Spend up 8% as firms raid budgets to fight tariff chaos

UK adspend rose 8% to £10.6bn in the first three months of 2025, up 1.4 percentage points on the April forecast, driven by increased spend across a number of channels – even direct mail – as advertisers brought budgets forward to combat the turmoil sparked by US president Donald Trump’s tariffs.

That is according to the latest AA/WARC Expenditure Report, which predicts the UK market will grow by 6.8% this year to £45.4bn, a slight increase (0.4 pp) since the April forecast.

While the report expects the UK’s overall GDP growth to remain relatively flat at 1.1% in 2025, UK adspend is still expected to see 3.5% growth, after inflation.

Data-driven TV advertising continues to come to the rescue of the traditional TV ad, with VOD growing 5.4% in the past year, and predicted to grow 10.1% for the rest of 2025.

In fact, many of the channels which have led the resurgence are expected to continue to make gains in 2025, with search (+9.4%), online display (+9.2%), cinema (+9.0%), out of home (+3.1%), and radio (+1.2%) all on the up, as a result of improved consumer and business confidence.

Looking ahead, AA/WARC’s forecast remains unchanged for 2026, with the advertising market expected to grow 5.6% to reach £48.0bn. According to the AA’s recent report “Advertising Pays 2025”, advertising accounted for 4% of total UK gross value added (GVA) in 2024, reinforcing its value as a key driver of economic growth.

In Q1, the rise of search – including retail media – and strong growth for online display were triggered by advertisers bringing budgets forward, particularly as they sought more short-term solutions during uncertainty caused by the period of negotiation of the US administration’s trade deals.

While there is more certainty in the UK economy now a trade deal has been secured, global macroeconomic headwinds persist.

Even so, cinema benefitted from big budget releases earlier this year, including Bridget Jones: Mad About The Boy and Captain America: Brave New World (pictured), while earlier releases, Mufasa: The Lion King and Wicked, continued to perform well in the new year.

Similarly, online radio has been showing strong double-digit growth over the last four quarters as radio listening continues to benefit from new technology.

Advertising Association chief executive Stephen Woodford said: “Further growth in the first quarter of 2025 is welcome, particularly following the launch of the UK Government’s new industrial strategy which recognises advertising as a priority sector.

“The announcement that brand advertising will be exempt from the incoming Less Healthy Food restrictions has also provided important clarity for advertisers, ahead of the industry’s agreement to implement these from October 2025.

“With our latest Ad Pays 2025 report showing advertising supports 1.7 million jobs, we will continue to monitor ad expenditure and work with the Government to highlight advertising’s contribution to the UK economy.”

WARC director of data, intelligence and forecasting James McDonald added: “The latest survey data highlights buoyancy in certain corners of the UK ad market, with total investment growing just ahead of forecast despite a wavering economy and a sustained period of global trade turbulence.

“Advertisers were seen to pull budgets forward and double down on agile formats within search, social, and retail media in response to the volatility sparked by new US tariffs.

“Brands appear to be adapting to the current environment by reallocating budgets tactically, with the outlook for the year remaining broadly positive despite persistent headwinds.”

Picture credit: Marvel Studios