Ad spending in the UK is predicted to reach £35 million this year, with most of it heading for digital channels. But according to the latest Advertising Association/Warc expenditure report this is still a 9.2% growth rate and of the channels it looks at, only television shrinking over the previous quarter. This will swing in the run to the end of the year as the Christmas ads hit television sets.
This is, however, a reduction from forecasts made in July when growth was expected to reach 10.9%. The shrinkage is attributed to increasing costs with a knock on effect on the amount available for marketing and advertising. As a consequence expectations for the Christmas quarter are muted according to Warc’s director of data intelligence and forecasting James McDonald. “Higher costs are carving into advertisers’ margins and household budgets alike, and trading conditions are at their worst since the Covid outbreak,” he says.
The first winter World Cup in Qatar will cushion the worst of the squeeze and comes immediately before the crucial run in to the festive season. This will take ad expenditure to £9.5 billion for the final quarter, itself a record and a rise of 4.5%. Advertising for ecommerce will increase faster than this as online shopping is increasingly important for gift selection and purchasing.
The report expects growth to continue through 2023 albeit at a slower rate. The advertising market will reach £36.2 billion in the year, 3.9% higher than this year, but with more than 75% of the spend going to online channels for the first time.
The forecasts follow an 8.8% growth in expenditure in Q2 this year with ads-end reaching £16.7 billion in the first half of this year, a rise of 14.4%. Direct mail spend grew 3.8% in the second quarter, amounting to 9.5% growth in the first six months. It means a 3% increase in growth expectations in the year.
Advertising Association chief executive Stephen Woodford says: “It is encouraging to see strong figures in Q2, with media channels continuing their recovery from the Covid 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 prioritise advertising investment to protect their brands in exceptionally challenging market conditions.”
The Advertising Association has launched a campaign to grow public awareness of the role that advertising plays and to increase trust in what the public sees. The campaign will run on TV in newspapers, cinema and out of home.
