This week’s AA/WARC Expenditure Report has revealed that the advertising and marketing industry is set for a bumper Christmas, with Q4 spend forecast to reach £14.0bn and total investment for 2026 now set to top £51.3bn.
The rise of retail media and AI appear to be the main drivers behind this surge, with retail growing 31.2% year-on-year, and the maturity of the UK’s digital ad market providing the perfect platform for AI to thrive.
Naturally, the report makes its own conclusions, but Decision Marketing asks leading industry professionals for their take on the findings.
First up is AgencyUK managing director Sammy Mansourpour, who, while acknowledging that AI is bringing the spend, questions what it is actually delivering.
He explains: “There are two AI stories in these figures: platforms using it to improve targeting, and technology companies spending more to win customers. Both help explain a growing advertising market, but we need to understand what each is contributing.
“More spending from AI businesses tells us competition is heating up. Better targeting raises a different question: how much does it improve advertising results?
“The report doesn’t put numbers against either effect. There’s plenty to be interested in here, and the next step is showing what that investment delivers in additional sales and profit. After all, that’s all that really matters when the budget planning cycle starts again.”
Over at Preciso, chief operating officer Larraine Ciss says that while the increased spend in social, retail media and search is encouraging, strong channel growth inevitably creates more competition for attention.
She adds: “Advertisers can’t assume that putting additional budget into the fastest-growing areas will automatically improve performance.
“What matters is being able to respond as demand changes. WARC points to growing AI investment as platforms enhance targeting, and that is where technology can add real value. Using current performance signals to adjust bids, audiences and creative allows advertisers to put more money behind what is working and pull back quickly where it isn’t. Growth is positive, but the real test is whether that extra spend delivers better results.”
Meanwhile, Royal Mail Marketreach commercial director Phil Ricketts reckons the need to stand out is driving marketers to embrace a more diverse media mix, and, perhaps unsurprisingly, he is encouraged to see that reflected in the outlook for direct mail, with investment forecast to grow 4.1% across 2026.
Ricketts comments: “Mail isn’t a channel that competes with digital or television, but one that can help other channels work harder. Because so many purchase decisions are made at home, it is well placed to reach consumers at the moment it matters. And, with 58% of mail kept for future reference, it creates a physical touchpoint people can return to when they’re ready to act.”
Nutcake chief customer officer Polly Hibbert, however, says what interests her most about the report is the continued growth of social and retail media, which she believes is the start of a new trend that will see the two worlds come together, particularly through creator content.
Hibbert adds: “Creators already play an important role in how people discover brands, consider products and make purchasing decisions. Recent developments from Tesco Media show how that content is starting to find its way into retail environments too.
“For brands, this creates an opportunity to connect the influence of social content more closely with shopping behaviour. It also means understanding creator content beyond traditional engagement metrics, including how products feature naturally in videos and the conversations happening around them.
“As investment grows, the challenge for brands will be moving beyond measuring creator content through views and engagement, towards understanding its influence on consumer behaviour and ultimately sales.”
Yet Appetite Creative managing director Jenny Stanley sees opportunities elsewhere. She explains: “Retail media’s surge shows brands want to reach shoppers at the moment of decision. Yet the most direct retail touchpoint of all is already in the consumer’s hand: the pack.
“Connected packaging turns every product into an owned media channel. It works on shelf and in store, and stays with the shopper at home long after the festive ads have stopped.
“Our 2026 industry survey of more than 700 brand professionals found that 92% expect connected packaging to grow in importance over the next year, and three-quarters are increasing their digital marketing spend. As AI makes targeting sharper, first-party data captured directly from the pack will become one of the most valuable assets a brand can own.”
Even so, Usercentrics head of strategy and market intelligence Tilman Harmeling strikes a note of caution when he says: “Brands are clearly willing to invest right now but a lot of that growth is in data-driven channels like retail media, and those channels only work if people are comfortable sharing their data.
“Our research found that 80% of UK consumers would stop using a brand that misused their personal information. So as budgets climb, brands need to make sure their approach to consent and transparency keeps pace. Spending more only pays off if customers trust the brand behind the ad.”
The final word goes to Bray Leino chief executive Kate Cox, who believes that the forecast £51.3bn investment this year, including the record £14bn expected in the final quarter, demonstrates that businesses recognise the importance of maintaining momentum rather than pulling back.
She adds: “What’s particularly interesting is where that investment is going. The significant growth in retail media and social reflects the increasing demand for channels that bring brands closer to consumers and deliver measurable results. But the strong performance of cinema and out of home is equally encouraging, reinforcing the continued value of creative, high-impact brand experiences.
“For advertisers, the opportunity lies in bringing these channels together. Short-term performance and long-term brand building shouldn’t be competing priorities. The strongest marketing strategies deliver both.
“AI is undoubtedly helping brands become more efficient and targeted, yet technology alone won’t create meaningful connections with consumers. Creativity, insight and a genuine understanding of people remain essential. But as we look towards 2027, it’s encouraging to see businesses continuing to invest in growth, even against an uncertain backdrop.”
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