Though the overall market expanded, traditional media had a difficult start to the year, with cinema the only non-digital medium to grow during the quarter.
Further, total television advertising spend dipped 6.2% in Q1 2017, the most severe fall since 2009. Radio (-0.1%), out of home (-0.6%), direct mail (-1.5%) and newsbrands (-11.2%) also recorded a decline in spend during the quarter.
In contrast, digital formats for these media saw good performance, though not enough to offset total declines. Digital ad income for national newsbrands (up 25.4%), radio (up 8.1%), broadcaster VOD (up 7.2%) and out-of-home (up 27.6%) rose strongly.
Overall, internet advertising has driven growth in the market, with a 10.1% year-on-year increase. Within this, mobile formats have grown rapidly – up 36.2% year-on-year. Search advertising is also extremely healthy, as one in four pounds of UK adspend now goes toward search.
The Advertising Association/WARC Expenditure Report is the definitive measure of advertising activity in the UK. It is the only source that uses advertising expenditure gathered from across the entire media landscape, rather than relying on estimated or modelled data.
“The latest data show that large retailers – particularly supermarkets – and major food brands reined in their TV spending by 25% during the first three months of 2017, instead committing to cutting prices on the shelves as household expenditure wanes,” said James McDonald, Senior Data Analyst at WARC.
Total TV ad expenditure is forecast to fall 1.9% this year, a 1.4 percentage point downgrade since the last AA/WARC forecast in April. Losses are expected to be regained in 2018, however, with ad revenue growing 2.5%, partially due to the men’s FIFA World Cup.
The outlook for total ad market growth in 2017 has been downgraded by 0.5pp to +2%. Broader economic headwinds, such as “higher inflation and slow wage growth” have squeezed consumer spending, according to McDonald. Meanwhile, political factors, including June’s inconclusive general election result, have depleted business confidence.
“These underlying stresses have resulted in a downgrade to our full-year expectations for UK ad market growth, almost all of which will come from digital formats,” McDonald noted.
“As business sentiment suffers, it’s no surprise to see ad-spend come under pressure – but the market overall remains resilient,” observed Stephen Woodford, Chief Executive at the Advertising Association.
“Beyond these numbers, our sector is a huge source of inward investment and exports and should be a priority for Government as we focus on business beyond Brexit,” Woodford added.
Data sourced from WARC