UK advertising spend achieves record for Q1 2018

Growth twice rate of GDP, Full Year 2018 forecast revised up to 4.8%
London, 31 July 2018 – UK advertising spend in Q1 2018 rose 5.9% year-on-year to reach £5.7bn – the 19th consecutive quarter of market growth, according to Advertising Association/WARC Expenditure Report data published today. The figure is 1.3 percentage points (pp) ahead of forecast.

Further key findings from the report indicate:
Q1 2018 was the strongest first quarter in three years
Print display ad revenue for national newsbrands rose for the first time in seven years
Radio (+12.5%) recorded its strongest growth in four years, while internet (+10.8%), out of home (+5.3%) and TV (+5.0%) were all positive during the quarter
Adspend growth forecasts for this year and next have been upgraded, by 0.6pp to 4.8% and 0.7pp to 4.5% respectively. If proved correct, this would conclude a decade of continuous growth, and result in investment of over £24bn in 2019.

Search now accounts for almost three in ten pounds spent on advertising in the UK, a share which has risen 1.8pp over the last year. Spend on search advertising has grown consistently since monitoring began in 2001.

Display formats, which account for just under two-thirds of all adspend in the UK, recorded a rise in investment of 4.7% in Q1 2018 – on a par with the rate recorded in the final quarter of 2017. Excluding direct mail, spend on display formats rose 6.0%. This was the strongest sector growth since the final quarter of 2015.

Stephen Woodford, Chief Executive at the Advertising Association said:

“Our latest advertising expenditure figures reflect the resilience of the wider UK economy, where consumer confidence is improved and the jobs market remains very strong. UK advertising continues to show steady growth with more businesses investing more spend in advertising. This investment boosts company profits and overall GDP, creates more jobs and helps our media sector to continue to invest in the creative content and technology that the public values.

“If Government can secure a good outcome from the Brexit negotiations and introduce a business-friendly immigration policy, we should continue to see sustained UK market growth and continued export success for advertising.”

James McDonald, Data Editor at WARC commented:

“The UK’s advertising market has now grown ahead of expectations in each of the last four quarters, and our projection for 2018 growth has been upgraded by a two percentage points since the start of the year on the back of sterling results across the media landscape.

“Online ad formats – particularly search and social media – continue to over perform, but traditional media are also proving their worth to advertisers. Notable among these are radio, TV, out of home and national newsbrands, with the latter carrying on from a good final quarter in 2017 to reverse a seven year downturn in display revenue.”

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 on estimated or modelled data.

 

Forecast summary
 
Adspend 2017 (£m)
 
2017 v 2016
 
Forecast 2018
 
Forecast 2019
 
% change
 
% change
 
% change
Internet
11,553
14.3%
9.8%
8.2%
of which mobile
5,223
37.3%
22.5%
17.2%
TV
5,108
-3.2%
2.5%
3.3%
of which broadcaster VoD
211
7.1%
11.8%
12.2%
Direct mail
1,753
0.8%
-4.1%
-3.8%
Out of home
1,144
1.5%
3.2%
2.6%
National newsbrands
1,032
-5.6%
-1.3%
-1.7%
of which digital
275
19.3%
9.1%
11.1%
Regional newsbrands
887
-13.1%
-7.9%
-6.2%
of which digital
212
9.9%
10.1%
6.5%
Magazine brands
776
-11.5%
-8.2%
-5.8%
of which digital
271
-4.0%
-3.8%
1.0%
Radio
679
5.2%
6.9%
4.4%
of which digital ad formats
35
26.3%
24.6%
16.3%
Cinema
260
3.3%
4.3%
6.5%
TOTAL UK ADSPEND
22,190
4.6%
4.8%
4.5%

* Broadcaster VoD, digital revenues for newsbrands and magazine brands, radio station websites and mobile advertising spend are also included within the internet total of £11,553m, so care should be taken to avoid double counting.

Source: AA/WARC Expenditure Report, July 2018

 

At-a-glance media summary
 
Q1 2018 v Q1 2017
 
Actual versus forecast
 
% change
 
Percentage points (pp)
Internet
10.8%
+0.9pp
of which mobile
26.5%
+4.3pp
TV
5.0%
+2.1pp
of which broadcaster VoD
11.9%
+2.1pp
Direct mail
-4.5%
-0.5pp
Out of home
5.3%
+3.2pp
National newsbrands
-0.5%
+4.6pp
of which digital
2.9%
-7.2pp
Regional newsbrands
-9.3%
+1.9pp
of which digital
16.6%
+11.6pp
Radio
12.5%
+6.5pp
of which digital ad formats
39.3%
+11.8pp
Magazine brands
-8.4%
-0.4pp
of which digital
-4.5%
-4.8pp
Cinema
-12.8%
-21.2pp
TOTAL UK ADSPEND
5.9%
+1.3pp

* Broadcaster VoD, digital revenues for newsbrands and magazine brands, radio station websites and mobile advertising spend are also included within the internet total, so care should be taken to avoid double counting. Actual versus forecast compares media performance with projections made in April 2018.

Source: AA/WARC Expenditure Report, July 2018

About the Advertising Association/WARC Expenditure Report
The Advertising Association/WARC quarterly Expenditure Report is the definitive guide to advertising expenditure in the UK. Impartial and independent of any media channel or agency affiliation, it is the only source of historical quarterly adspend data and forecasts for the different media for the coming eight quarters. With data from 1982, this comprehensive and detailed review of advertising spend includes the AA/WARC’s own quarterly survey of all national newspapers, regional newspaper data collated in conjunction with Local Media Works and magazine statistics from WARC’s own panels. Data for other media channels are compiled in conjunction with UK industry trade bodies and organisations, notably the Internet Advertising Bureau, Outsmart, Radiocentre and the Royal Mail.

All data are net of discounts and include agency commission, but exclude production costs. The survey was launched in 1981 and has produced data on a quarterly basis ever since.

Methodology for WARC’s quarterly forecasts
Analysis of annual adspend data over the past 35 years shows that there is a link between annual changes in GDP and annual changes in adspend (after allowing for inflation, and excluding recruitment adspend). Over this period, GDP changes account for about two thirds of the change in adspend. WARC has developed its own forecasting model to generate forecasts for two years based on assumptions about future economic growth. The model provides an indication of likely overall spend levels – adjusted to allow for short-term factors (Olympics, World Cup etc).

The Expenditure Report (www.warc.com/expenditurereport) launched online in February 2010 and combines data from the discontinued print publications the Quarterly Survey of Advertising Expenditure and the Advertising Forecast. It is relied upon daily by the world’s largest brands, ad agencies, media owners, investment banks and academic institutions. Alongside over 200 ready-made tables, subscribers can create their own customised tables for analysis of different media and time periods, as well as track the different media’s share of adspend. All reports can be exported from the online interface. An annual subscription is priced at £760 for AA members and £1,175 for non-members.

About the Advertising Association
We are the only organisation that brings together agencies, brands and media to combine strengths and seek consensus on the issues that affect them. Through wide-reaching engagement and evidence-based debate we aim to build trust and maximise the value of advertising for all concerned.

About WARC
warc.com is an online service offering advertising best practice, evidence, insights and data from the world’s leading brands. WARC

UK advertising spend achieves record for Q1 2018

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