UK ad spend reached £9.6 billion in Q3 2023, according to the latest Expenditure Report from the Advertising Association (AA) and WARC. And while TV spending remained in decline, it is expected to return to growth this year.
Ad spend climbed by 15.9 percent YoY during July and September 2023, following two consecutive quarters of suppressed growth; ad spend was flat in Q1, and up just 1 percent YoY in Q2. The AA and WARC said the latest quarter marks the first time that ad spending in Q3 has exceeded £9 billion.
As a result of quarterly ad spend coming in higher than expected, the AA and WARC upwardly revised their full-year forecast. The UK ad market is now thought to have grown by 6.4 percent in 2023, reaching a total £37 billion.
The report credited the growth to a sharp uptick in search and online advertising, which rose by 23.7 percent and 24.8 percent respectively in Q3 – their strongest performance in 18 months. Online retailers in particular increased their online ad spend in the UK market by 156 percent during the quarter.
“Data show that online retailers more than doubled their online advertising spend during the third quarter, as pricing became competitive and brand salience paramount when attracting stretched household budgets,” said James McDonald, Director of Data, Intelligence & Forecasting at WARC.
All eyes on BVOD
However, ad spend on TV continued to fall, registering a 3 percent YoY drop in Q3. TV spend is estimated to have fallen 7.3 percent for the full year. But broadcaster video-on-demand (BVOD) increased by 28.4 percent during Q3, boosted by the Women’s FIFA World Cup. It is interesting to note that even with this BVOD gain, TV spend remained depressed.
But there were optimistic signs for TV advertising in the year ahead, with TV spend forecast to rise by 1.4 percent in 2024. “This year will see a continued increase in advertising spend across more channels, with events such as the Men’s Euros this summer, the likelihood of a General Election and residual coverage of the Olympics contributing positively to this trend,” said the report.
As a result, total ad spend is expected to reach £39 billion in 2024, up 5.9 percent YoY. The report noted that the results echo last week’s IPA Bellwether figures, which suggested marketing budgets are seeing their strongest growth in more than a decade.
“The Q3 increase in 2023 and 2024 forecast upgrade demonstrate advertisers’ continued commitment to investing in their brands, despite the lack of overall growth and stubborn inflationary pressures in the UK economy,” said Stephen Woodford, CEO of the Advertising Association. “The IPA’s latest Bellwether forecast upgrade is further evidence of this, with the strongest improvement in advertiser expectations on total marketing budgets since 2014.”
“Our forecasts indicate the advertising industry is performing better than the wider UK economy, with spend expected to reach £39 billion in 2024,” he added. “All this should provide confidence that the industry is well positioned to help the UK’s economy tackle the economic and social challenges it faces, by promoting product and service innovation, stimulating competition and supporting jobs.”
