Ad spend growth set to exceed expectations
The full year spend for 2023 is forecast to increase by 6.4% to £37bn, according to the Advertising Association and WARC with further growth tipped for 2024.
By Molly Innes
Hope the UK advertising market is in better shape than thought has been further boosted by news spend increased by a higher than expected 6.4% in 2023.
According to the Advertising Association and WARC’s quarterly expenditure report, ad spend is to reach £37bn for 2023, an increase of 3.8 percentage points on October’s forecast.
The upward revision was driven by a 15.9% increase in the third quarter, with total spend in the three months to the end of September confirmed as £9.6bn, which the AA says is the first time ad spend has ever exceeded £9bn in the third quarter.
Final full year figures for 2023 are due to be published in late April 2024.
Marketing budgets get unexpected boost despite economic uncertaintyThis news follows last week’s IPA Bellwether report that showed an unexpected boost to marketing budgets in the fourth quarter of 2023. More than a quarter (26%) of businesses report an upward revision of spend in the final three months of the year.
In the third quarter, search – which includes retail media – experienced its strongest performance in 18 months with a 23.7% rise, according to AA/WARC. Online display also increased 24.8%.
Growth was shared across different channels, with cinema up 21.% and out-of-home 12.9%. Spend on broadcaster video on-demand increased by 28.4%, which is attributed to the role of viewing in the Women’s FIFA World Cup.
Despite BVOD experiencing growth in the third quarter, TV fell by 3% overall. Direct mail also suffered, with a 12.9% drop, alongside radio (-2.2%), national newsbrands (-2.6%), magazine brands (-8.2%) and regional newsbrands (-4.8%).
Optimism for 2024
2024 is forecast to be another year of advertising spend growth, with the Men’s UEFA Euros in the summer, a likely general election and Olympics coverage contributing to the upward trend.
AA and WARC are also expecting TV, radio and other newsbrands to return to growth in 2024.
“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,” says Stephen Woodford, CEO of the Advertising Association.
How can brands drive growth in 2024?
“The IPA’s latest Bellwether forecast upgrade is further evidence of this, with the strongest improvement in advertiser expectations on total marketing budgets since 2014,” he adds.
“Our forecasts indicate the advertising industry is performing better than the wider UK economy, with spend expected to reach £39bn in 2024. All this should provide confidence that the industry is well positioned to help the UK’s economy tackle the economic and social challenges it faces, by promoting product and service innovation, stimulating competition and supporting jobs.”
