Advertising Digital Publishing
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UK advertising spend forecast to rise to £35B this year

Spend projected to near £10B during Q4 World Cup Christmas period

The latest Advertising Association/WARC Expenditure Report has forecast the value of the UK’s advertising market will grow by 9.2% in 2022, to a total of £34.9bn, though this does reflect a downgrade of 1.7pp from the previous forecast in July. This revision is attributed to high levels of inflation and squeezed margins as UK plc deals with supply chain inflation and subsequent rise in the cost of living. The media sector is also bearing the brunt of these pressures, with advertisers facing higher media costs.

The report, which is the only one to collect advertising revenue data directly from media owners across the entire landscape, shows UK adspend rose by 8.8% in Q2 2022, to a total of £8.6bn, while adspend during the first half of the year was up 14.4% at £16.7bn. 

The UK’s ad market is forecast to grow by a further 3.9% in 2023, to a total of £36.2bn. This projection represents a downgrade of 0.5pp when compared to the July forecast. Meanwhile, online advertising’s share of total adspend is set to grow to a total of 74.0% for 2022 and is expected to cross the three-quarters threshold (75.2%) in 2023. 

The full picture in Q2 2022

The latest data show the continuation of strong recoveries for the out of home (OOH) (+46.4%) and cinema (+2,208.2%) sectors. Further, new IAB figures show online classified advertising – representing recruitment advertising and property listings, among others – was up by almost a third. TV was the only medium to witness a decline in investment during this quarter (-0.6%) though broadcaster video-on demand continued to grow (+9.3%) as audiences turned to catch-up and streaming platforms. 

Positive second quarter results were also recorded across the publishing sector, including national newsbrands (+9.1%), magazine brands (+3.3%), and regional newsbrands (+0.6%).  

It is encouraging to see strong figures in Q2, with media channels continuing their recovery from the COVID-19 pandemic. Looking forwards, political and economic stability is much-needed, given the inflationary and recessionary forces impacting all businesses. As companies navigate these pressures, we see them continuing to prioritise advertising investment to protect their brands in exceptionally challenging market conditions.

Stephen Woodford, Chief Executive, Advertising Association

Christmas adspend at record high despite muted lift from World Cup 

Adspend for the final quarter of 2022 is set to increase by 4.5% from last year’s record high, to a total of £9.5bn, setting a new record level of investment during the Christmas period. Search advertising – including eCommerce – is forecast to be one of the quickest growing media over the quarter, rising by 7.3% to a total of £3.4bn. At £1.7bn, TV advertising spend is expected to remain flat during the quarter, but video-on-demand is set to rise ahead of the wider market with expected growth of 4.2%. 

With the economic picture worsening amid ongoing political incertitude, the likelihood of a recession is now higher than when we last assessed market prospects in the summer. Indeed, we have downgraded UK ad market growth expectations for this year and next, in large part to reflect the waning climate.

Higher costs are carving into advertisers’ margins and household budgets alike, and trading conditions are at their worst since the Covid outbreak, leading to muted expectations for the Christmas quarter. Against this deteriorating economic backdrop, a 9.2% rise in advertising investment this year would be impressive given that it is near double the average rate of expansion recorded prior to the pandemic.

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

Increasing the public’s trust of advertising

The AA/WARC figures for Q2 2022 are released in the same week as a new advertising campaign launches for the Advertising Standards Authority, designed to build the public’s awareness, confidence and trust in advertising and its self-regulatory system. Businesses including Tesco, Marmite, Lloyds, and Churchill feature in the campaign which will run on TV, print, online, cinema and OOH channels over the next three months. The campaign is backed with advertising inventory from media owners including ITV, News UK, Sky, Mail Metro Media, The Guardian, Daily Telegraph, Evening Standard, Channel 4 and Reach plc. In digital media, it will be featured on YouTube, Yahoo, Snapchat and Meta’s channels. Outdoors, the campaign is backed with inventory from Clear Channel, Global, JCDecaux and Ocean Outdoor, and will also see support from DCM and Pearl & Dean in cinemas.

Planned by MediaCom with creative work by Leith Agency, the biggest-ever awareness campaign for the regulator will remind the public and businesses alike that UK ads across media are regulated and that there’s a body to maintain standards and step in when needed. 

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. 

Industry reaction

Clare Dove, UK Group Commercial Director, Future: “Premium publishers can facilitate the relationship between advertisers and readers that match brands’ target audiences by providing accurate data on their interests and passions while producing content that speaks to their needs. We have learned that Future’s audience is significantly more likely than the average UK consumer to opt-in for “treating myself and/or my loved one” to various items and experiences. Successfully tapping into ready-to-spend groups such as these can help brands shine and drive considerable uplift in Q4.”

Chris Hogg, Chief Revenue Officer, Lotame: “It’s reassuring to see healthy ad revenues for publishers, who have been fighting to stop the spend they depend on from being redirected to walled gardens. We’ve experienced increasing interest in cookie-free identity solutions from publishers seeking to enrich their audience data and remain competitive against the Big Three, and it’s wonderful that this seems to be paying off, as their success is the success of the open web.”

Michele Szabocsik, VP of Product Marketing at BlueConic: “The positive results among the publishing sector are a sign that the business transformations they’ve undergone over the last several years are starting to pay off. Now they’re taking control of their own destiny and experimenting with new audience engagement tactics to not only improve the experiences of their readers and viewers, but also develop new monetization strategies and products that would not have been possible before. Doing so has made them significantly more resilient when macroeconomic factors like the pandemic, inflation, and a recession come into play.”

Ben Cicchetti, VP Corporate Marketing, InfoSum: “With many brands pulling back, now could be the perfect opportunity to capitalize on a field less crowded than normal. Leveraging first-party data will be crucial to this performance-driven approach, as will collaboration with the right media partners. In concert, both parties can build and target highly customized audiences, allowing for more effective targeting than a ‘spray-and-pray’ strategy. However, parties will need to ensure customer data is thoroughly protected and consumer privacy prioritized.”

Josie Klafkowska, Global Marketing Director, Wunderman Thompson Technology: “Brands will need to focus their investment where ROI is the greatest, ensuring every pound is spent as efficiently as possible. They need to maximize their visibility on the channels and platforms that customers occupy, which means having a strong online and social media presence that can smoothly transition shoppers to checkout. In fact, according to our research, 34% of global shoppers say they look for inspiration on marketplaces and 28% seek it via social media platforms, so an omnichannel presence is key to garnering consideration.”

Charlie Johnson, VP International, Digital Element: “While investing during a recession has proved successful in the past, this does not mean simply throwing more money at any marketing activity. Instead, marketers need to use tools and partners who can provide solid, future-proof solutions with measurable ROI. Let’s not forget this is taking place in a new, privacy-first era with a renewed emphasis on contextual advertising. IP intelligence can provide quality data that helps businesses optimize their efforts and targeting through vital user insights, such as location or connection data.”

Andy Ashley, Global Marketing Director, SmartFrame Technologies: “It’s reassuring to see continued recovery within the industry, but there is no doubt that the realities of a cost-of-living crisis, growing energy prices, and rising inflation are starting to take effect. What we all need most amidst this uncertainty is to create clarity. Solutions that provide full transparency will help everyone navigate these choppy waters while maintaining vital industry priorities – such as a commitment to privacy and brand safety.”

Sophie Wooller Dent, Director of Digital Transformation at Croud: “Marketers should be embracing the emerging platforms – such as retail media – in order to avoid oversaturated markets. With higher costs already significantly impacting budgets, it’s an opportune time for marketers to explore alternative and innovative ways of reaching audiences, and gain the benefit of first mover advantage – which won’t be around for long.”

Gustav Westman, CEO and Founder of BrightBid: “Search advertising is predicted to be the fastest growing media over the quarter, rising to a total of £3.4bn. As marketing teams retrench to channels that show immediate value as the economic winds cool, we’ll continue to see an increase in total PPC spend: the AA-WARC report is testament to this.”

Audio gains strength

Michal Marcinik, CEO & Co-Founder, AdTonos: “It’s great to see that audio is recognized as an important part of the advertiser’s toolkit, as it’s proven to inspire better ad engagement and recall of up to 25% over other formats. Companies that want to strengthen their market position during these times would do well to continue trusting in audio, with sonic audio cues outperforming visuals nearly ninefold. People will still be listening to podcasts and streaming music even if there is a market downturn, so there will always be an opportunity to reach their ears.”

Zac Pinkham, VP Demand (Europe), AdsWizz: “Research from the Eurobarometer survey very recently said that radio is the most trusted medium in Europe, and the positive growth of radio ad spend in this latest AA-WARC report is further proof that radio still proves to be an effective platform for brands to reach users.”