Research from the Advertising Association and WARC predicts that Q4 spend will reach £10bn pushing total spend up to £35bn for the year.
2022 has not been without its challenges, but the World Cup may spell a last minute goal for the ad industry, according to figures from the latest AA/WARC report. With both Christmas and the World Cup in Q4, the report has predicted advertising spend to be near £10bn pushing the total UK advertising spend forecast to £35bn for the year.
The Advertising Association/WARC Expenditure Report collects advertising revenue data directly from media owners across the entire media landscape and has found that UK adspend rose by 8.8% in Q2 2022 to a total of £8.6bn. Ad spend during the first half of the year was up 14.4% at £16.7bn.
The report has forecast the value of the UK’s advertising market will grow by 9.2% in 2022, to a total of £34.9bn. This figure reflects a downgrade of 1.7 percentage points from the previous forecast in July however, due to high levels of inflation and squeezed margins as supply chain issues have led to inflation and a subsequent rise in the cost-of-living. The advertising sector is not immune to such and while the media sector is bearing the brunt of these pressures, advertisers are facing higher media costs.
While projections of growth have been modestly adjusted, the ad market is still forecast to grow by 3.9% in 2023. One sector where growth is far from modest is in online advertising, where growth is set to increase to a total of 74.0% for 2022 and is expected to cross the three-quarters threshold (75.2%) in 2023.
Other areas of media that have seen growth are the likes of out of home (+46.4%) and cinema (+2,208.2%) which are two sectors that were struck hard by the pandemic and which are now returning to pre-pandemic strengths. Growth in these areas is proof of audiences' rejuvenated desire to engage in experiences and out of home activities.
Positive second quarter results were recorded across the publishing sector, including national newsbrands (+9.1%), magazine brands (+3.3%), and regional newsbrands (+0.6%) and in online classified advertising – representing recruitment advertising and property listings, among others – up by almost a third.
TV was the only medium to witness a decline in investment during Q2 (-0.6%) though broadcaster video-on demand continued to grow (+9.3%), indicative of the changing ways in which audiences interact with video content and post pandemic viewing habits settling.
“It is encouraging to see strong figures in Q2, with media channels continuing their recovery from the COVID-19 pandemic.” Stephen Woodford, Chief Executive, Advertising Association commented, “Looking forwards, political and economic stability is much-needed, given the inflationary and recessionary forces impacting all businesses.”
While a winter World Cup won’t see the usual increase in ad spend it would in summer, in combination with Christmas the tournament will help see the final quarter of 2022 see growth of 4.5% from last year’s record high, to a total of £9.5bn. This is a new record level of investment during the Christmas period.
While consumers navigate inflation throughout the festive period, opportunities for search advertising and eCommerce are set to be the quickest growing, with forecasts rising 7.3% to a total of £3.4bn. The season may also grant opportunities for TV advertising spend and video-on-demand.
“With the economic picture worsening amid ongoing political incertitude, the likelihood of a recession is now higher than when we last assessed market prospects,” warns James McDonald, Director of Data, Intelligence & Forecasting, WARC, yet opportunities in Q4 may help advertisers prepare to tackle the challenging year ahead.
|
Media |
Q2 2022 year-on-year % change |
H1 2022 year-on-year % change
|
2022 forecast year-on-year % change |
Percentage point (pp) change in 2022 forecast vs July |
2023 forecast year-on-year % change |
|
Search
|
10.8% |
16.5% |
11.7% |
-1.5pp |
6.2% |
|
Online display*
|
5.4% |
8.1% |
7.1% |
-4.3pp |
5.9% |
|
TV
|
-0.6% |
8.7% |
2.9% |
-3.0pp |
0.5% |
|
of which VOD
|
9.3% |
17.2% |
10.1% |
-3.2pp |
7.2% |
|
Online classified*
|
32.4% |
41.4% |
20.1% |
+14.5pp |
-4.5% |
|
Direct mail
|
3.8% |
9.5% |
2.8% |
+3.0pp |
-4.5% |
|
Out of home
|
46.4% |
79.1% |
31.2% |
+2.3pp |
4.8% |
|
of which digital
|
48.2% |
78.8% |
32.3% |
+1.8pp |
8.4% |
|
National newsbrands |
9.1% |
12.6% |
3.4% |
+2.3pp |
-2.5% |
|
of which online
|
13.2% |
16.3% |
8.2% |
+1.6pp |
3.7% |
|
Radio
|
7.0% |
13.1% |
6.2% |
+0.8pp |
0.1% |
|
of which online
|
5.9% |
14.6% |
8.1% |
-2.6pp |
6.3% |
|
Magazine brands
|
3.3% |
5.0% |
0.7% |
+2.0pp |
-5.9% |
|
of which online
|
3.9% |
9.9% |
5.4% |
+1.4pp |
-1.7% |
|
Regional newsbrands
|
0.6% |
10.3% |
2.6% |
+2.6pp |
-7.1% |
|
of which online
|
5.3% |
13.8% |
7.2% |
-0.8pp |
-0.5% |
|
Cinema
|
2,208.2% |
3,978.0% |
174.0% |
-17.2pp |
21.1% |
|
TOTAL AD SPEND |
8.8% |
14.4% |
9.2% |
-1.7pp |
3.9% |
|
Note: Broadcaster VOD, digital revenues for newsbrands, magazine brands, and radio station websites are also included within online display and classified totals, so care should be taken to avoid double counting. Online radio includes targeted in-stream radio/audio advertising sold by UK commercial radio companies, together with online S&P inventory. Source: AA/WARC Expenditure Report, October 2022 |
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