MASTERCLASSING

UK ad spend continues to grow, but future reliant on favourable Brexit

Tyrone Stewart

UK EU BrexitUK ad spend rose for the 21st consecutive quarter, growing 5.1 per cent year-on-year (YoY) to reach £5.6bn in Q3 2018 and record the strongest third quarter since 2015. According to the latest Advertising Association/Warc Expenditure Report, these figures mean that the forecasted ad spend for the entirety of 2018 remains at £23.5bn – a six per cent YoY growth.

In addition to 2018 having the strongest third quarter since 2015, the first nine months of the year also showed the strongest growth since the same period in 2015.

“UK advertising continues to perform strongly, now delivering its 21st straight quarter of growth and demonstrating the commitment of British advertisers to investing in the growth and success of their businesses,” said Stephen Woodford, chief executive at the Advertising Association.

“As the clock ticks down to our departure from the EU, it is crucial the Government provides the certainty we are all seeking in business. We are predicting continued ad spend growth of 4.6 per cent in 2019 and an agreement with the EU that keeps disruption at a minimum and keeps trade and talent flowing will greatly help this growth. UK advertising is the best in the world and we need a deal that ensures we keep it that way.”

Breaking down the third quarter, overall YoY internet growth was at 12.3 per cent. Within this, mobile grew 23.6 per cent compared to Q3 2017. Digital radio ad formats were up 25.1 per cent, while Video-on-demand TV saw an increase of 11.5 per cent.

Elsewhere, regional digital newsbrands grew 10.9 per cent, national digital newsbrands were up 3.7 per cent, and digital magazine brands rose 1.5 per cent.

Online ad spend is expected to grow 9.8 per cent in 2019 after an estimated increase of 13.4 per cent across 2018.

“Our projection of 4.6 per cent growth in the UK’s ad market this year is firmly based on a business-favourable outcome from the EU withdrawal agreement, and would mark a decade of continuous expansion since the last advertising recession,” said James McDonald, data editor at Warc.

“Further, a preliminary estimate of 6% growth in advertising investment last year represents a faster rate of expansion than was recorded in 2017, and is therefore indicative of an industry in rude heath. This is particularly true in relation to digital ad formats, all of which are currently forecast to attract higher levels of investment in 2019.”

The industry has its say…

Damon Reeve, CEO at The Ozone Project
“The latest report shows a strong growth rate on digital spend in news brand environments – up 3.4 per cent in Q3 2018 and forecast to increase to 8.1 per cent in 2019. This is consistent with the increasing interest we are experiencing and reflects the growing preference by advertisers to reach audiences in brand safe and trusted content environments. Quality editorial environments offered by news brands drive much higher brand performance, and combined with improved formats and targeting, are fast becoming a compelling choice for reaching engaged audiences at scale in a brand safe way.”

Josh Krichefski, CEO at MediaCom
“The 21 quarters of consecutive growth is really a reflection that advertising is still an incredibly important investment for organisations in the UK, even in the face of the market uncertainties we’re seeing across the country. In fact, I’d say that 2018 saw some brilliant brand campaigns, from KFC’s apology ad to Apple’s heart-warming Christmas campaign.

“Advertising is an important driver of economic growth and already contributes £120bn to UK GDP – clearly, it boosts economic activity and productivity. Over the years we have seen advertising become a foundation of growth for the creative industry, the digital economy and wider employment figures. While developing unique and impactful campaigns during times of uncertainty is a challenge, the brands that do this will be the ones to see stronger brand metrics down the line.

“It’s not surprising that digital advertising has charged ahead – the average person spends more than a day a week online, and it makes sense for brands to take advantage of this captive audience. I fully expect this investment in online media to remain steady, especially as businesses continue to tap into AI-powered adtech and start to take advantage of new advertising models around addressable TV and VoD.”

Lou Weiss, CMO at Shutterstock
“We are not surprised that the advertising market is growing robustly. Creativity is becoming mission-critical for more and more businesses as customer expectations continue to go up. This January, we launched our first global ad campaign in six years, ‘It’s not Stock. It’s Shutterstock’, emphasizing the central role of imagery, video, and music in today’s business world. Uninteresting advertising will be left behind in 2019.”

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