UK adspend rose 6.3% year-on-year to reach £23.6bn in 2018, spearheaded by the inexorable march of data-driven digital media as brands big and small dig deeper and deeper into consumer insights to fuel their marketing activity.
Overall, the industry recorded the ninth consecutive year of market growth and the highest annual total since monitoring began in 1982, according to the Advertising Association/Warc Expenditure Report, although traditional media, including TV, direct mail and press have suffered.
The final quarter of 2018 recorded expenditure growth of 5.7% over Q4 2017, with adspend reaching £6.5bn. This includes adspend during the crucial Christmas period and marked the 22nd consecutive quarter of market growth.
Overall market growth is being driven by increasing spend on search (up 14.3%) and online display advertising (up 21.4%), with further, but milder, growth predicted for 2019 and 2020.
The positive story for online ad formats was reflected across a number of media. Notably high growth was recorded for online radio ad formats, with a year-on-year rise in 2018 of 30.6%. Ad investment in broadcaster video-on-demand (VoD) rose 29.4% to reach £391m, while regional online newsbrands recorded growth of 7.6%.
The news was not quite so rosy for traditional TV advertising, which grew just 0.1% or direct mail, which has been marching backwards for the past 12 months, witnessing an 8.5% decline.
Advertising spend is forecast to grow 4.8% this year, with a further rise, of 5.5%, projected for 2020. This would push investment to over £26bn, completing more than a decade of continuous expansion for the UK advertising industry. TV is predicted to grow 2.2%. Direct mail, however, looks set to miss out, with the report predicting the medium will decline again, this time by 8.2%.
However, it appears that marketers are failing to tap into positive consumer sentiment over direct mail. The DMA’s recent ‘Customer Engagement’ research showed that under a third (30%) of marketers say that they use post to contact customers, whereas post is consumers’ second-most preferred marketing channel, behind email, with over two-fifths (41%) of consumers selecting it among their favourite ways for brands to contact them.
Commenting on the Advertising Association/Warc Expenditure Report, Warc managing editor James McDonald said: “Despite most traditional media being stagnant or in decline, the UK’s ad market expanded at its strongest rate since 2015 last year, and the growth is primarily being driven by rapidly rising investment in paid search and online display formats, particularly social media and online video.
“These online components account for just over half of UK advertising spend today, and both are almost entirely data-driven, enabling advertisers to pair their messaging with Internet users based on their digital footprint. These tools are also accessible, enabling a long-tail of SMEs to invest, and this has transformed the DNA of advertising in recent years.”
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