The value of the UK advertising market will grow by 9.2 per cent in 2022, to a total of £34.9bn, according to latest Advertising Association/WARC Expenditure Report. The total reflects a downgrade of 1.7 percentage points from the previous forecast in July. The revision is attributed to high levels of inflation and squeezed margins, as UK plc deals with supply chain inflation and the subsequent rise in the cost-of-living. The media sector is also bearing the brunt of these pressures, with advertisers facing higher media costs.
The report is based on advertising revenue data collected directly from media owners across the entire landscape. It shows that UK ad spend rose by 8.8 per cent in Q2 2022, to a total of £8.6bn, while spend during the first half of the year was up 14.4 per cent at £16.7bn.
The AA/WARC figures broadly reflect those in the IAB's half-yearly Digital Adspend Update, released yesterday, which found that digital ad spend in the UK grew by 15 per cent in the first half of 2022. Similarly, the latest IPA Bellwether Report, released a week ago, found that UK marketing budgets grew in the third quarter of 2022, but at a slower rate that in the previous two quarters.
According to the AA/WARC figures, the UK’s ad market is forecast to grow by a further 3.9 per cent in 2023, to a total of £36.2bn. This projection represents a downgrade of 0.5 percentage points when compared to the July forecast. Meanwhile, online advertising’s share of total ad spend is set to grow to a total of 74 per cent for 2022 and is expected to cross the three-quarters threshold (75.2 per cent) in 2023.
OOH and cinema continue to recover strongly
The latest data show the continuation of strong recoveries for the out of home (OOH) (+46.4 per cent) and cinema (+2,208.2 per cent) sectors. Further, new IAB figures show online classified advertising – representing recruitment advertising and property listings, among others – was up by almost a third. TV was the only medium to witness a decline in investment during this quarter (-0.6 per cent) though broadcaster video-on demand continued to grow (+9.3 per cent) as audiences turned to catch-up and streaming platforms.
Positive second quarter results were also recorded across the publishing sector, including national newsbrands (+9.1 per cent), magazine brands (+3.3 per cent), and regional newsbrands (+0.6 per cent).
Christmas ad spend to hit a record high
Ad spend for the final quarter of 2022 is set to increase by 4.5 per cent from last year’s record high, to a total of £9.5bn, setting a new record level of investment during the Christmas period. Search advertising – including eCommerce – is forecast to be one of the fastest growing media over the quarter, rising by 7.3 per cent to a total of £3.4bn. At £1.7bn, TV advertising spend is expected to remain flat during the quarter, but video-on-demand is set to rise ahead of the wider market, with expected growth of 4.2 per cent.
“It is encouraging to see strong figures in Q2, with media channels continuing their recovery from the COVID-19 pandemic,” said Stephen Woodford, Chief Executive of the Advertising Association. “Looking forwards, political and economic stability is much-needed, given the inflationary and recessionary forces impacting all businesses. As companies navigate these pressures, we see them continuing to prioritise advertising investment to protect their brands in exceptionally challenging market conditions.”