The latest Advertising Association/WARC Expenditure Report shows UK ad spend increased 9.3 per cent to £9.2 billion (€10.9bn) during the first three months of 2024 – setting a new high for a first quarter period. Data reveals this rise was almost three percentage points (pp) ahead of forecast, due to stronger-than-expected online growth, with online formats accounting for 79.7 per cent of all UK spend in Q1 2024.

The new AA/WARC forecasts expect UK ad spend to rise 9.2 per cent in Q2 (April to July) this year to reach £9.7 billion, a result of increased spending around the Euro 2024 tournament and snap General Election. This would equate to a rise of 9.3 per cent during the first half of 2024, to a total of £18.9 billion.

Expectations for both 2024 and 2025 have seen an uplift in the latest dataset. The UK advertising market is now expected to grow by 7.7 per cent to reach £39.4 billion this year, an upgrade of 1.9 percentage points (pp) since AA/WARC’s April forecast, owing to strong digital results and increased investment around Euro 2024. Overall, this year, channels expected to see a boost include Out of Home (+12.5 per cent), Search (+10.1 per cent) and Radio (+5.5 per cent). Advertising spend on the BVoD portion of TV is set to cross the £1 billion threshold for the first time (an increase of 13.7 per cent), driven by a strong summer of sport including demand from Euro 2024, and to a slightly lesser extent, the Olympics and Paralympics.

A further rise of 5.5 per cent is expected in 2025, by when the UK’s advertising market is set to reach £41.6 billion, an upgrade of 1pp from the April forecast.

The full picture in Q1 2024

The online advertising market had a strong quarter from January to March, with search (including retail media) up by 12 per cent and online display (including social media) up 12.8 per cent. The latest dataset shows a return to growth for cinema (+6.4 per cent) and TV (+1.2 per cent), with BVoD seeing a continued strong increase at 19.2 per cent.

After allowing for inflation, real growth for adspend in Q1 stood at 5.5 per cent, indicating the UK advertising market saw a healthy £465 million of organic growth, as inflationary pressures eased year-on-year.

The data shows that products within the Consumables sector saw 16.1 per cent growth in Q1 (including food & drink, cosmetics and household FMCG), with Services (including leisure & entertainment, media and transport) registering a rise of 8.9 per cent. All other major categories posted year-on-year declines for the period, however.

Stephen Woodford, Chief Executive, Advertising Association, commented: “It is welcome news to see real-term growth and upgraded forecasts in the advertising market in Q1 this year, a positive sign that our industry is one of the driving factors in the UK’s economic recovery. This is a timely reminder of its dynamism as the new Government seeks to create an environment for growth, through political stability and a new industrial strategy. Advertising is a UK-wide industry, with three in five advertising jobs based outside of London and it is central to the successful development of the digital economy across the whole country.”

James McDonald, Director of Data, Intelligence & Forecasting, WARC, added: “The race for AI adoption has intensified in the advertising industry, with major online platforms introducing their own solutions to market and subsequently reporting a positive contribution to their bottom line. The true impact of these tools will emerge in time, though first quarter results were certainly lifted by higher ad loads and associated performance costs online.  That said, the enduring strength of legacy display media – chiefly TV, out of home, radio and cinema – was also evident in the first quarter, and we expect this to have sustained into the second due in part to short term stimuli such as the Men’s Euros and snap General Election. Overall, our outlook for the coming year is brighter than our last projection in April, with a forecast 7.7 per cent rise in total ad spend this year ahead of the average rate recorded before the pandemic.”

Reaction

Responding to the report, Joseph Worswick, VP of EMEA, Global Head of Sustainability, OpenX, said: “These findings are extremely encouraging for the digital ad industry. With the forecasts predicting further growth for 2024 and into 2025, advertisers should be mindful of the increased competition for inventory across all channels and platforms. While marketers battle for consumer attention, publishers that can offer curated audiences to advertisers will be in a strong position to maximise the value of their inventory. Buyers will be looking for solutions to connect with audiences across all screens and formats in ways that drive business outcomes.”

Virginie Dremeaux, VP of International Marketing and Communications at FreeWheel, commented: “As premium video continues to expand onto streaming platforms there are more opportunities for marketers to tap into high-quality, engaging content. The report highlights increased spend around the Men’s Euros, for example – emphasising the popularity of live TV as a way of combining mass appeal with advanced targeting and incremental reach. The strong growth of BVoD reinforces the positive outlook for media companies who have invested in broadening their offering and for the wider industry as a whole. We are seeing great work across the media and advertising industry to reframe linear TV and digital video as one convergent channel; from Barb’s audience measurement to advancements in programmatic, frequency capping and ad pacing technology, these efforts will continue to attract brand investments in the channel while ensuring video advertising delivers on both marketers and publishers’ goals.” 

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Categories: Advertising, Articles, Markets, Research

Tags: advertising, BVoD, cinema, euro 2024, WARC