Ad spend rose 6.1% in 2023

The report showed the latest increase in advertising spend was the 13th recorded in the last 14 years, with online formats accounting for more than three-quarters of all advertising spend.

Forecasts predicted there would be a 5.8% rise in advertising spend in 2024 to a total £38.8bn, as well as further growth of 4.5% in 2025 to take the UK’s advertising market above the £40bn mark.

When compared to Europe’s largest advertising markets, the UK’s advertising industry outpaced Germany (-0.7%), France (+2.1%) and Ireland (+3%) last year, and is expected to repeat this in 2024.

Online formats combined grew by 11% to reach a total of £28.7bn in 2023, equivalent to 78.4% of all UK ad spend, and out of home was up 9.7% as the only other advertising medium to record growth in 2023.

The only major product sectors to record rising display ad spend last year were retail (+5%) and services (+4.7%), the latter almost entirely attributable to a 6.6% rise in the entertainment and leisure sector.

The latest data also showed last year’s Christmas advertising season topped £9.7bn for advertising spend, registering growth of 7.4% year-on-year.

Television (+2.6%), cinema (+2.5%) and radio (+2.3%) are expected to return to growth in 2024, while search (+8.9%) and online display (+6.4%) are set to see the strongest rises this year, closing the year with a combined share of 77% of all spend.

The AA and Warc said that more favourable economic conditions should encourage advertisers to invest more in brand-building campaigns in 2024 and this, coupled with the men’s European Championships in June, the upcoming general election and the Paris Olympics in July, is expected to contribute to growth in formats such as broadcaster video-on-demand (+14.1%) this year.

Stephen Woodford, chief executive at the AA, said: “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.

“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.”

James McDonald, director of data, intelligence and forecasting at Warc, said: “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.

“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.”

Steve Phillips, chief executive and co-founder at Zappi, responded to the findings: “You can't deny the shift towards digital advertising, which is happening at a breakneck pace and accounts for over 78% of total ad spend in the UK. This underscores how critical it is for marketers to have solid digital capabilities these days. 

“Importantly, this digital transformation also heightens the need for marketers to deeply understand evolving consumer behaviours and preferences. Consumers are spending more time than ever shopping online and engaging with digital media and platforms, making faster, better and more often consumer insights critical for delivering impactful and captivating ads.”