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UK adspend grows despite Brexit

News, 15 November 2016

LONDON: Media agency GroupM has professed itself surprised as it has revised upwards its forecasts for UK advertising expenditure this year and next, citing the "negligible" impact of the Brexit vote and the advance of paid search.

It now expects the industry to grow by 7.2% in 2016, up from an earlier figure of 6.3%; and it anticipates that level of growth will continue into 2017, well ahead of the 5.8% it had previously predicted.

According to Adam Smith, Futures Director, GroupM, while the longer term effects of the EU referendum result remain unknown, "the short-term impact was negligible".

"To our own surprise, we are revising UK advertising growth up," he said.

"The main driver that we have seen is paid search accelerating again," Smith said. "It benefits from rising automation and the immediacy needed for mobile and performance-minded advertising."

Digital display is also growing strongly, driven by a shift from static to video and the inroads it is making into social media.

Overall, pure-play internet adspend is set to increase 18.1% this year and 15.2% next year.

But the outlook for traditional media advertising over the same period has deteriorated slightly, from -1.1% to -2.6% this year and from +0.5% to -1.4% in 2017.

The predicted ad market share for pure-play digital has consequently risen by a percentage point to 52% in 2016, with GroupM expecting a further three point rise to 55% in 2017.

It also highlighted where it thought some of this new spending would be directed, noting that five advertising categories stand out as being important for TV but relatively light on digital.

GroupM predicted that pure-play digital vendors would target these categories – Cosmetics & Personal Care; Food; Retail; Household Equipment & DIY; and Leisure Equipment – more aggressively in future.

Data sourced from GroupM; additional content by Warc staff