AA/WARC report reaction: 'Will Budget stunt growth?'

New figures from the Advertising Association/WARC Expenditure Report reveal total UK adspend recorded a 13.4% increase to £10bn during the second quarter of 2024, and is set to exceed the £40bn barrier for the first time by the end of the year.

While the report draws its own conclusions, Decision Marketing quizzes industry chiefs for their take on what it all means for the sector and beyond, as well as how this week’s Budget might bring its own challenges.

For Medialab director of advanced TV Jonathan Manning the report underscores the fact that, despite on-demand streaming services dominating the TV industry over the past few years, there is still demand for traditional, linear TV viewing experiences.

This, he adds, is particularly true when it comes to household events, such as the Men’s European Football Championships, which saw TV benefit from growth of 9.0% for Q2 – representing the strongest quarter for TV in over two years.

Manning continues: “This proves TV’s resilience, with UK viewers still craving localised, high-quality and UK-originated content. As more broadcasters ramp up their digital offering – and as BVOD evolves – it will become increasingly important for brands to integrate linear TV with digital and direct marketing efforts. In this way, they can create personalised campaigns that combine the scale of traditional TV with the exactness of digital – delivering impact.”

Meanwhile, pubX chief executive and co-founder Andrew Mole is hoping that this increased investment in advertising will make its way to publishers, who, he claims, continue to be the main suppliers of high quality inventory in the digital space.

Mole adds: “It is important we don’t confuse more spend going into the walled gardens as being a net good for digital as a whole; instead the industry must ensure additional spend finds its way to publishers, and that there is greater support for an ecosystem to enable this to happen.”

Nevertheless, Fuse chief executive Louise Johnson reckons the growth of the industry is good news not only for those working within it, but also for the wider business world, as all UK investment in promoting and building brands is investment in the country.

And Johnson is in little doubt what has been the key factor. She explains: “The past year has seen sport increasingly become the fulcrum around which much of this ad investment has focused. And it’s not surprising that adspend has been directed at these big cultural moments, particularly as sport remains one of few opportunities to engage mass audiences – which is hugely appealing to advertisers.

“Q2 also benefited from brands building their pre-event advertising support for the Men’s Euros and the Paris Olympics and Paralympics. This summer, the cultural impact of these global sporting competitions gave brands golden opportunities to associate with the spectacle and excitement of sport on this scale.”

Over at Lotame, chief revenue officer Chris Hogg says it is no surprise that activity was ramped up during this period, especially as it included the beginnings of the summer of sport.

He continues: “While we may not be out of the woods yet, and with this week’s Budget putting further pressure on many businesses, there still seems to be an appetite from many brands to continue to spend on advertising. This is heartening and aligns with our own data, which revealed 38% of marketers and agencies in the UK anticipated an increase in programmatic spend a year from now.

“Maximising this increased spend to continue navigating the uneven economic terrain will mean new technologies that help marketers drive greater efficiencies. While many are keen to adopt automation and identity resolution solutions in the next six to 12 months, there is also a struggle to find the high-quality data partners needed to optimise these tools. It’s clear that this issue must be addressed if advertisers are to see returns from their spend.”

And, Adverity VP growth marketing and operations Mark Debenham is quick to highlight that digital remains the driving force.

He comments: “Breaking the £10bn-mark in Q2 highlights the UK advertising market’s renewed momentum, led by digital’s continued growth. The projected £40.5bn annual spend isn’t just recovery – it’s a signal that brands are investing where they see real returns.

“Digital’s resilience is clear, and TV’s strong quarter shows the lasting appeal of multi-channel strategies that blend the scale of traditional media with the precision of digital.

“At Adverity, we see these shifts reinforcing the need for real-time insights that help brands make impactful, growth-focused channel decisions.”

But while TBWA\MCR managing partner John Triner agrees that the shift to spend in digital spaces is inevitable, he reckons this brings its own challenges.

Triner explains: “The continued move towards digital spend provides creative agencies with the biggest challenge and opportunity, it becomes more critical than ever to deliver disruptive and powerful creative platforms that can really deliver impact across all media and not just deliver an automated sea of sameness. And, it is a great opportunity for the creative industry that is not to be missed.”

OpenX VP of EMEA and global head of sustainability Joseph Worswick is another who highlights that it is the strength of the digital ad sector that has underpinned what is set to be the second best year for the UK advertising industry since 2000.

He explains: “Revenues for publishers’ online properties are growing, and with programmatic technology evolving to become more efficient and offer more precise targeting, advertisers will likely be seeing better returns on their investments across all digital formats.”

Even so, Worswick cautions: “While the upward revision to 2025 forecasts is also encouraging, it remains to be seen whether this optimism aligns with consumers’ post-Budget confidence.”

His sentiment is echoed by Joint founder Richard Exon, who also questions what effect the Budget will have.

He says: “As marketing and advertising leaders absorb the detail of Rachael Reeve’s first Budget, they would be right to ask how exactly it’s helping our industry.

“As the AA/WARC data shows, there is measurable momentum across most channels, but what macro-environment is Government policy creating for us to operate in? For Labour to be truly pro-growth, it would be good to see some more ambitious and targeted thinking from them soon.”