The Advertising Association (AA) and WARC Expenditure Report has found that the UK’s ad market grew by 8.8% to reach £34.8 billion in 2022.
This is despite a dip in the final quarter of the year which saw UK ad spend fall by 5.8% to a total of £8.6 billion, the first time spend had decreased during a fourth quarter since 2009.
The AA/WARC Expenditure Report also found that online advertising – three-quarters (75.1%) of total UK spend last year – grew 30.1% in the first half of 2022 before falling 5.4% in the second half. Subsequently, total ad spend in the first half of the year sat at 26%, while the second hlaf contracted by 5.7%.
Continuing their year-on-year improvements, cinema and out-of-home (OOH) mediums saw the strongest growth in 2022, with ad spend rising 123% and 31.1% respectively. Broadcaster video on demand (BVOD) (15.4%) and paid search (12.7%) also posted strong figures.
Looking forward, AA/WARC forecasts for the coming year show reduced growth expectations for most sectors of advertising due to high inflation, muted growth and talent shortages across the industry. The forecast for 2023’s ad market has been downgraded to a rise of just 0.5% (compared to a 3.8% forecast published in January) reaching £35 billion. While cinema is expected to grow a sizeable 37.2% in 2023, OOH is forecast modest growth of 4.9%.
In 2024, the UK’s ad market is predicted to grow by 3.9% totalling £36.3 billion, as high inflation and stagnation are expected to subside.
As a result of the report’s findings, the UK remains the third-largest advertising market in the world.
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“These figures reflect the broader macro-economic environment, with a cautious outlook as the UK economy narrowly avoids recession, but shows very little signs of real growth,” AA chief executive Stephen Woodford said. “Advertising investment is an important barometer of business performance and confidence in the economic outlook. It drives competition and innovation, supporting job creation and livelihoods, returning a ration of £1 invested generating £6 of GDP.”
WARC director of data, intelligence and forecasting, James McDonald, added: “The latest verified media data reveals that the UK’s ad market entered recession in the second half of 2022, with clear signs that the downturn has continued into the opening months of this year.
“Sharp and sustained falls in social media spend – the first time this has been recorded in the UK – are likely to have been instigated by reduced advertising activity among the SMEs who comprise a ‘long tail’ of ad volume on social platforms and whose margins are under incredible stress as inflation bites. One in every 202 UK companies entered liquidation in 2022 – the highest rate in seven years – and it is unsurprising to see these pressures reflected to some degree within advertising trade.”
