After the Covid-19 pandemic crisis, the British advertising sector is expected to reach 36 billion pounds this year
The latest quarterly data from the Advertising Association/WARC Expenditure Report showed that UK advertising spend increased by 4.3% to a total of £8.5 billion between July and September 2022. The period reflects the ninth consecutive quarter of growth and demonstrating a continued and resilient recovery of the sector from the covid-19 pandemic.
According to the report, the UK advertising market is expected to grow by a further 3.8% in 2023, totaling £36.1 billion, following an estimated 8.8% increase in 2022, based on the latest revenue data from advertising collected directly from media owners.
Despite the increase, the projection for 2023 is equivalent to a drop of 3.0% in real terms, once inflation is taken into account, and forecasts for the next year show reduced growth expectations for almost all advertising sectors in the country.
The UK advertising industry has held firm in its ongoing recovery from the Covid pandemic, with ad spend holding up in the face of significant headwinds. However, the economic pressures of 2022, including the impacts of high inflation on the wider economy and media costs, mean that in real terms spending is likely to be flat. All these pressures contribute to slower growth projections for the year ahead,” explained Stephen Woodford, executive director of the Advertising Association.
Third quarter of 2022
Figures released by the Advertising Association/WARC for the first nine months of 2022 confirmed that the sector grew by 10.8%, with the total value reaching 25.3 billion.
Out of Home (OOH) and cinema specifically continued its strong recovery during Q3, with searches up 7.7%, equivalent to nearly 40% of total ad spend during the quarter. Social media, included in the online view, also continued to grow (+4.4%), while spending on video-on-demand (BVOD) transmission increased by 4.3%.
Revised projections for 2022
The UK advertising market is believed to have reached a total of £34.7 billion in 2022, as preliminary estimates put growth at 8.8% last year, representing a 0.4pp drop from projections. of October of the same year. After accounting for inflation, real growth was considered stable in 2022, at -0.1%.
Spending during this period was estimated at 4.0%, for a total of 9.5 billion, as the winter period hosted the two biggest ad spending events: Christmas and the FIFA Men’s World Cup. Despite this, growth was half a point below previous forecasts.
Despite an air of resilience in recent market results, an impending recession will put pressure on the ad business this year. We forecast ad market growth to slow to 3.8%, which is equivalent to a decline in real terms and the weakest increase in a decade, if the 2020 pandemic is excluded. On the bright side here, our current modeling suggests the downturn will be short-lived, with ad spend set to increase by 5% in the first nine months of 2024,” added James McDonald, director of data, intelligence and forecasting at WARC.