The UK advertising and marketing industry continues to defy the odds and is forecast to grow by 9.2% in 2022 to a total of £34.9bn – including a near £10bn boost in Q4 thanks to the Qatar World Cup and Christmas – although the sector is braced for a much rougher ride next year.
So says the latest Advertising Association/WARC Expenditure Report, claimed to be the only study to collect advertising revenue data directly from media owners across the entire landscape. It reveals that UK adspend rose by 8.8% in Q2 2022, to a total of £8.6bn, while adspend during the first half of the year was up 14.4% at £16.7bn.
However, the UK’s ad market is forecast to grow by just 3.9% in 2023, to a total of £36.2bn, while online advertising’s share of total adspend is set to grow to a total of 74% for 2022 and is expected to cross the three-quarters threshold (75.2%) in 2023.
The latest data shows the continuation of strong recoveries for the out of home (OOH) (+46.4%) and cinema (+2,208.2%) sectors, albeit from a virtual wipe-out during Covid.
Further, new IAB figures show online classified advertising – representing recruitment advertising and property listings, among others – was up by almost a third. TV was the only medium to witness a decline in investment during this quarter (-0.6%) although broadcaster video-on demand continued to grow (+9.3%) as audiences turned to catch-up and streaming platforms.
Positive second quarter results were also recorded across other sectors, including national newsbrands (+9.1%), direct mail (+3.8), magazine brands (+3.3%), and regional newsbrands (+0.6%).
Adspend for the so-called “golden quarter” Q4 2022 is set to increase by 4.5% from last year’s record high, to a total of £9.5bn, setting a new record level of investment during the Christmas period.
Search advertising – including ecommerce – is forecast to be one of the quickest growing media over the quarter, rising by 7.3% to a total of £3.4bn. At £1.7bn, TV advertising spend is expected to remain flat during the quarter, but video-on-demand is set to rise ahead of the wider market with expected growth of 4.2%.
Advertising Association chief executive Stephen Woodford said: “It is encouraging to see strong figures in Q2, with media channels continuing their recovery from the Covid-19 pandemic. Looking forwards, political and economic stability is much-needed, given the inflationary and recessionary forces impacting all businesses.
“As companies navigate these pressures, we see them continuing to prioritise advertising investment to protect their brands in exceptionally challenging market conditions.”
WARC director of data, intelligence and forecasting James McDonald added: “With the economic picture worsening amid ongoing political incertitude, the likelihood of a recession is now higher than when we last assessed market prospects in the summer. Indeed, we have downgraded UK ad market growth expectations for this year and next, in large part to reflect the waning climate.
“Higher costs are carving into advertisers’ margins and household budgets alike, and trading conditions are at their worst since the Covid outbreak, leading to muted expectations for the Christmas quarter. Against this deteriorating economic backdrop, a 9.2% rise in advertising investment this year would be impressive given that it is near double the average rate of expansion recorded prior to the pandemic.”
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