All channels, apart from news and magazine brands, saw increases in adspend, with overall mobile adspend in the first half of 2015 hitting the billion-pound mark for the first time.
This post is by Emma Lane, MEC.
UK advertising expenditure reached a record high of £9,424m in the first half of 2015, according to the latest advertising association and Warc Expenditure report – an increase of 5.8% year on year.
News and magazine brands were the only formats to see drops in overall spend, reporting falls of -8.2% and -5.4% respectively. However, digital investment in these channels did see increases year on year, with a 13.3% increase in digital news brands spend and an 8% increase for magazine brands. All other channels saw increased investment, even TV spot advertising, which saw an impressive 7.1% increase year on year despite comparisons with H1 2014, in which the FIFA World Cup took place. This comes thanks to a strong Q1 performance where 11.5% growth was recorded.
However, the clear driver of growth continues to be investment in digital channels. digital spend, which includes revenue from news and magazine brands, video on demand and radio stations, reached £3,975m during the first half of 2015. This marks a huge 13.3% increase in spend from H1 2014 and the highest spend of any channel. Staggeringly, mobile accounted for 79% of this growth, with overall mobile adspend in the first half of 2015 hitting the billion-pound mark for the first time (£1,079m) and marking a 52.1% year-on-year increase. The growth in mobile expenditure isn't expected to stop either, Warc and the advertising association expect mobile to account for 36% of internet spend in 2016, up from 22.5% in 2014. The UK is now leading the way in Europe for mobile adspend and ranks third globally behind the US and China (Warc's global adspend database).
Annual % change in UK adspend, H1 2015 (at current prices)
Source: Advertising Association/Warc Expenditure Report, www.warc.com/expenditurereport
Note: Data for newsbrands and magazine brands include print and digital revenues. TV data are built on spot advertising only as other data are not available on a quarterly basis. Radio data exclude branded content. Internet pure play data exclude online revenues from newsbrands, magazine brands, TV broadcasters and radio station websites.
While not seeing quite the level of growth of digital channels, advertising revenues for traditional formats outside of press continue to see steady growth. Radio, cinema and outdoor all saw increased advertising spend in the first half of 2015, up 2.9%, 2.7% and 2.3% respectively. This comes despite poor performances from all three channels in Q2 2015, with cinema's drop in spending attributed to a fall in investment by larger product categories, including telecoms and cosmetics. direct mail also saw revenue growth during the first half of 2015 with an increase of 4.5% to £965m, the third-biggest increase after digital and TV spot spend.
Looking a head…
In the second half of the year strong growth is expected in both outdoor and TV spot advertising expenditure thanks to Rugby World Cup spend. Cinema is expected to be bolstered by big cinema releases in Q4 2015, including the new Star Wars and James Bond movies. Print format expenditure is still expected to be in decline, with regional title spend expected to dip below the £1bn mark for the first time since 1984.
Adspend forecasts for 2015 and 2016 have been revised down mildly to reflect the signs of slowing economic growth in the UK. Advertising expenditure is now expected to grow by 5.8 per cent in 2015 (down 0.4pp from July) to £19,670m and by 5.3 per cent in 2016 (down 0.3pp in July), meaning advertising expenditure should break the £20bn barrier for the first time in 2016.
Looking ahead to 2016's forecasts, mobile advertising is expected to be the channel that sees the largest increase in advertising spend year on year, with growth predicted at 36.7%. Broadcast VoD is also expected to do particularly well, with a 20.6% increase forecast. Magazine and newsbrands advertising spend is still expected to be in decline, while all other channels are forecast for growth.