Economists looking for evidence of growth in the UK economy need look no further than the advertising and marketing industry, with new figures showing the sector recorded a 13.4% increase in spend to £10bn during the second quarter of 2024, and is set to break through the £40bn barrier for the first time by the end of the year.
That is according to the latest Advertising Association/WARC Expenditure Report, which reveals the increase was just over four percentage points ahead of forecast, owing to stronger-than-expected digital growth and the relatively weak comparable results for 2023.
The figures now provide a picture for the first half of the year, showing adspend increased 13.5% to £19.6bn in H1.
AA/WARC has also upgraded its forecasts for 2024, as a whole, by 2.9pp and now expects spend to cross the £40bn barrier for the first time to reach £40.5bn. This is largely due to better digital results and marks a year-on-year increase of 10.6%, with real terms growth for 2024 expected to be 7.9%.
The latest report notes that prospects for UK economic expansion have again been upgraded – from 0.6% to 1.1% this year – as inflation begins to ease on household budgets. UK advertising spend is currently expected to register annual growth ahead of key European markets, such as France (8%), Spain (5.7%), Italy (5.4%) and Germany (4%) in current prices.
The latest figures for April to June this year show key online formats registered growth, including online display (21.6%) and search (12.7%), alongside out of home (17.0%).
The broadcast of the Men’s UEFA European Championship finals saw TV benefit from growth of 9.0% for the quarter, representing the strongest quarter for TV in over two years and signalling its resilience.
Meanwhile, regional newsbrands and magazines registered their first growth since the pandemic bounce-back of Q2 2022 with increases in spend of 1.9% and 0.5% respectively.
And, unlike while there is no single category for direct marketing – unlike the IPA Bellwether Report – direct mail appears to be more than holding its own given the stampede towards digital channels.
Looking ahead, AA/WARC expects the UK’s ad market to reach £43.1bn spend next year, a rise of 6.5% and an uplift of 1.0pp from July’s forecast. This is due to more favourable trading conditions and higher consumer spending.
Advertising Association chief executive Stephen Woodford said: “The advertising industry is once again driving UK growth, helping businesses to compete, promote innovation and support jobs.
“It is an essential engine of the economy and key to the Government’s central ambition to achieve the highest sustained growth in the G7. Advertising has a vital role in funding culture, media and sport – and the results of Q2 show how advertising can play a fundamental part in supporting the success of events such as the Men’s Euros, the Olympics and the Paralympics.”
WARC director of data, intelligence and forecasting James McDonald added: “Four in every five pounds spent on advertising so far this year has gone towards digital formats, money which has mostly been committed programmatically and which is increasingly leveraging AI tools for further efficiencies.
“The strong growth across the online sector in particular during the first half of 2024 has put the UK’s ad market on course for its best year since the millennium, if the post-pandemic recovery year of 2021 is discounted.”
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