UK advertising expenditure will post 4.2 per cent growth in 2016 and 3.8 per cent growth in 2017, the latest Advertising Association/Warc Expenditure Report data suggests.
The forecasts follow a strong showing for the UK ad market in Q1 2016, with advertising expenditure rising 4.3 per cent to reach £5.007m – the first time spend has passed £5bn in a first quarter.
Overall forecasts have been revised down slightly since April (-1.3 percentage point for 2016 and -1.7 percentage point for 2017), driven by downgrades for news brands and direct mail, the UK’s third and fourth largest media channels. But, while economic uncertainty surrounding the UK’s vote to leave the EU is a factor, Internet spend forecasts have been revised up 0.8 percentage points to 12.3 per cent in 2016, with mobile advertising predicted to increase 39.3 per cent in the same period.
Tim Lefroy, chief executive at the Advertising Association, said: “These numbers suggest that, despite uncertainty, our sector is resilient. Government can underpin that by taking every step possible to build advertiser confidence, promote the UK as a global advertising hub and ensure we remain open to the world’s best advertising talent.”
Key stats:
• Television spot advertising spend grew 3.3 per cent year-on-year, totalling £1.247m in Q1 – the highest first quarter total on record. Overall, TV adspend is expected to increase 3.6 per cent in 2016 and 3.1 per cent in 2017.
• Radio adspend (excluding branded content) rose by 2.9 per cent to £127m in Q1. Total radio adspend is forecast to rise 2.9 per cent in 2016, and 1.7 per cent in 2017.
• Out of home adspend grew 3.9 per cent to £238m in Q1. Growth is predicted to continue at 4.0 per cent in 2016 and 2.1 per cent in 2017, driven by digital spend forecasts of +17.0 per cent and +15.8 per cent respectively. Digital out of home is expected to claim a 40 per cent share of total spend in 2017, up from 31 per cent in 2015. Digital out of home forecasts are a new series in this release.
• National newsbrands total adspend declined by 14.4 per cent in Q1 to a total of £267m. Print adspend fell 16.9 per cent y-on-y to £218m, as digital adspend declined for the second consecutive quarter, down 1.1 per cent to £50m. Total national newsbrand spend is forecast to decline 10.1 per cent in 2016 and 10.8 per cent in 2017.
• Regional newsbrands adspend declined 11.3 per cent in Q1 to £262m, driven by a 13.5 per cent fall in Q1 print revenues to a total of £216m, although digital adspend did increase 0.6 per cent to £46m. An overall decline of 9.7 per cent is forecast in 2016, with a further 8.5 per cent fall forecast next year.
• Magazine brands saw adspend dip 4 per cent to £207m in Q1, in line with our April forecast. Print adspend fell 7.6 per cent to £145m, though digital spend rose 5.5 per cent to £62m. Total magazine brands adspend is forecast to decline 5.9 per cent in 2016 and 7.0 per cent in 2017.
• Cinema adspend dipped by 0.6 per cent to £52m in Q1 2016, according to Nielsen data. AA/Warc forecasts overall growth of 1.3 per cent in 2016 and a further 2.4 per cent in 2017.
• Internet (including mobile) adspend is estimated to have grown 15.3 per cent in Q1 to reach £2.341m – the 11th consecutive period of quarterly growth. Mobile is believed to have accounted for some 96 per cent of total internet growth, as spend rose 55.9 per cent y-on-y to an estimated £830m during Q1 2016. Full-year internet adspend growth is forecast to be 12.3 per cent in 2016 and a further 10.1 per cent in 2017, by when the market should be worth over £10bn.
• Direct mail adspend data from the Royal Mail show a 13.3 per cent decline in Q1 to £424m – almost all of this decline was due to losses among SMEs – non-subsidiaries of the Royal Mail. A decline of 7.2 per cent is forecast for 2016 as a whole, with the rate of decline easing to -5 per cent in 2017.
The Advertising Association/Warc Expenditure Report is said to be the definitive measure of advertising activity in the UK. It is the only source that uses advertising expenditure gathered from across the entire media landscape, rather than relying solely on estimated or modelled data. With total market and individual media data available quarterly from 1982, it is thought to be the most reliable picture of the industry and is widely used by advertisers, agencies, media owners and analysts.