AA/WARC: UK ad market to reach £36bn but growth will slow

The latest quarterly data from the Advertising Association / WARC Expenditure Report shows UK advertising spend rose by 4.3% to a total of £8.5bn between July and September 2022, demonstrating the ongoing recovery from the COVID-19 pandemic. 

The UK’s ad market is expected to grow by a further 3.8% this year, totalling £36.1bn and following on from an estimated 8.8% rise in 2022, based on the latest advertising revenue data collected directly from media owners. 

The projection for 2023 matches the previous forecast (published in October 2022) but equates to a 3.0% real terms decline once inflation is accounted for. Forecasts for the coming year show reduced growth expectations for almost all sectors of advertising in line with pressures felt by all parts of the economy.

Actual figures released by the Advertising Association/WARC for the first nine months of 2022 confirm that growth was up by 10.8%, with the total figure standing at £25.3bn.  Search, social media and broadcast video on-demand (BVOD) grew in Q3 2022. Search rose by 7.7%, equating to almost 40% of total ad spend during the quarter. Social media, included within online display, continued growing (+4.4%), while BVOD spend rose by 4.3%.

Revised 2022 projections

The UK’s ad market is now thought to have reached a total of £34.7bn in 2022, estimates put growth at 8.8% last year – this represents a slight downgrade of -0.4pp from the October projections. After accounting for inflation, real growth was thought to have been flat in 2022, at -0.1%. Crucially, a retained recovery is projected for Q4 2022, as the winter period hosted the two biggest events for ad spend: Christmas and the FIFA Men’s World Cup. Spend during this time was estimated to have grown by 4.0%, to a total of £9.5bn. This growth was still half a point behind previous forecasts but should be considered as a good performance given economic challenges. 

Stephen Woodford, Chief Executive, Advertising Association said: “The UK advertising industry has held firm in its continued recovery from the COVID pandemic, with ad investment holding up in the face of significant headwinds. However, the economic pressures of 2022 including high inflation’s impacts on the wider economy and on media costs means in real terms spend is likely to be flat. These pressures all contribute to slower growth projections for the year ahead.”

James McDonald, Director of Data, Intelligence & Forecasting at WARC, added: “The silver lining here is that our current modelling suggests that the slump will be short lived, with advertising investment set to lift by 5% over the first nine months of 2024.“

The Advertising Association/WARC quarterly Expenditure Report is the definitive guide to advertising expenditure in the UK with data and forecasts for different media going back to 1982.