UK ad spend exceeds expectations in Q1

The data indicated that growth in ad spend was three percentage points ahead of forecasts, with online growth performing stronger than expected and online formats accounting for 79.7% of all UK spending in the first quarter.

The online advertising market had a strong quarter from January to March, with search (including retail media) up by 12% and online display (including social media) up 12.8%.

There was also a return to growth for cinema (up 6.4%) and TV ( 1.2%), with broadcaster video-on-demand (BVOD) seeing a continued strong increase at 19.2%.

New forecasts for the second quarter of 2024 indicated that ad spend would likely increase by 9.2% compared to the same period last year, partly due to the snap general election and Euro 2024.

If the figures for the second quarter were borne out, it would equate to a 9.3% rise in ad spend in the first half of 2024 to a total £18.9bn.

The UK advertising market is now expected to grow by 7.7% to reach £39.4bn this year, an upgrade of 1.9 percentage points since AA/WARC’s April forecast.

Advertising channels expected to see a boost include out of home (up 12.5%), search ( 10.1%) and radio ( 5.5%).

Advertising spend on BVOD is also set to cross the £1bn threshold for the first time with an increase of 13.7%, driven by a strong summer of sport including demand Euro 2024 and the upcoming Olympics and Paralympics.

A further rise of 5.5% is expected in 2025, by when the UK’s advertising market is set to reach £41.6bn, an upgrade of one percentage point from the April forecast.

Stephen Woodford, chief executive at the Advertising Association, said: “It is welcome news to see real-term growth and upgraded forecasts in the advertising market in Q1 this year, a positive sign that our industry is one of the driving factors in the UK’s economic recovery.

“This is a timely reminder of its dynamism as the new government seeks to create an environment for growth, through political stability and a new industrial strategy. Advertising is a UK-wide industry, with three in five advertising jobs based outside of London and it is central to the successful development of the digital economy across the whole country.”

James McDonald, director of data, intelligence and forecasting at Warc, added: “The enduring strength of legacy display media – chiefly TV, out of home, radio and cinema – was also evident in the first quarter, and we expect this to have sustained into the second due in part to short term stimuli such as the men’s Euros and snap general election.”

Reaction

Jessica McGrogan, general manager business development, The Trade Desk
UK ad spend across all channels is up again – a consistent pattern we expect to continue in H2 and beyond as marketers prioritise an omnichannel approach. And as advertisers consider the pounds behind their outstanding campaigns, they’ll ponder on how they can maximise a return on their investments. The answer lies in measurement. 

We shouldn’t be distracted by Google’s constant flip flopping as cookies won’t give advertisers the cross-channel insights they need. There are other identity solutions that upgrade the consumer experience and give advertisers a much deeper and comprehensive understanding of consumer behaviour to ensure they are getting the biggest bang for their buck.

Justine O’Neill, senior director, Analytic Partners
The digital age has well and truly shown its dominance in the market as AA WARC reports that online formats accounted for almost 80% of ad spend in the first quarter of this year. Search spend was particularly strong between January and March, rising by 12% – including retail media which continues to be a focus for budget allocation. But it’s not enough to simply throw money at a channel – the key to ensuring retail media retains its power and purpose in a digital strategy is a holistic measurement approach and open data sharing from retailers.     

Spikes in ad spend brought on by infrequent events such as the Euros and Olympics/Paralympics have heralded a strong and robust outlook for the UK advertising industry. While it’s understandable brands are front loading and pushing out creative around these key points, businesses need to remember that sponsorship is just the start line.