UK ad spend posts 25th consecutive quarter of growth, driven by online - report

David Murphy

UK ad spend rose 5.6 per cent year-on-year to reach £5.97bn in Q3 2019, marking the UK advertising industry’s 25th consecutive quarter of market growth, according to the Advertising Association/WARC Expenditure Report, released today.

The latest data reveal that growth in the third quarter of 2019 was 0.8 percentage points ahead of forecast. Looking ahead to the full-year figures for 2019, UK ad spend is forecast to reach £24.8bn, meaning growth of 5.2 per cent year-on-year. This is expected to rise a further 5.2 per cent in 2020 to reach £26.1bn.

Overall market growth is being driven by increased spend on online advertising, which saw percentage increases across every format. This was led by digital out of home which rose by 17.1 per cent; TV broadcaster VOD (Video on Demand) which saw a rise of 16.7 per cent; online display, up 12.8 per cent; search, which posted an increase of 11.9 per cent; and national online news brands which saw growth of 6.5 per cent. By far the strongest growth, however, was for cinema advertising, which posted a 46.5 per cent increase in Q3 2019 over Q3 2018.

The channels that suffered most were regional news brands, which posted an 11.7 per cent decrease in spend; magazine brands, down 8.3 per cent; and direct mail, down 4.5 per cent.

The online figures reflect the Advertising Pays 7: UK Advertising’s Digital Revolution report from industry’s think tank, Credos. The report, which was published last year, revealed that Britain is the largest online advertising marketplace in Europe and that the country has the highest per capita online retail spend in the G20.

“UK media spend has continued to perform strongly in Q3 2019, now on the 25th straight quarter of growth,” said Advertising Association chief executive, Stephen Woodford. “The figures show ad spend increases across a range of media, with digital formats and sectors continuing to drive growth. These media spend figures are particularly impressive given this was a period of Brexit and political uncertainty and very low overall economic growth.

“As the Credos report on UK digital advertising showed, this is in part fuelled by the exceptional growth in SME spend in digital, as well as larger advertisers continuing to move budgets into digital formats in most media sectors. The projected growth for 2020 shows these trends continuing. With Brexit now a certainty, industry’s focus now turns to the future relationship with the EU and the importance of this to the overall health of the economy, which underpins this media spend growth.”

James McDonald, data Editor at WARC noted the disparity between online and other forms of advertising. He said: “The UK’s ad market has sustained a 25-quarter period of expansion, but underlying data show that this growth is asymmetric – excluding online advertising, the UK’s ad market has contracted each quarter for the last four years. Online formats account for three in five pounds spent on advertising in the UK, and we expect this to rise to two in three by mid-2021, fuelling total market growth in tow.”