The value of the UK’s advertising market will grow by 9.2% in 2022, to a total of £34.9 billion, the latest Advertising Association/WARC Expenditure report has forecasted, though this does reflect a downgrade of 1.7 percentage points from the previous forecast in July. This revision is attributed to high levels of inflation and squeezed margins as UK plc deals with supply chain inflation and 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, which is the only to collect advertising revenue data directly from media owners across the entire landscape, shows UK ad-spend rose by 8.8% in the second quarter of 2022, to a total of £8.6 billion, while ad-spend during the first half of the year was up 14.4% at £16.7 billion.
The UK’s ad market is forecast to grow by a further 3.9% in 2023, to a total of £36.2 billion. This projection represents a downgrade of 0.5pp when compared to the July forecast. Meanwhile, online advertising’s share of total ad-spend is set to grow to a total of 74.0% for 2022 and is expected to cross the three-quarters threshold (75.2%) in 2023.
● THE FULL PICTURE IN Q2 2022
The latest data show the continuation of strong recoveries for the out of home (+46.4%) and cinema (+2,208.2%) 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%) though broadcaster video-on demand continued to grow (+9.3%) as audiences turned to catch-up and streaming platforms.
● CHRISTMAS AD-SPEND AT RECORD HIGH
Ad-spend for the final quarter of 2022 is set to increase by 4.5% from last year’s record high, to a total of £9.5 billion, setting a new record level of investment during the Christmas period. Search advertising – including ecommerce – is forecast to be one of the quickest growing media over the quarter, rising by 7.3% to a total of £3.4 billion. At £1.7 billion, 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%.
“It is encouraging to see strong figures in Q2, with media channels continuing their recovery from the Covid-19 pandemic. 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 prioritize advertising investment to protect their brands in exceptionally challenging market conditions,” said Stephen Woodford, Chief Executive of the Advertising Association.
James McDonald, Director of Data, Intelligence & Forecasting at WARC, added: “With the economic picture worsening amid ongoing political incertitude, the likelihood of a recession is now higher than when we last assessed market prospects in the summer. Indeed, we have downgraded UK ad market growth expectations for this year and next, in large part to reflect the waning climate. Higher costs are carving into advertisers’ margins and household budgets alike, and trading conditions are at their worst since the Covid outbreak, leading to muted expectations for the Christmas quarter. Against this deteriorating economic backdrop, a 9.2% rise in advertising investment this year would be impressive given that it is near double the average rate of expansion recorded prior to the pandemic.”