The AA/WARC Expenditure Report covers all major media and ad formats, includes adspend by product category and quarterly data going back to 1982 along with projections for the next two years.
- Overall growth for 2020 is predicted to reach 5.3%.
- Total online display, which includes broadcaster video-on-demand, saw growth of 16.6%.
- Online radio advertising expenditure grew by 26.5% year-on-year.
- Growth is predicted for the majority of advertising formats across 2019, with online radio and video-on-demand forecast to see the most significant gains (22% and 18.1% respectively).
Q1 2019 marks the 23rd consecutive quarter of market growth and covers the three-month period leading up to the original scheduled Brexit date of March 29, 2019. It comes as the government has indicated it will spend a reported £100m on advertising to prepare business for a no-deal Brexit ahead of the next scheduled departure date of Oct 31.
“We hope that the new administration can deliver a business-friendly outcome to our relationship with the EU, ensuring the UK’s domestic advertising market remains robust and our advertising exports, which are world-class, keep growing,” said Stephen Woodford, Chief Executive at the Advertising Association.
The report forecasts growth to £24.6bn for 2019, equivalent to a 4.6% annual increase, with the UK’s ad market expected to grow a further 5.3% in 2020.
The figures highlight growth coming from areas including search, online display, TV VOD, online radio, out-of-home and cinema.
Online advertising expenditure performed notably across a number of formats, with online radio seeing standout year-on-year growth of 26.5% in the first quarter. TV VOD achieved an increase of 17.5% in the same period, while total online display saw an increase of 16.6%. Digital out of home also experienced a good Q1 with growth of 10.9%.
Across traditional formats, cinema saw strong growth of 12.3% in Q1 2019 versus Q1 2018, making it the second-fastest growing medium overall.
Growth is forecast for 2019 across the majority of formats, with the greatest increases predicted in digital ad formats for radio broadcasters and broadcaster video-on-demand (BVOD).
But these projections are dependent on the emerging political climate. “As before, we have assumed that the UK will leave with a deal in place and that the worst-case scenario recently outlined by the Office for Budget Responsibility, with the economy entering a recession next year, will be avoided”, the report states.
Damon Reeve, CEO, The Ozone Project, said: “It’s really encouraging to see that the UK advertising industry continues to grow in the face of uncertainty; and even more so to see that online advertising is the driving force behind this, with brands continuing to engage with and put their faith in the medium. However, digital growth continues to be dominated by the big tech players, with publishers and premium content creators having to fight hard to earn their share. In this era of unprecedented content creation, the importance of advertising in trusted, brand-safe environments is becoming a number one priority and premium, trusted publishers can offer this to help brands reach engaged audiences at scale. The strong forecasted growth (12.8%) for online in 2019 is positive, but publishers will need to come together to demonstrate the power of their engaged audiences, premium content and trustworthy environments to successfully compete and capture that growth.
Julia Smith, Director of Communications, Impact, said: “The most recent AA/WARC report demonstrates a continued strength across the UK advertising industry, especially the promising growth of TV VOD advertising by 17.5% in 2019. This reveals that there is a fair amount of trust within the industry and emerging platforms which are becoming increasingly appealing. However, as an industry we must keep pace by maintaining trust and transparency. The overall increase in ad spend provides companies and marketers the opportunity to diversify and expand to generate stronger areas of revenue. We expect to see marketers doing this by streamlining their partnerships through a sustainable partnership channel. Most recently a global Forrester study with Impact announced that 76% of companies agree that partnerships are key to delivering revenue on their goals. Businesses are already seeing the benefits and I expect to see continued investment in this sector moving into 2020.”
Lou Weiss, Chief Marketing Officer, Shutterstock, said: “Online display remains a significant area of growth and demonstrates how advertisers and marketers are continuing to prioritise quality digital content. A driving factor within this is digital video, which over half of consumers want to see more of (according to a recent trends report), and an area that is predicted to dominate global internet traffic over the coming years. We are seeing an increased demand for motion content i.e video and music, as brands and agencies continue to recognise the power of video to reach audiences in a quick and engaging way. We expect to see sustained growth and investment in the area of video advertising as it remains a priority for marketers.”
David Walsh, Chief Business Officer, Mindshare UK, said: “It’s fantastic to see that adspend in the UK is on a growth trajectory, with the report forecasting an upward rise of 5.3% in 2020. As traditional formats expand their digital capacity, it’s not surprising that online expenditure has achieved higher growth across the board.
“Interestingly, search is highlighted as a key area – predicted to rise by 9.9% in 2020. Our Mindshare Future of Search report revealed that search is becoming increasingly sophisticated, particularly with the rise of smart speaker adoption and image recognition technologies.
“As expenditure in this area is predicted to grow, the search landscape will become more diverse. Marketers will therefore need to think about a cohesive, cross-platform search strategy as part of their communication plans, that reflects the nuances of key search platforms for brands across different stages of the consumer journey.
Sam Taverner, EVP, Merkle EMEA, said: “It’s encouraging to see that the UK’s ad market continues to grow, with positive figures reported across both traditional and online formats. With the report revealing increased spend on search / SEO and online display, it’s clear that marketers are rightly investing in maximising performance and media efficiency to deliver the right message at the right time in the consumer’s journey on path-to-purchase.
Personalisation remains the key to driving engagement. As organisations find new ways of leveraging their data and analytical assets across all channels, brands are becoming more savvy about how and where to deploy marketing spend. This should be a crucial priority for businesses as today’s economic and political uncertainties continue to remain at large, despite the ad industry’s forecasted growth.
John Davidson, Chief Operating Officer, Kinetic, said: Out-of-home (OOH) continues to show its real world strength once again, proving itself to be a key growth channel in the UK advertising industry. Not only has traditional OOH been predicted further growth in 2020, digital OOH (DOOH) stands out with a forecasted 10.8% growth for the following year, the second highest advertising format behind online radio.
New brands that might not have not traditionally invested in the medium are now keen to invest in DOOH, and with the format continually innovating, there’s never been a better time to do so. With its amplified flexibility and dynamic creative and real-time capabilities, DOOH is now an integral part of performance marketing, delivering both long-term brand building and short-term sales activation. Its ability to work well alongside both mobile and addressable TV offers new creative opportunities, and this latest report shows that DOOH is a firm fixture alongside tried-and-true traditional OOH within the UK advertising sector.