Advertising spend is holding steady according the the latest AA/WARC Expenditure Report. According to the report in the first quarter of 2023 advertising spend remained flat at 0.1% year on year growth, reaching a total value of £9.0bn.

Yet, the report finds that while growth is set to be minimal in 2023 at 2.6%. The outlook has improved since the previous forecast in April, with spend predicted to reach £35.7bn. This revision is due to the growth of key online advertising formats, which is now forecast to account for 76.7% of all spend this year.

Q1 by catagory

The report shows online to be the stand out category of Q1 with figures reflecting key online formats returning to growth including search (+5.1%) and online display (+3.6%) in the first three months of this year. These two formats alone accounted for over two-thirds of all advertising spend during the first quarter.

While legacy media had a challenging quarter, streaming platforms, particularly those owned by broadcasters, recorded strong results. Broadcaster video-on-demand (BVOD) spend rose 18.7% during the first quarter and is set to continue posting gains over the forecast period. Online radio also saw improved growth over the first three months of 2023 rising 7.6%, while digital out of home (DOOH) also maintained strong growth, up 6.8%.

Capitalising on cultural moments

The industry can remain optimistic as despite reports of a modest Q1, large scale cultural events such as the Women’s World Cup, the Para Athletics World Championships and cinema phenomenon, ‘Barbenheimer’ are predicted to bolster spend throughout the remainder of the year.

The sporting events of the are set to provide a boost to the UK advertising market through an increase in TV spots and sponsorship. During this time radio and out of home are also expected to see adspend growth.

Where 'Barbenheimer' has already broken records as the biggest UK box office opener since 2019, cinema is another channel experiencing huge levels of growth, especially post pandemic. The category is projected to record 20.8% year-on-year growth this year, spearheaded not only by blockbusters Barbie and Oppenheimer but upcoming anticipated flicks such as Mission Impossible: Dead Reckoning Part One and Wonka.

Maintaining growth in uncertainty

Overall the report maintains a conservative approach to spend across the year, as businesses and families continue to face turbulent economic headwinds. Iflationary pressures are leading to a cautious approach to spending see projections for 2023 suggesting a 4.3% contraction to the market in real terms.

“This latest forecast indicates a slight improvement in outlook in terms of growth of spend, with the improvements in online forecasts being notable. However, with high inflation continuing to depress consumer and business confidence we may end up seeing a real-terms contraction of nearly 4.3% in 2023 for UK advertising investment,” says Stephen Woodford, CEO, Advertising Association, “The recent higher-than-expected fall in inflation will hopefully continue and with that we will see confidence begin to build later in the year and into 2024, when the ad market is expected to return to growth.”

The report finds that the UK’s ad market will grow by a further 4.0% in 2024, to a value of £37.1bn. While this is a slight downgrade (-1.3pp) from AA/WARC’s April forecast, the industry can still be optimistic that despite external economic pressures this still equates to +1.1% growth in real terms.

While the industry continues to face external economic pressures, the upcoming events of 2023 and beyond should provide some hope and inspiration. As this weekend’s ‘Barbenheimer’ cinematic success shows that we can never underestimate the power of cultural moments to drive marketing spend.