Inflation takes its toll on UK ad market recovery

The UK ad market is set to reach £36bn this year, up from a projected £34.7bn in 2022, according to the latest quarterly data in the Advertising Association / WARC Expenditure Report. 

Overall growth of 3.8% in 2023 is less than half of what is now expected for 2022 (+8.8%) and equates to a 3.0% real-terms decline once inflation is accounted for. Forecasts for the coming year show reduced growth expectations for almost all sectors of advertising in line with pressures felt by all parts of the economy. 

Q3 2022 highlights 

• UK advertising spend rose by 4.3% to a total of £8.5bn between July and September 2022, the ninth consecutive quarter of growth and demonstrative of an ongoing, resilient recovery from the COVID-19 pandemic.
• Search rose 7.7% – equating to almost 40% of total adspend during the quarter.
• Out of Home (+13.2%) continued a strong recovery, while cinema, in particular, bounced back (+148.1%) from a COVID-hit 2021. 
• Social media, included within online display, grew in line with the average (+4.4%), as did broadcast video on-demand (+4.3%).
• Main traditional media all declined: TV -6.6%, national newsbrands -11.2%, regional newsbrands -10.4%, radio -7.5% and magazine brands -6.3%.

Q4 projections 

A retained recovery is projected for the ‘golden quarter’ (Q4 2022). Spend during this time was estimated to have grown by 4.0%, to a total of £9.5bn, as the winter period hosted the two biggest events for adspend: Christmas and the FIFA Men’s World Cup. This growth was still half a point behind previous forecasts but should nonetheless be considered as a good performance given economic challenges.

WARC says 

“A looming recession will put pressure on ad trade this year,” advises James McDonald, Director of Data, Intelligence & Forecasting, WARC. “The silver lining here is that our current modelling suggests that the slump will be short lived, with advertising investment set to lift by 5% over the first nine months of 2024.”

Subscribers can read the report in full here. Non-subscribers can download the executive summary here. 

Sourced from WARC, Advertising Association