WARC: +3.7% UK adspend growth forecast for 2017, despite Brexit

Cristina Blanaru Digital & Media, Marketing, Media, Studies

UK’s adspent growth will be of 3.2% in 2017, despite Brexit, predicts AA/Warc Expenditure Report, which just released the data for Q3 2016, the first full quarter after country’s vote to leave EU.

According to the released data, adspend went up 4.2% year-on-year in Q3 2016, reaching to £5,142M. This was driven by strong growth in internet spend (+15.3%), which in turn was boosted by 45.6% growth in mobile spend. Digital out of home spend (+24.7%) also performed strongly, and TV spend increased 1.4% from a record-high Q3 in 2015, when the UK hosted the Rugby World Cup.

The estimate for the entire 2016 adspend is 4.4% growth – a total of £21.1BN, up £886m compared to 2015. This is the seventh consecutive year of growth in the UK’s advertising market.

Stephen Woodford, Chief Executive at the Advertising Association said:

That adspend held up after the referendum is another marker of the strength of the UK’s advertising and media industries. As the Government gears up for Brexit negotiations and a new industrial strategy, it must prioritise protecting this global advantage.

James McDonald, Senior Data Analyst at Warc commented:

Drawing from over three decades of unique and extensive industry data, we know that the amount spent to reach consumers has never been greater. Advertising on social platforms, particularly via mobile devices as native articles and videos, will continue to garner surging investment this year as marketers shadow media consumption habits. Yet the TV spot, an industry staple, will remain the largest ad format by spend in 2017

At-a-glance media summary Q3 2016

  • Television advertising expenditure across all formats went up 1.4% YOY, to £1,224M in Q3. Of this, spot spend rose 0.6% to £1,097m from a notably strong Q3 2015, when ITV broadcast the Rugby World Cup. Total TV adspend is estimated to have grown 1.6% to £5.4bn in 2016, with further growth of 1.6% forecast for 2017.
  • Radio adspend – incorporating spots, branded content and digital ad formats – rose by 5.6% in Q3 2016, reaching £157m. It is estimated to have grown 3.9% in 2016, with growth of 2.1% forecast this year.
  • Out of home (OOH) adspend grew 3.1% in Q3 2016 to reach £279m. This was driven by digital OOH growth of 24.7%. Total OOH adspend is estimated to have grown 5.0% in 2016, with growth of 2.2% forecast for 2017.
  • National newsbrands adspend declined by 9.0% year-on-year in Q3 to a total of £258m, however ad revenue from digital formats increased 4.7% to £59m. Total ad revenue for national newsbrands is estimated to have contracted by 9.8% in 2016 (though income from digital ads grew 2.1%) and a slower decline of 7.9% is forecast for 2017.
  • Regional newsbrands’ ad income decreased by 14.7% in Q3 2016 to a total of £250m. Collective advertising revenues from both digital (-1.5%) and print (-17.5%) properties dipped during the quarter. Total regional newsbrand adspend is estimated to have declined by 11.9% in 2016 (with digital spend down 1.7%), though a softer fall – of 8.6% – is forecast for 2017.
  • Magazine brands adspend declined 9.5% in Q3 2016 to a total of £224m, however digital ad revenue increased 0.8%. Total ad revenue for magazine publishers is estimated to have fallen 6.0% in 2016 (despite 2.6% digital growth), easing to a forecast 5.1% decline for 2017.
  • Cinema adspend increased 17.1% year-on-year in Q3 2016 to a total of £65m. Spend for 2016 as a whole is estimated to have increased 9.2%, with growth of 2.4% forecast for 2017.
  • Internet adspend grew by an estimated 15.3% year-on-year in Q3 2016 to a total of £2,518m, driven by mobile adspend growth of 45.6% (to £994m). Total internet adspend in 2016 is estimated to have risen by 14.4% (with mobile spend up 45.9%). Further growth, of 9.5%, is forecast for 2017, by when internet will account for over half of all UK adspend.
  • Direct mail adspend declined 14.6% in Q3 2016 to a total of £400m. Adspend in 2016 is estimated to have declined 10.4%, though the rate of decline is expected to east to 7.8% during 2017.

The Advertising Association/Warc Expenditure Report is the definitive measure of advertising activity in the UK. It is the only source that uses advertising expenditure gathered from across the entire media landscape, rather than relying solely on estimated or modelled data. With total market and individual media data available quarterly from 1982, it is the most reliable picture of the industry and is widely used by advertisers, agencies, media owners and analysts.