The UK advertising market will grow by 9.2% this year, reaching £34.9 billion, according to the latest Advertising Association/WARC Expenditure Report. Though still a significant increase, this represents a downgrade of 1.7 percentage points from the previous forecast in July, thanks to high levels of inflation across all areas. Online advertising’s share of total ad spend is set to grow to 74% in 2022.
In the second quarter of 2022, UK ad spend was up 8.8% on the previous year, totalling £8.6 billion. Meanwhile, ad spend during the first half of the year was up 14.4% to £16.7 billion.
The second quarter saw a continuation of the strong recoveries for cinema (+2,208.2%) and out-of-home (+46.4%), while the publishing sector – including national newsbrands (+9.1%), magazine brands (+3.3%), and regional newsbrands (+0.6%) – also recorded positive results. TV was the only medium to witness a decline (-0.6%), but broadcaster video-on-demand grew 9.3%.
Looking ahead, the final quarter of 2022 is set to reach a record high spend of £9.5 billion, increasing 4.5% during the FIFA World Cup Christmas period. Search advertising is forecast to be one of the quickest growing media in the quarter, rising 7.3% to a total of £3.4 billion. TV advertising is predicted to remain flat, but video-on-demand looks on course to rise by 4.2%.
“With the economic picture worsening amid ongoing political incertitude, the likelihood of a recession is now higher than when we last assessed market prospects in the summer. Indeed, we have downgraded UK ad market growth expectations for this year and next, in large part to reflect the waning climate,” said James McDonald, Director of Data, Intelligence & Forecasting at WARC.
“Higher costs are carving into advertisers’ margins and household budgets alike, and trading conditions are at their worst since the Covid outbreak, leading to muted expectations for the Christmas quarter. Against this deteriorating economic backdrop, a 9.2% rise in advertising investment this year would be impressive given that it is near double the average rate of expansion recorded prior to the pandemic.”
In 2023, the UK’s ad market is forecast to grow by a further 3.9% to £36.2 billion – a reduction of 0.5 percentage points from the July forecast. Online advertising is predicted to account for 75.2% of this spend.
“It is encouraging to see strong figures in Q2, with media channels continuing their recovery from the COVID-19 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,” said Stephen Woodford, Chief Executive at Advertising Association.