UK Advertising Market Shows Resilience with 1 per cent Growth in Q2 2023

The most recent Advertising Association/WARC Expenditure Report indicates that the advertising market in the UK experienced a slight increase (+1.0 per cent) in the second quarter of 2023, in line with the July forecast of 0.9 per cent growth. The total advertising expenditure reached nearly £9 billion. Notably, essential online formats such as search (+5.3 per cent) and online display (+5.8 per cent) demonstrated growth from April to June. Additionally, BVOD (+5.6 per cent) and out-of-home (+4.4 per cent) continued their recovery from the effects of the pandemic downturn.

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 per cent ad spend growth is just ahead of ONS figures for the same period, which show GDP rose 0.6 per cent.

In the first half of 2023, the UK advertising market recorded a 1 per cent year-on-year increase, equivalent to £17.5 billion in spend from January to June 2023, compared to £17.3 billion the previous year.

Looking ahead to forecasts for the full year, AA/WARC expects ad spend to grow 2.6 per cent to reach £35.6 billion in 2023. Double digit growth is expected from Broadcaster Video on Demand (BVOD) at 16.1 per cent year-on-year, with increases also projected for online display (7.4 per cent), out of home (7.7 per cent) and cinema (7.6 per cent. 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 fillip in the second half of 2023 in the face of ongoing macroeconomic headwinds.

The latest dataset shows that the UK’s ad market is set to grow by 3.9 per cent to reach £37 billion in 2024, a minor downgrade from July’s forecast of +4.0 per cent. More channels are expected to return to growth next year, such as the online portions of national and regional news brands and magazines, though the economic backdrop is likely to remain challenging.

Stephen Woodford, CEO, Advertising Association, said: “Advertising continues to show itself as a weathervane for the UK economy, with the advertising market expected to grow slightly more than the economy, with both barely in positive figures. Looking ahead to 2024, we expect to see more channels experience growth again, as the ad market grows to £37 billion for the year. As we anticipate the General Election next year, the Advertising Association will continue to demonstrate advertising’s contribution to a strong economy, not least that brands that continue to invest in advertising during a downturn are more likely to post better returns when emerging from tough conditions.”

James McDonald, Director of Data, Intelligence & Forecasting, WARC, added: “The UK’s economy continues to skirt with recession as households make cutbacks in the face of stubbornly high inflation and unemployment slowly ticks upwards as activity in the private sector cools. It is therefore encouraging that, amid this backdrop, the UK’s advertising industry was able to grow during the first six months of 2023, and that the market is on course to be 2.6 per cent 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.”