The UK advertising market reported a £36.6 billion adspend in 2023, a 6.1% increase in investment on the previous year, marking the sector’s 13th annual expansion in just 14 years.
Revealed in the Advertising Association (AA) and WARC’s latest Expenditure Report, this promising growth trend is set to continue across 2024, with the market’s value forecasted to reach £38.8 billion this year and top £40 billion by 2025.
The predicted 5.8% rise in adspend this year does however mark a small (0.1pp) downgrade on January’s forecast with ‘prolonged inflationary pressures’ stifling investment. Slower growth of 4.5% is forecast for next year.
Despite the market’s 6.1% growth equating to a 1.2% contraction in real terms, the UK is still outpacing its nearest neighbours with Ireland (3%) and France (2.1%) proving sluggish and Germany’s market contracting (by 0.7%).
The UK’s adspend is set to dwarf its neighbouring markets by as much as £16 billion in 2024.
A continued market shift towards online formats saw these dominate the market throughout 2023, accounting for over three-quarters of all UK ad spend for the first time.
Having grown 11% to reach a total of £28.7 billion in 2023, online was the driver behind 78.4% of market investment last year, with out-of-home (9.7%) the only other medium to experience growth.
The only product sectors to record rising display adspend last year were retail (5%) and services (4.7%), with the latter’s growth attributed to a 6.6% rise in the entertainment and leisure sector.
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For the first time the AA and WARC also provided a breakdown of 2023’s golden quarter, which saw adspend top £9.7 billion after posting 7.4% year-on-year growth led primarily by digital out-of-home (18.1%), broadcaster video-on-demand (15.9%) and search (12.9%).
The AA and WARC also expect adspend across broadcast media to return to growth this year, spearheaded by TV (2.6%), cinema (2.5%) and radio (2.3%), whilst search (8.9%) and online display (6.4%) are set to see strongest rises among digital, closing the year with a combined share of 77% of all spend.
“The continued shift to online advertising formats reflects the changing shape of our economy, with people increasingly shopping online as well as on the high street, and businesses striving to provide the best customer experience in all scenarios,” AA CEO, Stephen Woodford said.
“The UK advertising industry is much respected around the world, which is why we continue to see the exports of UK advertising services grow, an important source of additional revenue for many advertising businesses in a domestic economy that has little-to-no growth.”
More favourable economic conditions in 2024 should encourage greater investment in brand-building campaigns according to the report, with major events such as the 2024 Paris Olympics and Euro 2024 forecasted to contribute to healthy broadcaster video-on-demand growth (14.1%).
The picture is set to improve for even more channels in 2025, with an 11% rise in adspend for broadcaster video-on-demand anticipated, as well as 6.4% for search and 5.5% for online display as economic headwinds ease.
WARC director of data, intelligence and forecasting, James McDonald added: “Our latest survey of media owners confirms 2023 as a challenging year for most, with few properties recording gains and spend instead further consolidating within search and online display formats – particularly social media.
“Combined, these digital staples are on course to account for almost four in five pounds spent on advertising in the UK next year, up from a share of 51% just five years ago.
“Our forecasts assume that the UK’s economy will begin to break from the pattern of stagnation that has come to define recent quarters. Easing inflation over the coming 18 months should encourage more favourable trading conditions within the advertising sector, facilitating growth across a broader range of channels in turn.”
