UK Adspend Flat in Q1 with Slight Uplift in Outlook for 2023
Published: 27 Jul 2023
UK adspend reached almost £9.0bn in the first three months of 2023, with spend now set to grow by 2.6% to reach £35.7bn this year
London, July 27, 2023: The latest AA/WARC Expenditure Report data represent a stable first quarter for the UK advertising industry in 2023, with spend remaining flat (0.1% year-on-year growth) to reach a total of £9.0bn.
The outlook for the total UK advertising market in 2023 suggests that while growth will be minimal at 2.6% year-on-year, the outlook has improved (+2.1pp) since the previous forecast in April, with spend now expected to reach £35.7bn. These figures also reflect the return to growth of key online formats, with internet now forecast to account for 76.7% of all spend this year – and 77.6% next year – in comparison to 75.1% in 2022.
The muted outlook for this year in part reflects the inflationary pressures faced by all businesses and families, with the projections for 2023 suggesting a -4.3% contraction to the market in real terms.
Sporting events of the Women’s World Cup and the Paralympics are, however, set to provide a boost to the UK advertising market in Q3 of this year when, most notably, TV spot and sponsorship as well as radio and out of home are expected to see adspend growth. Another channel set to see further post-pandemic recovery is cinema, which is projected to record 20.8% year-on-year growth this year, buoyed by the release of blockbusters such as Barbie, Oppenheimer and Mission Impossible: Dead Reckoning Part One.
The latest dataset suggests the UK’s ad market will grow by a further 4.0% in 2024, to a value of £37.1bn. This represents a slight downgrade (-1.3pp) from AA/WARC’s April forecast but equates to +1.1% growth in real terms.
Stephen Woodford, CEO, Advertising Association, commented: “This latest forecast indicates a slight improvement in outlook in terms of growth of spend, with the improvements in online forecasts being notable. However, with high inflation continuing to depress consumer and business confidence we may end up seeing a real-terms contraction of nearly 4.3% in 2023 for UK advertising investment. The recent higher-than-expected fall in inflation will hopefully continue and with that we will see confidence begin to build later in the year and into 2024, when the ad market is expected to return to growth.
“It is vital to recognise the value that advertising brings to the economy in supporting competition, innovation and growth ahead of the General Election next year. Together with WARC, we will continue to monitor advertising expenditure results and provide guidance for our industry and policy decision-makers within the UK Government.”
The full picture in Q1 2023
The latest figures reflect key online formats returning to growth including search (+5.1%) and online display (+3.6%) in the first three months of this year. These two formats alone accounted for over two-thirds (76.2%) of all advertising spend during the first quarter.
While legacy media had a challenging quarter, streaming platforms, particularly those owned by broadcasters, recorded strong results. Broadcaster video-on-demand (BVOD) spend rose 18.7% during the first quarter and is set to continue posting gains over the forecast period.
Online radio also saw improved growth over the first three months of 2023 with growth of 7.6%, while digital out of home (DOOH) continued to post gains (+6.8%).
James McDonald, Director of Data, Intelligence & Forecasting, WARC commented: “With the economy flat over the last three years, and inflation remaining stubbornly high, macroeconomic headwinds continue to bear down on the UK’s advertising industry. That said, a welcome return to growth in key online sectors during the first quarter has been cause for an upgrade to our full year projections, with a forecast rise of 2.6% demonstrative of more favourable trading conditions in the second half of the year.”
Media |
Q1 2022 |
2023 forecast year-on-year % change |
Percentage point (pp) change in 2023 forecast vs April |
2024 forecast year-on-year % change |
Percentage point (pp) change in 2024 forecast vs April |
Search |
5.1% |
6.1% |
+4.4pp |
5.2% |
No change |
Online display* |
3.6% |
5.2% |
+3.5pp |
5.5% |
+0.2pp |
TV |
-7.2% |
-1.4% |
+0.6pp |
2.0% |
+0.4pp |
of which BVOD |
18.7% |
17.3% |
+14.8pp |
10.1% |
+6.5pp |
Online classified* |
-22.3% |
-14.2% |
-6.7pp |
-2.6% |
+0.1pp |
Direct mail |
-16.6% |
-10.8% |
-4.8pp |
-4.0% |
No change |
Out of home |
5.1% |
5.7% |
+0.8pp |
6.8% |
+0.9pp |
of which digital |
6.8% |
7.5% |
+1.5pp |
8.3% |
+1.2pp |
National newsbrands |
-6.4% |
-5.9% |
-0.7pp |
-3.6% |
-0.6pp |
of which online |
-4.4% |
-1.4% |
-2.4pp |
1.6% |
-0.7pp |
Radio |
-5.5% |
-1.4% |
+0.2pp |
0.8% |
No change |
of which online |
7.6% |
11.8% |
+9.1pp |
3.7% |
-0.4pp |
Regional newsbrands |
-14.1% |
-10.5% |
-4.7pp |
-2.1% |
+2.8pp |
of which online |
-10.3% |
-7.0% |
-6.2pp |
3.5% |
+2.8pp |
Magazine brands |
-7.1% |
-7.1% |
-3.9pp |
-1.5% |
+1.1pp |
of which online |
-11.0% |
-7.0% |
-7.9pp |
2.4% |
+0.8pp |
Cinema |
-7.2% |
20.8% |
-16.4pp |
10.1% |
-2.9pp |
TOTAL UK ADSPEND |
0.1% |
2.6% |
+2.1pp |
4.0% |
-1.3pp |
Note: Broadcaster VOD (BVOD), digital revenues for newsbrands, magazine brands, and radio broadcasters are also included within online display and classified totals, so care should be taken to avoid double counting. Online radio includes targeted in-stream radio/audio advertising sold by UK commercial radio companies, together with online S&P inventory. |
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The Advertising Association/WARC quarterly Expenditure Report is the definitive guide to advertising expenditure in the UK with data and forecasts for different media going back to 1982.
- ENDS –
For more information, please contact:
Advertising Association
Matt Bourn, Director of Communications
Mariella Brown, Communications Manager
WARC
Amanda Benfell, Head of PR & Press
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.
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