The latest Advertising Association/WARC Expenditure Report has predicted that the value of the UK’s advertising market will grow by 9.2% in 2022 to a total of £34.9 billion.
This shows a downgrade of 1.7pp from a previous forecast made in July earlier this year.
The forecast total considers high levels of inflation and squeezed margins as UK plc deals with the subsequent rise in the cost of living. The ad association also believes that the media sector is ‘bearing the brunt of these pressures’ with advertisers facing higher media costs.
While UK ad-spend rose by 8.8% in Q2 to a total of £8.6 billion, spend is projected to near £10 billion during the Q4 World Cup Christmas period. According to the Advertising Association/WARC, search advertising – including e-commerce – is predicted to be one of the quickest growing media over the quarter, rising by 7.3% to £3.4 billion.
In 2023, the UK’s ad market is predicted to grow by further 3.9% to a total of £36.2 billion.
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“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,” WARC director of data, intelligence and forecasting, James McDonald, said.
“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.”
Advertising Association chief executive, Stephen Woodford, added: “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.”
