Advertising expenditure on TV is expected to reach £5.0bn for the first time in 2014, according to the latest data from the Advertising Association/Warc Expenditure Report. Our annual forecast for the TV ad sector – including spot, sponsorship and broadcaster VOD – has been raised to 7.8% growth for the year, taking total spend to £5,003m. We anticipate further growth of 6.6% in 2015, equating to spend of £5,335m.
This uplift in the forecast stems from better than anticipated growth for TV spot advertising expenditure. Spot adspend had a very strong Q2 2014, rising 10.7% compared with the same period in 2013 to £1,118m. The sector benefited from the football World Cup and slightly outperformed our previous July forecast (+10.5%).
Note: Orange bars represent forecast periods.
Source: AA/Warc Expenditure Report
We expect growth for TV adspend to moderate in the second half of the year, with further increases of 4.7% and 5.7% for Q3 and Q4 – these represent increases of 0.7pp and 0.1pp from July. Looking to the year as a whole, we estimate spot advertising spend revenues will rise by 6.7% in 2014 (to £4,518m) and by a further 5.2% next year (to £4,755m).
While spot revenues account for the majority of total TV adspend – a projected 90% share in 2014 – other elements will still generate £485m this year. With predicted revenues of £248m in 2014, sponsorship should register a 5.0% share of TV adspend, following growth of 7.8% compared with 2013. The next biggest element is broadcaster VOD, with forecast spend of £160m following year-on-year growth of 27%. This represents a share of just over 3% of total revenues. The remaining 1.5% of TV adspend – with a value of £77m in total – is made up of product placement, advertiser funded programming and other revenues, including interactive fees and pub TV. These latter sectors are all expected to record double digit increases in adspend from 2013.
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Note: Other revenues include interactive fees (e.g. Shazam) and pub TV.
Source: AA/Warc Expenditure Report
Nevertheless, spot TV advertising remains the main driver of overall sectoral growth for the foreseeable future.
Commenting on the AA/Warc Expenditure Report, Thinkbox Research and Planning Director Neil Mortensen said: "2014 is set to be the fifth consecutive year of growth for TV advertising. The strength of this investment reflects advertisers' confidence in TV's unrivalled ability to create business sales and profit, and the proven effects it has in boosting the performance of other forms of advertising. This forecast also shows how TV advertising opportunities are expanding, with Broadcaster VOD the premium advertising environment online."
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