UK ad growth 1.3%, despite TV drop

UK advertising expenditure grew 1.3 per cent year-on-year in Q1 2017 to reach £5.318 billion (€5.954bn) – the 15th consecutive quarter of growth, according to Advertising Association/Warc Expenditure Report data.

Overall market growth was despite a drop of -6.2 per cent in television advertising, its steepest fall since 2009. However, TV ad expenditure is forecast to recover in 2018 with 2.5 per cent growth. Ad spend growth continues to be driven by Internet (10.1 per cent), with mobile spend (36.2 per cent) particularly strong. Cinema recorded an outstanding quarter, growing 27.6 per cent year-on-year in Q1 and outperforming forecasts by +20.0pp.

The full year outlook for 2017 has been downgraded by -0.5pp to 2 per cent, but is forecast to bounce back in 2018 at 2.6 per cent growth, driven by the Football World Cup and a likely improvement in certainty around the terms of Brexit.

“As business sentiment suffers, it’s no surprise to see ad-spend come under pressure – but the market overall remains resilient,” advised Stephen Woodford, Chief Executive at the Advertising Association. “Beyond these numbers, our sector is a huge source of inward investment and exports and should be a priority for Government as we focus on business beyond Brexit.”

“The latest data show that large retailers – particularly supermarkets – and major food brands reined in their TV spending by 25 per cent during the first three months of 2017, instead committing to cutting prices on the shelves as household expenditure wanes,” noted James McDonald, Senior Data Analyst at WARC. “Higher inflation and slow wage growth has put a squeeze on consumer spending, while business confidence has weakened following the unexpected and indecisive general election result in June. These underlying stresses have resulted in a downgrade to our full-year expectations for UK ad market growth, almost all of which will come from digital formats.”

At-a-glance media summary, Q1 2017

  • Internet adspend rose 10.1 per cent during Q1 2017, mainly driven by mobile which experienced a 36.2 per cent year-on-year increase in spend.
  • Television adspend dipped by -6.2 per cent in the first quarter of 2017, with a decrease of -7.2 per cent for spot advertising. Total TV spend is expected to dip -1.9 per cent this year, before the losses are regained in 2018.
  •  Radio adspend dipped -0.1 per cent despite an 8.1 per cent increase for digital ad formats during the quarter.
  • Out of home (OOH) spend contracted by -0.6 per cent year-on-year during the first three months of 2017, despite a 27.6 per cent rise in digital ad expenditure.
  • National Newsbrands’ combined ad revenues fell -6.6 per cent during Q1 2017. However, this was the industry’s strongest performance in two and a half years, with digital (up 25.4 per cent year-on-year) now accounting for just over a quarter of ad revenue.
  • Regional Newsbrands’ ad income dropped across print (-18.8 per cent) and digital (-2.7 per cent) formats in the first quarter of 2017, with combined revenues down -16.0 per cent.
  • Magazine brands recorded losses in income from both print (-16.1 per cent) and digital (-8.9 per cent) ads in Q1.
  • Cinema adspend rose 27.6 per cent, making it the only non-digital medium to grow during Q1 2017.
  • Direct Mail adspend was down -1.5 per cent in Q1 2017, 7.5 percentage points better than forecast.

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