Digital bolsters adspend but 2017 looks challenging

digital-twoThe UK ad industry continues to shrug off Brexit uncertainty, with digital driving record growth for the first six months of the year, but the sector is bracing itself for a tough 2017, with the direct mail market in particular expected to feel the pinch.
According to figures released today by the Advertising Association/Warc, UK advertising expenditure posted 5.2% growth in H1 2016, 0.4% ahead of forecast, with spend reaching a record £9.9bn in total for the first six months of the year.
Growth in Internet adspend was particularly strong, increasing 16.9% to reach £4.8bn in H1. Within this category, mobile spend grew 52.6% to £1.7bn – and for the first time mobile now accounts for over half of all online display adspend in the UK.
Digital formats continue to thrive across all media, with online video adspend increasing by 66.4%, to £252m, while native advertising spend also grew 29.9% to £451m in H1. Digital out of home increased 28.9% in H1 to reach £176m, taking out of home’s total spend to £511m.
Within that, Internet (including mobile) rose 16.6% to £2.4bn during Q2 2016, representing 48% of all UK adspend during the quarter. Total Internet adspend is forecast to grow 15.7% in 2016, and 9.5% in 2017. Mobile adspend grew 49.5% in Q2 to reach £892m.
Direct mail adspend fell sharply in Q2, down 13.3%, although the vast majority of this decline was recorded among Royal Mail’s smaller rivals. It is forecast that total direct mail adspend will be down 10.6% in 2016, with a dip of 7.3% forecast in 2017.
In light of the data, full year growth forecasts for 2016 have been revised up 1.0pp to 5.2%. However the forecast for 2017 has been downgraded by half a point to 3.3%, as the impacts of the EU referendum result begin to unfold.
Advertising Association chief executive Tim Lefroy said: “Investment in UK advertising remains strong this year, and the trend towards digital and mobile continues – but the medium term is more complex. The Government should avoid any regulatory uncertainty that might affect advertising’s stimulus to the economy.”

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