UK ad spend increased 9.3% to hit £9.2 billion during the first quarter of 2024 – a record for the first three months of a year – according to the latest Advertising Association/WARC Expenditure Report.
The figures represent a rise of almost three percentage points more than was forecasted, thanks to stronger-than-expected online growth. Broadcaster video-on-demand (BVOD) jumped 19.2%, while online display (including social media) and search (including retail media) grew 12.8% and 12% respectively. Overall, online formats accounted for 79.7% of all spend during the quarter.
Elsewhere, out-of-home (OOH) climbed 16.4%, radio rose 7%, and both cinema (+6.4%) and TV (+1.2%) made a return to growth. However, national newsbrands (-4.9%), magazine brands (-4.9%), regional newsbrands (-4.4%), and direct mail (-2.5%) all suffered declines.
Accounting for inflation, real growth across Q1 2024 was 5.5%, meaning the UK ad market achieved £465 million of organic growth.
“It is welcome news to see real-term growth and upgraded forecasts in the advertising market in Q1 this year, a positive sign that our industry is one of the driving factors in the UK’s economic recovery,” said Stephen Woodford, Chief Executive at Advertising Association.
“This is a timely reminder of its dynamism as the new Government seeks to create an environment for growth, through political stability and a new industrial strategy. Advertising is a UK-wide industry, with three in five advertising jobs based outside of London and it is central to the successful development of the digital economy across the whole country.”
Looking ahead, UK ad spend is expected to rise 9.2% to reach £9.7 billion in Q2, as a result of increased spending around the men’s Euros and the snap General Election. Should this come to fruition, it would mean a rise of 9.3% during the first half of 2024.
Across the year, the UK ad market is expected to grow by 7.7% to reach £39.4 billion. This would include an increase of 13.7% for BVOD, which is set to cross £1 billion in spend for the first time, while OOH (+12.5%), search (+10.1%) and radio (+5.5%) are also set for a boost.
In 2025, a further rise of 5.5% is predicted, reaching £41.6 billion.
“The race for AI adoption has intensified in the advertising industry, with major online platforms introducing their own solutions to market and subsequently reporting a positive contribution to their bottom line. The true impact of these tools will emerge in time, though first quarter results were certainly lifted by higher ad loads and associated performance costs online,” said James McDonald, Director of Data, Intelligence & Forecasting at WARC.
“That said, the enduring strength of legacy display media – chiefly TV, out of home, radio and cinema – was also evident in the first quarter, and we expect this to have sustained into the second due in part to short term stimuli such as the Men’s Euros and snap General Election. Overall, our outlook for the coming year is brighter than our last projection in April, with a forecast 7.7% rise in total ad spend this year ahead of the average rate recorded before the pandemic.”
