Report: UK Q1 adspend flat

July 27, 2023

British advertising remained stable in the first quarter of the financial year 2023 with flat year-on-year spending of £9 billion (€10.5bn), the AA/WARC Expenditure Report shows.

The outlook for the full year, however, has improved +2.1 percentage points on April’s forecast to reach BP 35.7 billion, equivalent 2.6 % expected year-on-year growth.

With the economy flat over the last three years, and inflation remaining stubbornly high, macroeconomic headwinds continue to bear down on the UK’s advertising industry,” notes James McDonald, director of data, intelligence & forecasting, WARC. “That said, a welcome return to growth in key online sectors during the first quarter has been cause for an upgrade to our full year projections, with a forecast rise of 2.6 % demonstrative of more favourable trading conditions in the second half of the year.”

Some of this anticipated growth reflects a return to spending in online formats, which are forecast to account for 76.7 per cent of all advertising spend this year (versus 75.1 per cent in 2022).

This adspend share growth is expected to continue steadily into 2024, when online advertising is forecast to take a 77.6 % share.

Q3 appears to be blessed with advertising-friendly big events, not least the Women’s World Cup, which is set to provide a boost to TV spots, sponsorship, radio, and OOH spending growth.

Elsewhere, cinema – a heavy casualty due to the pandemic – is projected to grow 20.8 per cent year on year for this quarter, propelled by this summer’s blockbuster releases: Barbie, Oppenheimer, and a new instalment of Mission Impossible.

“With high inflation continuing to depress consumer and business confidence, we may end up seeing a real-terms contraction of nearly 4.3 per cent in 2023 for UK advertising investment,” advises Stephen Woodford, CEO, Advertising Association. “The recent higher-than-expected fall in inflation will hopefully continue and with that we will see confidence begin to build later in the year and into 2024, when the ad market is expected to return to growth,” he added.