The UK advertising market is forecast to grow faster than any other market in Western Europe during 2014. This will be the fifth year running that the UK has outperformed Western Europe, this year growing eight times faster than the rest of the region.

That’s the verdict of ZenithOptimedia’s first UK Advertising Expenditure Forecasts, which predicts that the advertising market will grow by 5.8 per cent to £13.7bn in 2014, beating the healthy 5.5 per cent growth it achieved in 2013.

The strong growth will be supported this year by the UK’s continued economic recovery and by the World Cup in Brazil. Longer term growth in the UK market is being driven by the ongoing rise of mobile technology and programmatic buying.

Mobile growth
In fact, mobile is supplying 94 per cent of all growth in UK ad spend. Mobile ad spend (on web and in-app) grew by 71 per cent in 2013, and ZenithOptimedia forecasts that it will grow another 68 per cent in 2014, reaching £1.3bn. This will make spend on mobile greater than on cinema, radio, magazines and outdoor by the end of the year, and the firm also expects it to overtake newspapers in 2015. Between 2013 and 2016 ZenithOptimedia forecasts mobile ad spend to grow by £2.03bn, contributing 94 per cent of the £2,16bn growth in total UK ad spend over that period.

Mobile is growing so rapidly due to its wide reach and deep engagement, the company says. According to Google, 62 per cent of the UK population now owns a smartphone, and 91 per cent of these owners use them to access the internet daily. Research from Samsung and O2 suggests that smartphone users spend just under two hours (119 minutes) on their phones each day. Most of this is new media consumption, creating opportunities for advertisers that did not previously exist. Mobile is expanding the scope of the UK advertising market, not cannibalising traditional media, ZenithOptimedia concludes.

Categories that a few years ago were reluctant to use mobile are now spending heavily. FMCG spend has grown quickly to become the largest display category on mobile (27 per cent of total display ad spend in H1, according to the IAB), and ZenithOptimedia expects it to continue to grow rapidly into 2015 too. But the principle driver of mobile growth, the company says, has been search.

Programmatic on the march
Desktop internet ad spend is forecast to grow by 4 per cent in 2014. Desktop classified is essentially flat this year, as is search. The main source of desktop growth is display, which the company predicts will grow by 15 per cent in 2014, with most of this growth coming from social media and programmatic buying.

Programmatic currently represents 17 per cent of total UK display ad spend, but is forecast to grow to 30 per cent by 2016, (which seems a somewhat modest forecast to us – Ed). This should particularly benefit video advertising this year, as real-time bidding for online video becomes widely available, allowing advertisers to target their video activity much more effectively.

Between them, mobile and desktop internet will attract 44 per cent of all UK advertising expenditure this year, more than in any other country. By 2016, ZenithOptimedia expects this proportion to rise to 50 per cent.

World Cup boost
The World Cup is set to provide a sizeable spike in consumption across all media, but the effect will be greatest on television. During the last World Cup, 83 per cent of the population watched at least one game, and 21 million people watched England v Algeria. ZenithOptimedia expects audiences to be particularly high this year, especially since, because of the time difference with the UK, many matches will run in peak time.

The World tournament will deliver large numbers of viewers who are hard to reach on TV (notably upmarket young men), making it particularly attractive to the drinks, auto and telecoms sectors. ZenithOptimedia expects the World Cup to add around £50m to the total UK market this summer, about £35m of which will go to TV, helping TV ad spend to rise by 5 per cent in 2014 to £3.6bn.

Economic recovery
Looking at the bigger picture, the company notes that the level of recovery in the UK economy over the past year has surprised most observers. The economy grew by 1.8 per cent in real terms – the fastest rate in six years – thanks mainly to higher consumer spending and an improved housing market. Business investment and exports lagged behind for most of the year, but picked up in the last quarter, while manufacturing expanded strongly in early 2014.

Concerns about the sustainability of the recovery remain, but most forecasters expect growth to be higher this year than last year. Advertisers have been emboldened by the recovery, especially when contrasted against the weakness of the eurozone. Categories that are particularly sensitive to consumer confidence – such FMCG, finance and auto – have been particularly active in the year to date.

Compared to the rest of Western Europe, the UK advertising market is performing significantly better. For example, ZenithOptimedia is forecasting growth of 0.3 per cent for France, 1.5 per cent for Germany, 1.8 per cent for Spain, and -2.9 per cent for Italy. The UK is also set to grow faster than the world average of 5.3 per cent for 2014. The company forecasts slightly slower – but still healthy – UK growth of 5.5 per cent in 2015 and 4.6 per cent in 2016.

“The UK has the most developed internet advertising market in the world, and so is well placed to take advantage of the opportunities created by the mobile revolution,” said Mark Howley, ZenithOptimedia UK’s group managing director. “But the spectacle and drama of the televised World Cup should remind us of the continued power of traditional media.”