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UK ad spend expected to reach £40billion by 2025

Total UK advertising spend rose by 6.1% to £36.6bn in 2023 and it’s forecast to break £40bn by 2025.

The figures were released this morning in the Advertising Association/WARC Expenditure Report.

The growth represents the 13th annual expansion in the sector and also reveals that online now accounts for more than three-quarters of all ad-spend for the first time. Although it’s worth bearing in mind that it actually equates to a 1.2% contraction in real terms, when accounting for high inflation.

While further increases are predicted, they are at a slower pace, 5.8% to reach £38.8bn this year and then 4.5% in 2025 to £40bn+.

“The continued shift to online advertising formats reflects the changing shape of our economy, with people increasingly shopping online as well as on the high street, and businesses striving to provide the best customer experience in all scenarios,” explained Stephen Woodford, Chief Executive, Advertising Association.

“The UK advertising industry is much respected around the world, which is why we continue to see the exports of UK advertising services grow, an important source of additional revenue for many advertising businesses in a domestic economy that has little-to-no growth.”

Online formats grew 11% to reach a total of £28.7bn in January 2023, which is equivalent to 78.4% of all UK ad spend.

Out of home (+9.7%) was the only other advertising medium to record growth.

The only major product sectors to record rising display ad spend (excluding search and classified formats) last year were retail (+5.0%) and services (+4.7%), the latter almost entirely attributable to a 6.6% rise in the entertainment & leisure sector. 

The Christmas period topped £9.7bn after achieving growth of 7.4% year-on-year. This was led by digital out-of-home (+18.1%) and BVOD (+15.9%) as well as search (+12.9%).

2024/2025

Looking ahead to the next couple of years, AA/WARC expects the UK advertising market to grow 5.8% to reach nearly £39bn in 2024. 

Broadcast media, most notably TV (+2.6%) and radio (+2.3%) are expected to return to growth, as is cinema (+2.5%). 

Among digital formats, search (+8.9%) and online display (+6.4%) are again set to see the strongest rises, closing the year with a combined share of 77% of all spend.

Brands are expected to invest heavily in advertising due to more favourable economic conditions, the Men’s Euros and the General Election. Plus the Paris Olympics in July, is expected to contribute to growth in formats such as broadcaster video-on-demand (+14.1%).

“Our latest survey of media owners confirms 2023 as a challenging year for most, with few properties recording gains and spend instead further consolidating within search and online display formats – particularly social media. Combined, these digital staples are on course to account for almost four in five pounds spent on advertising in the UK next year, up from a share of 51% just five years ago,” added James McDonald, Director of Data, Intelligence & Forecasting, WARC.

“Our forecasts assume that the UK’s economy will begin to break from the pattern of stagnation that has come to define recent quarters. Easing inflation over the coming 18 months should encourage more favourable trading conditions within the advertising sector, facilitating growth across a broader range of channels in turn.” 

Media2022 £m2023 £m2023 year-on-year % change2024 forecast year-on-year % change2025 forecast year-on-year % change
Search13,143.814,705.011.9%8.9%6.4%
Online display11,612.212,925.111.3%6.4%5.5%
TV5,381.04,900.0-8.9%2.6%0.9%
of which BVOD845.4979.615.9%14.1%11.0%
Out of home1,181.21,295.39.7%7.2%5.6%
of which digital749.9841.312.2%9.5%7.3%
Online classified1,110.81,080.8-2.7%-0.6%1.5%
Direct Mail1,094.5956.7-12.6%-4.9%-3.3%
National newsbrands825.3773.6-6.3%-3.3%-2.1%
of which online374.5352.8-5.8%-0.8%0.8%
Radio740.1715.5-3.3%2.3%1.6%
of which online77.772.2-7.1%7.5%4.1%
Magazine brands553.8503.3-9.1%-5.1%-0.8%
of which online302.2260.8-13.7%-4.8%2.0%
Regional newsbrands505.2454.2-10.1%-3.3%-2.0%
of which online259.2239.4-7.6%-1.7%0.2%
Cinema229.5219.9-4.2%2.5%2.2%
TOTAL UK AD SPEND34,518.536,624.36.1%5.8%4.5%

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