UK Advertising Skyrockets: Q3 2023 Up 15.9 per cent to £9.6 bn, Led by Online Growth

In a surprising turn, the latest quarterly data from the Advertising Association and WARC Expenditure Report reveals that UK advertising spend soared by 15.9 per cent to an unprecedented £9.6 billion during the period from July to September 2023. This remarkable increase, higher than anticipated, marks the first time Q3 advertising spend has surpassed the £9 billion milestone, driven predominantly by a sharp increase in online advertising.

The UK advertising market is now thought to have expanded by 6.4 per cent in 2023, reaching a total of £37 billion for the year. This represents a significant 3.8 percentage point upgrade from the previous forecast published in October 2023. Final figures for the fiscal year 2023 are expected to be disclosed in late April 2024. The projection for advertising spend in 2024 has also been revised upward to £39 billion, reflecting a year-on-year increase of 5.9 per cent. This data underscores growing confidence in advertising and marketing expenditures, echoing the recently released IPA Bellwether figures, which indicated the most substantial upward revisions in UK marketing budgets for more than a decade.

Despite the wider economic market conditions, search (including retail media) and online display (including social media) advertising experienced higher-than-expected growth in Q3 2023. Search, in particular, demonstrated its strongest performance in 18 months, surging by an impressive 23.7 per cent, while online display followed suit with a substantial 24.8 per cent increase, achieving its highest gain in the same period. In comparison, online growth in France during the quarter was around 5 per cent, highlighting the UK's remarkable growth rate of 22.3 per cent. Online retailers significantly ramped up their online ad spend in the UK market by a staggering 156 per cent during Q3 2023, intensifying competition for household budgets.

Other channels also witnessed growth in Q3 2023, with cinema spending up by 21.2 per cent, out-of-home advertising increasing by 12.9 per cent, and broadcaster video on-demand (BVOD) seeing a notable surge of 28.4 per cent, partially attributed to the Women’s FIFA World Cup.

The momentum is expected to continue into 2024, with advertising spend set to increase across various channels. Anticipated events such as the Men’s Euros, a potential General Election, and lingering coverage of the Olympics are expected to contribute positively to this trend. TV advertising is projected to return to positive figures, rising by 1.4 per cent year-on-year, driven primarily by increases in BVOD, which is expected to surge by 14.6 per cent. The latest AA/WARC dataset also foresees a return to growth for radio (2.1 per cent) and online channels of national newsbrands (2.1 per cent), regional newsbrands (1.1 per cent), and magazine media (2.3 per cent).

Stephen Woodford, CEO of the Advertising Association, expressed optimism, stating: “The Q3 increase in 2023 and 2024 forecast upgrade demonstrate advertisers’ continued commitment to investing in their brands, despite the lack of overall growth and stubborn inflationary pressures in the UK economy.”

James McDonald, Director of Data, Intelligence and Forecasting at WARC, added: “With the UK’s economy in the doldrums, the online ad sector’s strongest performance in over 18 months – growing five times faster than in key European markets – came as a welcome respite for an ad industry worth a record £37 billion overall last year.”