UK ad market avoids contraction in Q2 2023 through growth in online channels
Almost £9bn spent in Q2, with 2023 FY forecast to reach £35.6bn and four in five advertising pounds now spent online
The latest Advertising Association/WARC Expenditure Report shows that the UK’s advertising market was marginally up (+1.0%) during the second quarter of 2023 – on a par with AA/WARC’s July forecast of 0.9% growth – to reach a total of almost £9bn. The latest figures show key online formats, including search (+5.3%) and online display (+5.8%) registered growth between April and June, alongside BVOD (+5.6%) and out of home (+4.4%), which continued its recovery from 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 1.0% adspend growth is just ahead of ONS figures for the same period, which show GDP rose 0.6%.
In the first half of 2023, the UK advertising market recorded a 1.0% year-on-year increase, equivalent to £17.5bn in spend from January to June 2023, compared to £17.3bn the previous year.
Looking ahead to forecasts for the full year, AA/WARC expects ad spend to grow 2.6% to reach £35.6bn in 2023. Double digit growth is expected from Broadcaster Video on Demand (BVOD) at 16.1% year-on-year, with increases also projected for online display (7.4%), out of home (7.7%) and cinema (7.6%). 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% to reach £37.0bn in 2024, a minor downgrade from July’s forecast of +4.0%. More channels are expected to return to growth next year, such as the online portions of national and regional newsbrands 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 £37bn 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, said: “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% 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.”
The Advertising Association/WARC quarterly Expenditure Report is the definitive guide to advertising expenditure in the UK with data and forecasts for different media going back to 1982.
For more information, please contact:
Matt Bourn, Director of Communications
Mariella Brown, Communications Manager
Amanda Benfell, Head of PR & Press
T: +44 (0) 20 7467 8125
About the Advertising Association/WARC Expenditure Report
The Advertising Association/WARC quarterly Expenditure Report is the definitive guide to advertising expenditure in the UK. Impartial and independent of any media channel or agency affiliation, it is the only source of historical quarterly adspend data and forecasts for the different media for the coming eight quarters. With data from 1982, this comprehensive and detailed review of advertising spend includes the AA/WARC’s own quarterly survey of all national newspapers, regional newspaper data collated in conjunction with Local Media Works and magazine statistics from WARC’s own panels. Data for other media channels are compiled in conjunction with UK industry trade bodies and organisations, notably the Internet Advertising Bureau, Outsmart, Radiocentre and the Royal Mail.
All data are net of discounts and include agency commission but exclude production costs. The survey was launched in 1981 and has produced data on a quarterly basis ever since.
Methodology for WARC’s quarterly forecasts
Analysis of annual adspend data over the past 35 years shows that there is a link between annual changes in GDP and annual changes in adspend (after allowing for inflation and excluding recruitment adspend). Over this period, GDP changes account for about two thirds of the change in adspend. WARC has developed its own forecasting model to generate forecasts for two years based on assumptions about future economic growth. The model provides an indication of likely overall spend levels – adjusted to allow for short-term factors (Olympics, World Cup etc).
The Expenditure Report launched online in February 2010 and combines data from the discontinued print publications the Quarterly Survey of Advertising Expenditure and the Advertising Forecast. It is relied upon daily by the world’s largest brands, ad agencies, media owners, investment banks and academic institutions. Alongside over 200 readymade tables, subscribers can create their own customised tables for analysis of different media and time periods, as well as track the different media’s share of adspend. All reports can be exported from the online interface. An annual subscription is priced at £975 for AA members and £1,475 for nonmembers.
About the Advertising Association
The Advertising Association promotes the role and rights of responsible advertising - trusted, inclusive, and sustainable – and its value to people, society, businesses,
and the economy. Responsible businesses understand that there is little point in an advertisement that people cannot trust. That's why, over 50 years ago, the Advertising Association led UK advertising towards a system of independent self-regulation which has since been adopted around the world. There are nearly thirty UK trade associations representing advertising, media, and marketing. Through the Advertising Association they come together with a single voice when speaking to policy makers and influencers.
About WARC – The global authority on marketing effectiveness
For over 35 years, WARC has been powering the marketing segment by providing rigorous and unbiased evidence, expertise and guidance to make marketers more effective. Across four pillars - WARC Strategy, WARC Creative, WARC Media, WARC Digital Commerce - its services include 100,000+ case studies, best practice guides, research papers, special reports, advertising trend data, news & opinion articles, as well as awards, events and advisory services. WARC operates out of London, New York, Singapore and Shanghai, servicing a community of over 75,000 marketers in more than 1,300 companies across 100+ markets and collaborates with 50+ industry partners.
WARC is an Ascential company. Ascential delivers specialist information, analytics, events and eCommerce optimisation to the world's leading consumer brands and their ecosystems. Its world-class businesses improve performance and solve customer problems by delivering immediately actionable information and visionary longer-term thinking across Digital Commerce, Product Design, Marketing and Retail & Financial Services.
With more than 3,800 employees across five continents, Ascential combines local expertise with a global footprint for clients in over 120 countries. Ascential is listed on the London Stock Exchange.