Advertising expenditure on TV is expected to reach £5.0bn for the first time in 2014, according to the latest data from the Advertising Association/Warc Expenditure Report. Our annual forecast for the TV ad sector – including spot, sponsorship and broadcaster VOD – has been raised to 7.8% growth for the year, taking total spend to £5,003m. We anticipate further growth of 6.6% in 2015, equating to spend of £5,335m.
This uplift in the forecast stems from better than anticipated growth for TV spot advertising expenditure. Spot adspend had a very strong Q2 2014, rising 10.7% compared with the same period in 2013 to £1,118m. The sector benefited from the football World Cup and slightly outperformed our previous July forecast (+10.5%).
Advertising expenditure in magazine brands dipped 6.7% year-on-year in Q2 2014 to £254m, according to the latest data from the Advertising Association/Warc Expenditure Report. This is the 35th consecutive quarter of decline for the sector, with growth last recorded in Q2 2005. But, according to the latest forecast, adspend growth should finally return for magazine brands – including both print and digital platforms – this time next year.
Of the print media, it is magazine brands (alongside the regional press) which have fared worst as spend has shifted online. Looking at the chart below, we can see that from a peak in 2000, print advertising in magazines has more than halved, dropping from £2,020m to just £786m in 2013.
Adspend in regional newsbrands performed ahead of expectations in Q2 2014, according to the latest data from the Advertising Association/Warc Expenditure Report. Even so, newsbrands – inclusive of both print and digital newspaper platforms – still recorded a decline of 1.7% compared with the same period in 2013, despite a 27.9% increase for their digital revenues (to £44m). While growth for digital has gained significant pace in the last three quarters, it has still not been enough to offset the decline in print adspend (this dropped 5.2% to £280m in the latest quarter). But could the regional newsbrands be on the cusp of growth after a difficult decade?
The regional newsbrands sector has witnessed a dramatic shift in fortunes in recent years, as spend has shifted online. Back in 1982, when Warc first started collected quarterly advertising spend data on behalf of the Advertising Association, spend in regional newsbrands accounted for 23% of total UK adspend. By the end of this year, we expect this to have dipped to just 6.6%.
In Q1 2014, out of home advertising expenditure dipped 2.2% compared with the same period a year ago, according to the latest data released in the Advertising Association/Warc Expenditure Report. But this is expected to be just a temporary blip, and we forecast consistent growth throughout the rest of the year and into 2015.
We predict annual growth in the out of home sector of 2.7% in 2014, reaching a total of £1,017m. This is the first time the sector will have surpassed the £1bn mark. The pace of annual growth is expected to accelerate to 5.9% in 2015, or £1,077m.
Total UK advertising expenditure rose 5.0% year-on-year in Q1 2014, according to the latest data from the Advertising Association/Warc Expenditure Report released last week. We're predicting growth of 6.0% for the year as a whole and a further increase of 6.7% in 2015.
These are the headline figures – but what do they mean for the industry? There is often confusion when it comes to interpreting UK adspend data, because the AA/Warc is just one of the many organisations that release data in this field, and often the figures and forecasts seem very different to those from other sources. One of the main queries I receive at Warc tends to be "Why are your data so different to the numbers I've just seen from insert source organisation here?"
Last week Warc published the June results of its Global Marketing Index, one of the main ways we track current marketing activity in order to benchmark the health of the industry.
For those of you not familiar with this report, let me provide a bit of background. Back in October 2011, in partnership with World Economics, Warc launched the Global Marketing Index (GMI). Our aim was to provide a unique monthly indicator of the state of the global marketing industry by tracking current conditions among marketers all around the world. The data would also provide useful information for the financial markets relating to the state of global economic activity. Advertising expenditure has traditionally had a clear relationship with GDP, as you can see in the chart below.
It's not exactly news that the internet has been one of UK advertising's biggest success stories over the last decade. Total internet advertising expenditure hit £6.3bn in the UK in 2013, following growth of 15.6% compared with 2012, according to the latest Advertising Association/Warc Expenditure Report which we released last week. Looking ahead, we predict further year-on-year growth for internet in excess of 12% for both this year and next.
Subscribers to the Expenditure Report are able to track long-term datasets for the different ad sectors, and will know that internet spend has grown by a staggering 4000% since 2000, when total revenues stood at just £153m.
In 2013, total UK TV advertising spend rose by 3.6% to £4.64bn, according to the latest data published in the Advertising Association/Warc Expenditure Report which we released last week. Overall adspend growth is predicted to accelerate over the forecast period, with adspend increasing 5.5% in 2014 (the second quarter is expected to be particularly strong due to the relatively late Easter and the World Cup) and by 7.3% in 2015.
But what are the media stories behind these headline figures? For one, the rapid growth of the broadcaster video-on-demand (VOD) sector within TV has attracted a lot of interest in recent times and is often portrayed as the next big thing for broadcasters. Indeed, we know that total adspend in this area increased 73% in 2012, and by a further 21% last year, an increase largely attributed to the continued popularity of catch up TV channels.
During the next two years, total UK advertising expenditure is forecast to accelerate way beyond levels recorded prior to the financial crisis, according to the latest data from the Advertising Association/Warc Expenditure Report released last week. This is no small feat, as the recession in 2008/9 was the sharpest since the AA/Warc began collecting quarterly adspend data back in 1982.
But looking at the trends in context, we can see that the UK ad market is a long-term success story. Other than the recent downturn and smaller dips around the global recession in the early 1990s and the dotcom crash in 2001, the growth trajectory for UK adspend has been impressive. Indeed, the impact of the three big recessions faced by the UK, seem mere blips in the sector's steady expansion.
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