UK ad market avoids contraction in Q2 as online channels continue to grow

UK advertising spend rose 1% to almost £9bn in Q2, according to the latest Advertising Association/WARC Expenditure Report, which shows that four in five advertising pounds are now spent online.

Why the UK ad market matters

The advertising industry is often seen as a barometer for the broader state of the UK economy, and AA/WARC’s latest results continue to demonstrate this trend. The industry-verified data for Q2 of 1.0% adspend growth is just ahead of ONS figures for the same period, which show GDP rose 0.6%.

By channel 

• The latest figures show key online formats, including search (+5.3%) and online display (+5.8%) registered growth between April and June, alongside BVOD (+5.6%) and digital out of home (+5.6%), which continued its recovery from the pandemic downturn. 
• Significant declines were registered in TV spending (-12.8%), online classifieds (-11.6%), direct mail (-15.0%) and cinema (-7.0%).
• National (-9.9%) and regional (-14.0%) newsbrands and magazine brands (-7.4%) all saw continued spending decline, including in online formats; the same was true of radio (6.2%).

Looking ahead 

• AA/WARC expects ad spend to grow 2.6% to reach £35.6bn for the full year in 2023.
• Double-digit growth is expected from Broadcaster Video on Demand (BVOD) at 16.1% year-on-year, with increases also projected for online display (7.4%), out of home (7.7%) and cinema (7.6%). 
• Sporting events such as the FIFA Women’s World Cup and the Rugby World Cup, as well as key content moments such as the return of Big Brother to ITV and the success of the Barbie and Oppenheimer films, are expected to give ad spend a stimulus in the second half of 2023 despite ongoing macroeconomic headwinds.
• In 2024, the UK ad market is set to grow by 3.9% to reach £37bn, a minor downgrade from July’s forecast of +4.0%. More channels are expected to return to growth next year, such as the online portions of national and regional newsbrands and magazines, though the economic backdrop is likely to remain challenging.

Key quote 

“The market is on course to be 2.6% larger this year overall. It should however be noted that this growth is concentrated in certain corners of the industry, with broadcasters and publishers bearing the brunt of an unfavourable trading climate while digitally native platforms largely prosper” – James McDonald, Director of Data, Intelligence & Forecasting, WARC.