Advertising Digital Publishing
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UK adspend continues recovery in Q1 but 2023 forward guidance looks choppy

ocean washing up on street

Following last week’s IPA Bellwether results – which indicated less than favourable conditions for marketing spend in the UK – today sees the release of AA/WARC’s expenditure report. The report shows that whilst adspend recovered in Q1, there are serious headwinds in the form of the rising cost of living, geopolitical uncertainties and other factors that indicate a tumultuous second half of the year. 

Overall, Q1 was strong, with a year-on-year rise of 28% (£8.6bn) resulting in an increase in expectation for the rest of the year. But factoring in inflation, the real growth of the UK’s ad market is likely to sit at just 1.8%. 

For advertisers, higher costs will carve into margins, and while a real term rise of 1.8% in ad investment is expected this year – compared to a pre-Covid average of +2.6% – the market is now set to contract in 2023 after accounting for these ongoing inflationary pressures.

James McDonald, Director of Data, Intelligence & Forecasting, WARC

For digital publishers, the latest report is significant because it shows that whilst UK Q1 adspend growth was recorded across all media, it was search, display (including social) and classified that grew the most in absolute terms, as the market share reached 74.9% for online channels combined.

Other key stats from the report include: 

  • National news brands recorded a percentage change of +15.9% with a +18.8% growth online
  • Regional newsbrands reported a +22.2% change, with +25.8% online
  • Magazine brands recorded a +7.2% increase with +20.5% online

The latest dataset also suggests the UK’s ad market will grow by a further 4.4% in 2023, to a value of £37bn. This represents a 1.0pp downgrade from AA/WARC’s April forecast, and equates to a 0.9% contraction in real terms. 

Commenting on the results, Duncan Tickell, Chief Revenue Officer at Immediate Media, says, “The latest AA/WARC adspend figures show the value that advertisers place on magazine media that helps people get the most out of doing the things they love. Investment in print was up by 7.2% and digital by over 20%, trends also reflected across our portfolio, demonstrating the value that commercial partners place in trusted magazine brands and their highly engaged audiences.”

Oscar Wall, General Manager, EMEA, at subscription and billing management company,  Recurly, adds, “With the cost-of-living crisis continuing, publishers, streaming media companies – including both video and audio – and out-of-home experiences, all need to consider how they can support consumers and continue business.”

A hybrid ad- and subscription-funded mix model could be the way forward. Not only offering flexibility in payment and service options for consumers, but also supporting the advertising economy.

Oscar Wall, GM, EMEA, Recurly