course to account for almost four in five pounds spent on advertising in the UK next year, up from a share of 51% just five years ago. Our forecasts assume that the UK’s economy will begin to break from the pattern of stagnation that has come to define recent quarters. Easing inflation over the coming 18 months should encourage more favourable trading conditions within the advertising sector, facilitating growth across a broader range of channels in turn”.
The only major product sectors to record rising display ad spend (i.e. excluding search and classified formats) last year were retail (+5.0%) and services (+4.7%), the latter almost entirely attributable to a 6.6% rise in the entertainment & leisure sector.
The latest AA/WARC data also reveals actual investment for last year’s Q4 Christmas ad season, which topped £9.7bn after achieving growth of 7.4% year-on-year. This growth was led by digital out-of-home (+18.1%) and BVOD (+15.9%) as well as search (+12.9%), as the traditional uplift in Golden Quarter investment was buoyed further by increased advertising activity during the Rugby World Cup.
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