UK ad spend grew 8.8% in 2022 to reach £34.8bn

Published: 27 Apr 2023

Inflationary pressures persist with minimal growth forecast for 2023

London, April 27, 2023: The Advertising Association / WARC Expenditure Report

shows the UK’s ad market grew 8.8% to £34.8bn in 2022, despite a dip in the final quarter of the year. Revised forecasts suggest minimal growth (+0.5%) in 2023, with spend expected to reach £35.0bn, before a 3.9% rise in 2024 to a total of £36.3bn. The revisions follow confirmation that UK advertising spend fell by 5.8% to a total of £8.6bn between October and December 2022, the first time spend had decreased during a fourth quarter since 2009.

2023 projections have been downgraded from the previous forecast (published in January 2023) to +0.5% (compared to +3.8% in January) due to signs that the downturn recorded in the latter half of 2022 has continued into the first half of 2023. Forecasts for the coming year show reduced growth expectations for nearly all sectors of advertising with the economic headwinds of high inflation, muted growth and talent shortages being felt across the industry.

The full picture in 2022:

Actual figures released by the Advertising Association/WARC for the full year in 2022 confirm that spend was up by 8.8%, with the total figure standing at £34.8bn, but the momentum from a strong start to the year was seen to wane in latter months. Data shows that online advertising – 75.1% of total UK spend last year – grew 30.1% in the first half of 2022 before falling 5.4% in the second half. As a result, total UK ad spend growth in the first half of 2022 is upwardly revised to 26.0%, while the total ad market contracted by 5.7% in the second half of the year.

The strongest growth seen in 2022 was for cinema (123.0%) and out-of-home (31.1%), media which continued their year-on-year improvements after a disproportionate impact from COVID-19. Other areas of the industry posted strong figures in 2022: 15.4% year-on-year growth was seen in the Broadcaster Video on Demand (BVOD) component of TV, while Paid Search grew by 12.7%. When reviewed by category, advertising growth was led by services (such as entertainment, media and travel) and industrial (such as business, property and telecoms) products.

Revised projections for 2023 and 2024:

The forecast for 2023’s ad market has been downgraded to +0.5% (compared to +3.8% in January) reaching £35.0bn. Cinema is expected to continue its high levels of growth in 2023 (37.2%) while modest growth is expected in OOH (4.9%). The UK’s ad market is forecast to grow by 3.9% in 2024, totaling £36.3bn as high inflation and stagnation are expected to subside and growth to pick up to a more reasonable rate.

The UK remains the third-largest advertising market in the world, at a value of US$41.5bn, and saw the third-fastest growth rate of the top ten markets in 2022, behind only Brazil (+9.7%) and Australia (+9.4%). Projections from WARC Media however show that the UK is forecast to post the slowest growth among the top 10 ad markets this year.

Stephen Woodford, Chief Executive, Advertising Association said: “These figures reflect the broader macro-economic environment, with a cautious outlook as the UK economy narrowly avoids recession, but shows very little signs of real growth. Advertising investment is an important barometer of business performance and confidence in the economic outlook. It drives competition and innovation, supporting job creation and livelihoods, returning a ration of £1 invested generating £6 of GDP.”

Annette King, Chair, Advertising Association, said: “It’s clear from these figures that the UK needs a strong plan for growth, one that capitalises on the advertising industry’s talent to help businesses innovate and compete, and support jobs and livelihoods up and down the country. At the same time, we need to address the talent shortages faced by our industry – for example, working with Government to increase flexibility in apprenticeships, and answering the demand for digital skills and expertise which will equip our workforce for the future.”

James McDonald, Director of Data, Intelligence & Forecasting, WARC said: “The latest verified media data reveals that the UK’s ad market entered recession in the second half of 2022, with clear signs that the downturn has continued into the opening months of this year.

“Sharp and sustained falls in social media spend – the first time this has been recorded in the UK – are likely to have been instigated by reduced advertising activity among the SMEs who comprise a ‘long tail’ of ad volume on social platforms and whose margins are under incredible stress as inflation bites. One in every 202 UK companies entered liquidation in 2022 – the highest rate in seven years – and it is unsurprising to see these pressures reflected to some degree within advertising trade.

“Trading conditions are not expected to improve until the second half this year, with economic activity and advertising investment both largely flat during 2023 as a whole. The outlook is set to improve next year, however, as the economy returns to growth, inflation falls nearer to the government’s 2% target and consumer confidence lifts, though advertising spend is still predicted to rise below its long-term average in 2024.”

The latest figures are now available to AA/WARC Expenditure Report subscribers on the newly launched AA/WARC adspend hub. Verified market data across more than 150 series covering major media and product sectors can be visualised in a new dashboard, making insight simple to surface, and a library of over 50 dynamic articles ensures readers always have access to the latest dynamics within their sector.

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For more information, please contact:

Advertising Association

Matt Bourn, Director of Communications

Matt.Bourn@adassoc.org.uk

Mariella Brown, Communications Manager

Mariella.Brown@adassoc.org.uk

WARC

Amanda Benfell, Head of PR & Press

amanda.benfell@warc.com

T: +44 (0) 20 7467 8125

About the Advertising Association/WARC Expenditure Report

The Advertising Association/WARC quarterly Expenditure Report is the definitive guide to advertising expenditure in the UK. Impartial and independent of any media channel or agency affiliation, it is the only source of historical quarterly adspend data and forecasts for the different media for the coming eight quarters. With data from 1982, this comprehensive and detailed review of advertising spend includes the AA/WARC’s own quarterly survey of all national newspapers, regional newspaper data collated in conjunction with Local Media Works and magazine statistics from WARC’s own panels. Data for other media channels are compiled in conjunction with UK industry trade bodies and organisations, notably the Internet Advertising Bureau, Outsmart, Radiocentre and the Royal Mail.

All data are net of discounts and include agency commission, but exclude production costs. The survey was launched in 1981 and has produced data on a quarterly basis ever since.

Methodology for WARC’s quarterly forecasts

Analysis of annual adspend data over the past 35 years shows that there is a link between annual changes in GDP and annual changes in adspend (after allowing for inflation, and excluding recruitment adspend). Over this period, GDP changes account for about two thirds of the change in adspend. WARC has developed its own forecasting model to generate forecasts for two years based on assumptions about future economic growth. The model provides an indication of likely overall spend levels – adjusted to allow for short-term factors (Olympics, World Cup etc).

The Expenditure Report (www.warc.com/expenditurereport) launched online in February 2010 and combines data from the discontinued print publications the Quarterly Survey of Advertising Expenditure and the Advertising Forecast. It is relied upon daily by the world’s largest brands, ad agencies, media owners, investment banks and academic institutions. Alongside over 200 readymade tables, subscribers can create their own customised tables for analysis of different media and time periods, as well as track the different media’s share of adspend. All reports can be exported from the online interface. An annual subscription is priced at £760 for AA members and £1,175 for nonmembers.

About the Advertising Association

The Advertising Association promotes the role and rights of responsible advertising - trusted, inclusive, and sustainable – and its value to people, society, businesses,
​and the economy. Responsible businesses understand that there is little point in an advertisement that people cannot trust. That's why, over 50 years ago, the Advertising Association led UK advertising towards a system of independent self-regulation which has since been adopted around the world. There are nearly thirty UK trade associations representing advertising, media, and marketing. Through the Advertising Association they come together with a single voice when speaking to policy makers and influencers.

About WARC – The global authority on marketing effectiveness

For over 35 years, WARC has been powering the marketing segment by providing rigorous and unbiased evidence, expertise and guidance to make marketers more effective. Across four pillars - WARC Strategy, WARC Creative, WARC Media, WARC Digital Commerce - its services include 100,000+ case studies, best practice guides, research papers, special reports, advertising trend data, news & opinion articles, as well as awards, events and advisory services. WARC operates out of London, New York, Singapore and Shanghai, servicing a community of over 75,000 marketers in more than 1,300 companies across 100+ markets and collaborates with 50+ industry partners.

WARC is an Ascential company. Ascential delivers specialist information, analytics, events and eCommerce optimisation to the world's leading consumer brands and their ecosystems. Its world-class businesses improve performance and solve customer problems by delivering immediately actionable information and visionary longer-term thinking across Digital Commerce, Product Design, Marketing and Retail & Financial Services.

With more than 3,800 employees across five continents, Ascential combines local expertise with a global footprint for clients in over 120 countries. Ascential is listed on the London Stock Exchange.