Despite looming recession and turbulent economic headwinds, the latest Advertising Association/WARC Expenditure report shows that the UK advertising market experienced small growth.

The 1% increase in Q2 was largely due to a growth in online advertising spend.

The small growth sees the ad market reach a total of almost £9bn and is in line with AA/WARCS July forecast of 0.9% growth. Where the advertising industry can often be looked at as a barometer for the broader state of the UK economy, the report's latest results demonstrate this trend. The industry-verified data for Q2 of 1.0% ad spend growth is just ahead of ONS figures for the same period, which show GDP rose 0.6%.

“Advertising continues to show itself as a weathervane for the UK economy, with the advertising market expected to grow slightly more than the economy, with both barely in positive figures.” says Stephen Woodford, CEO, Advertising Association.

In the first half of 2023, the UK advertising market recorded a 1.0% year-on-year increase, equivalent to £17.5bn in spend from January to June 2023, compared to £17.3bn the previous year.

The Q2 report shows growth in key online formats, including search (+5.3%) and online display (+5.8%) which registered growth between April and June, as well as Broadcaster Video On Demand (BVOD) (+5.6%) and out of home (+4.4%). Such growth in the BVOD category could be attributed to sporting events such as the FIFA Women’s World Cup and the Rugby World Cup.

Looking ahead to forecasts for the full year, AA/WARC expects ad spend to grow 2.6% to reach £35.6bn in 2023. Double digit growth is expected from BVOD at 16.1% year-on-year, with increases also projected for online display (7.4%), out of home (7.7%) and cinema (7.6%). The success of the Barbie and Oppenheimer films are also expected to show impact in the latter half of the year as despite an overall gloomy economic picture, event cinema and cultural moments provide opportunity for the advertising industry.

“Looking ahead to 2024, we expect to see more channels experience growth again, as the ad market grows to £37bn for the year. As we anticipate the General Election next year, the Advertising Association will continue to demonstrate advertising’s contribution to a strong economy, not least that brands that continue to invest in advertising during a downturn are more likely to post better returns when emerging from tough conditions.” added Woodford.

The report shows that the UK’s ad market is set to grow by 3.9% to reach £37.0bn in 2024, which is a small point downgrade from July’s forecast of +4.0%. More channels are expected to return to growth next year, capitalising on the success of online as a category. Analysts expect that national and regional newsbrands and magazines will increase online revenues in 2024.