The UK ad industry appears to be riding out the predicted post-Brexit slump with spend breaking through the £5bn barrier for the first time in a Q1, although the direct mail market faces challenging times.
According to Advertising Association/Warc Expenditure Report data, the market is forecast to record 4.2% growth in 2016 and 3.8% growth in 2017.
Overall forecasts have been revised down slightly since April (-1.3% for 2016 and -1.7% for 2017), driven by downgrades for newsbrands and direct mail, the UK’s third and fourth largest media channels.
Direct mail adspend data from the Royal Mail reveals a worrying 13.3% decline in Q1 to £424m, with almost all of this decline attributed to SMEs working in the postal market.
However, it is already predicted that the medium will recover slightly by the end of the year, recording a 7.2% decline for 2016 as a whole, with a 5.0% fall in 2017.
But, as everyone knows, direct mail is only part of the DM business, so many will take heart from the fact that online spend forecasts have been revised up 0.8% to 12.3% in 2016, with mobile advertising predicted to increase 39.3% in the same period.
Internet (including mobile) adspend is estimated to have grown 15.3% in Q1 to reach £2.34bn – the 11th consecutive period of quarterly growth. Mobile is believed to have accounted for some 96% of total Internet growth, as spend rose 55.9% year on year to an estimated £830m during Q1 2016. Full-year online adspend growth is forecast to be 12.3% in 2016 and a further 10.1% in 2017, by when the market should be worth over £10bn.
Meanwhile out of home adspend grew 3.9% to £238m in Q1 and is predicted to continue at 4.0% in 2016 and 2.1% in 2017, driven by digital spend forecasts of +17.0% and +15.8% respectively.
Digital out of home is expected to claim a 40% share of total spend in 2017, up from 31% in 2015.
Advertising Association chief executive Tim Lefroy said: “These numbers suggest that, despite uncertainty, our sector is resilient. Government can underpin that by taking every step possible to build advertiser confidence, promote the UK as a global advertising hub and ensure we remain open to the world’s best advertising talent.”
The research is in sharp contrast to the IPA’s Bellwether Report, released last month, which saw IPA director general Paul Bainfair try to rally the troops after it predicted a fall in spend and significantly downgraded its forecasts for 2017 as a direct result of falling confidence following the Brexit vote.
Related stories
Don’t panic, says IPA chief, Brexit cuts aren’t fatal
DMA backs campaign to big up industry post Brexit
Industry comes out fighting to counter Brexit fears
Industry urged to shout about the benefits of DM
Online lifts the gloom as DM dips
£17.5bn DM outpaces GDP by 250%
Clients divert spend into promotions
Sharpest rise in DM spend for two years
Industry joy as spend goes up again