UK adspend flat in Q1, but uplift in sight for full year: AA/WARC

British advertising remained stable in the first quarter of the financial year 2023 with flat year-on-year spending of £9 billion, the AA/WARC Expenditure Report shows.

The outlook for the full year, however, has improved +2.1 percentage points on April’s forecast to reach £35.7bn, equivalent 2.6% expected year-on-year growth. 

For the full data, WARC members can read the full report here; for non-members, a sample of the report is also available. 

Why it matters:

“With the economy flat over the last three years, and inflation remaining stubbornly high, macroeconomic headwinds continue to bear down on the UK’s advertising industry.

That said, a welcome return to growth in key online sectors during the first quarter has been cause for an upgrade to our full year projections, with a forecast rise of 2.6% demonstrative of more favourable trading conditions in the second half of the year” - James McDonald, director of data, intelligence & forecasting, WARC.

Focus online

Some of this anticipated growth reflects a return to spending in online formats, which are forecast to account for 76.7% of all advertising spend this year (versus 75.1% in 2022).

This adspend share growth is expected to continue steadily into 2024, when online advertising is forecast to take a 77.6% share.  

Major events boost Q3 spend

Q3 appears to be blessed with advertising-friendly big events, not least the Women’s World Cup, which is set to provide a boost to TV spots, sponsorship, radio, and OOH spending growth.

Elsewhere, cinema – a heavy casualty due to the pandemic – is projected to grow 20.8% year on year for this quarter, propelled by this summer’s blockbuster releases: Barbie, Oppenheimer, and a new instalment of Mission Impossible.

Inflation ongoing

Commenting on the findings, Stephen Woodford, CEO, Advertising Association said: “With high inflation continuing to depress consumer and business confidence we may end up seeing a real-terms contraction of nearly 4.3% in 2023 for UK advertising investment.”

“The recent higher-than-expected fall in inflation will hopefully continue and with that we will see confidence begin to build later in the year and into 2024, when the ad market is expected to return to growth,” he added.