Research |
Report : Online ads account for over 78 % of UK ad spend
The latest Advertising
Association / WARC Expenditure
Report shows that the UK ’ s ad
market recorded a 6.1 % increase
in investment to a total of £ 36.6
billion (€ 42 . bn ) in 2023 ; the
13th annual expansion recorded
in the last 14 years . The data
also shows that online formats
now account for over threequarters
of all UK ad spend for
the first time .
New AA / WARC forecasts
show advertising spend will rise
by 5.8 % to reach £ 38.8 billion
in 2024 , though this represents
a minor ( -0.1pp ) downgrade
from January ’ s forecast owing to
prolonged inflationary pressures
on the market . Further growth
– of 4.5 % – is expected in 2025 ,
by when the UK ’ s ad market will
be worth more than £ 40 billion .
When compared to Europe ’ s
largest advertising markets , the
UK ’ s advertising industry was
seen to have outpaced Germany
( -0.7 %), France (+ 2.1 %) and
Ireland (+ 3 %) last year , and is
expected to repeat this in 2024 .
The UK ’ s ad market is on course
to end the year some $ 20 billion
larger than those of its closest
neighbours .
The full picture in 2023
While UK ad spend grew by 6.1 %
in 2023 , this equated to a 1 .%
contraction in real terms after
accounting for high inflation , a
rate which slightly lagged the
flat (+ 0.1 %) activity witnessed
across the UK ’ s economy last
year .
As estimated in January ,
online formats combined grew
by 11 % to reach a total of £ 28.7
billion in 2023 , equivalent to
78.4 % of all UK ad spend last
year . Beyond this , out of home
(+ 9.7 %) was the only other
advertising medium to record
growth in 2023 .
The only major product
sectors to record rising display
ad spend ( i . e . excluding search
and classified formats ) last year
were retail (+ 5 %) and services
(+ 4.7 %), the latter almost
entirely attributable to a 6.6 %
rise in the entertainment &
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leisure sector . The AA / WARC data also reveals actual investment for last year ’ s Q4 Christmas ad season , which topped £ 9.7 billion after achieving growth of 7.4 % year-on-year . This growth was led by digital out-of-home (+ 18.1 %) and BVoD (+ 15.9 %) as well as search (+ 12.9 %), as the traditional uplift in Golden Quarter investment was buoyed further by increased advertising activity during the Rugby World Cup .
Projections for 2024 and 2025 The AA / WARC dataset expects the UK advertising market to grow 5.8 % to reach nearly £ 39 billion in 2024 . Broadcast media , most notably TV (+ 2.6 %) and radio (+ 2.3 %) are expected to return to growth , while the same is true for cinema (+ 2.5 %). Among digital formats , search (+ 8.9 %) and online display (+ 6.4 %) are again set to see the strongest rises , closing the year with a combined share of 77 % of all spend .
More favourable economic conditions should encourage advertisers to invest more in brand-building campaigns in
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2024 and this , coupled with short-term stimuli such as the Men ’ s Euros in June , the upcoming General Election in the second half of the year and , to a lesser extent , the Paris Olympics in July , are expected to contribute to healthy growth in formats such as broadcaster video-ondemand (+ 14.1 %) this year . The picture is set to improve further for more channels in 2025 as a rise of 4.5 % is forecast for the market as a whole . This includes an 11 % rise for BVoD , 6.4 % for search and 5.5 % for online display , as economic headwinds are anticipated to ease .
Stephen Woodford , Chief Executive , Advertising Association , said : “ The continued shift to online advertising formats reflects the changing shape of our economy , with people increasingly shopping online as well as on the high street , and businesses striving to provide the best customer experience in all scenarios . The UK advertising industry is much respected around the world , which is why we
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continue to see the exports of UK advertising services grow , an important source of additional revenue for many advertising businesses in a domestic economy that has little-to-no growth .”
James McDonald , Director of Data , Intelligence & Forecasting , WARC , added : “ Our latest survey of media owners confirms 2023 as a challenging year for most , with few properties recording gains and spend instead further consolidating within search and online display formats – particularly social media . Combined , these digital staples are on course to account for almost four in five pounds spent on advertising in the UK next year , up from a share of 51 per cent just five years ago . Our forecasts assume that the UK ’ s economy will begin to break from the pattern of stagnation that has come to define recent quarters . Easing inflation over the coming 18 months should encourage more favourable trading conditions within the advertising sector , facilitating growth across a broader range of channels in turn .”
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