Programmatic Lunch

UK advertising grows for the 20th quarter in a row

Tyrone Stewart

London red telephone boxUK ad spend grew for the 20th consecutive quarter, rising 6.4 per cent year-on-year (YoY) to reach £5.6bn in Q2 2018, while overall ad spend for the first half of the year grew 7.2 per cent YoY to £11.4bn.

2018’s second quarter and first half represented the strongest since 2014, according to the latest expenditure report from the Advertising Association and Warc, and has seen the full-year outlooks for both 2018 and 2019 upgraded to +6.3 per cent and +4.9 per cent respectively. This means 2018 is expected to finish with a total ad spend of over £23.5bn.

“Growth in online advertising spend continues to exceed our expectations, resulting in the fifth upgrade to our forecasts in as many quarters,” said James McDonald, data editor at Warc. “Barring any major shock to the system, this trend should continue to play out over the years ahead, lifting total market value in tow.”

Stephen Woodford, chief executive at the Advertising Association, added: “Spend on advertising is showing real strength and resilience especially at a time of some uncertainty for UK business. We know advertising has a positive effect on the economy, with £1 spent generating £6 for UK GDP, so it is encouraging to see the strongest Q2 and H1 results since 2014.”

Overall market growth is being driven mainly by increased spend on online advertising. Spend on the internet is continuing to grow rapidly and expected to grow 13.3 per cent this year – equalling more than £13bn spent online alone. Within this, mobile accounted for over half of search spend for the first time in Q2 2018, while online video saw £500m invested for the three-month period.

The TV market also exceeded expectations in the second quarter of 2018 – spend rising 1.9 per cent to £1.2bn. 89 per cent of this went toward spot advertising, which rose for the third consecutive quarter in achieving a growth rate of 1.4 per cent.

What the industry has to say…

Eric Visser, CEO, JustPremium
“The growth of the UK ad market paints an accurate picture of advertising budgets globally, and it’s very positive that the last 20 quarters have shown continuous growth. This set of results indicates that despite the political and regulatory turmoil - including Brexit and GDPR - advertising remains a vital part of a brand’s marketing strategy.

“Internet advertising is the main driver of this increase in spend, which is mainly due to the appeal of clear measurements – such as viewability and in-view time – which enable marketers to demonstrate ROI.

“Initiatives such as the Coalition for Better Ads have assisted with this growth, as more businesses are focussing on providing the best experience for consumers while taking into consideration the needs of advertisers and publishers.”

Raman Sidhu, VP business development, Beemray
”All forms of advertising are becoming digital, as we move forward, everything digital is becoming contextual. The first quarter of 2018 was affected with a reduction of spend by the introduction of GDPR, however spend has evolved from cookies and PII, to context, and the market continues to grow.

“Unsurprisingly, mobile was the largest contributor to growth, and it also happens to be the perfect proving ground for contextual advertising. Somewhat surprising, digital radio also made huge percentage gains, although less significant financially. News and magazine brands are doing an amazing job growing digital revenue, however this does not make up for the losses seen in print.

“GDPR has been a painful yet positive force in resolving many of the challenges facing the industry, including transparency and trust. The ePrivacy regulation is next potential regulatory speed bump on the agenda. To ensure 2019 is another year of growth, marketers should be considering the time taken to assess partners that can guarantee that consumer data is handled with care.”

Tom Rolph, VP, EMEA, Tapad
“This record investment in ad spend shows brands are increasingly tuning in to the importance of engaging with individuals across multiple devices. Advertisers need to recognise the importance of being able to understand a consumer's journey across different devices, to ensure that they are able to accurately measure the ROI of ad spend.”