UK ad spend grew 8.8% in 2022 to reach £34.8bn

Despite a significant dip in the final quarter of the year, the UK ad market grew 8.8% to £34.8bn in 2022, according to the Advertising Association / WARC Expenditure Report.

Advertising spend fell by 5.8% to a total of £8.6bn between October and December 2022, the first time a Q4 decrease has been recorded since the days of the global financial crisis back in 2009.

2022: waning momentum

• After a strong start to the year, when ad spend growth was running at 26%, the situation reversed in the second half, as the total ad market contracted by 5.7%.
• Online advertising – 75.1% of total UK spend last year – grew 30.1% in H1 2022 before slowing to 5.4% in H2. 
• Strong growth at cinema (123.0%) and out-of-home (31.1%) continued their year-on-year improvements after a disproportionate impact from Covid-19.
• Other areas of the industry posting strong figures in 2022 included: 15.4% year-on-year growth in the Broadcaster Video on Demand (BVOD) component of TV; Paid Search grew by 12.7%. 
• When reviewed by category, advertising growth was led by services (such as entertainment, media and travel) and industrial, such as business, property and telecoms products.

2023/2024: revised projections 

• Forecasts for the coming year show reduced growth expectations for nearly all sectors of advertising, with the economic headwinds of high inflation, muted growth and talent shortages being felt across the industry.
• Revised forecasts suggest minimal growth (+0.5%) in 2023, with spend expected to reach £35.0bn, before a 3.9% rise in 2024 to a total of £36.3bn. 
• Cinema is expected to continue its high levels of growth in 2023 (37.2%) while modest growth is expected in OOH (4.9%). 
• While the UK remains the third-largest advertising market in the world and saw the third-fastest growth rate of the top 10 markets in 2022, WARC Media projections suggest the UK will post the slowest growth among the top 10 ad markets this year.

Key quote

“One in every 202 UK companies entered liquidation in 2022 – the highest rate in seven years – and it is unsurprising to see these pressures reflected to some degree within advertising trade” – James McDonald, Director of Data, Intelligence & Forecasting, WARC.

The AA/WARC Expenditure Report is now available to subscribers within the WARC Media platform. Non-subscribers can read a sample of the report here.