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Report: Strong Q1 adspend for UK, but inflation biting

July 28, 2022

UK adspend rose 28.3 per cent to a total of £8.6 billion (€8.4bn) in the first three months of 2022, according to the latest AA/WARC Expenditure Report – 7.7 percentage points ahead of the previous forecast in April.

While a rebound was expected in Q1 2022 as all media recovered in comparison to the lockdowns of Q1 2021, the actual results outperformed expectations. The outlook for the total UK advertising market in 2022 has now been upgraded (+0.2pp) to 10.9 per cent growth, by when adspend is set to reach a new high of £35.4 billion. These figures also reflect the consistent growth of online advertising, which is forecast to account for 74.3 per cent of all spend this year, in comparison to 73.5 per cent in 2021.

Despite encouraging growth across most sectors, real growth in the UK’s ad market is expected to be just 1.8 per cent this year when accounting for inflation. Nominal spend is forecast to rise by a further 4.4 per cent in 2023, though, sustaining the market’s post-Covid recovery into next year.

The full picture in Q1 2022

  • Online formats – notably search (+29.9 per cent), display, including social (+27.6 per cent) and classified (+29.9 per cent) – grew the most in absolute terms, as market share reached 74.9 per cent for online channels combined.
  • A triple-digit recovery was seen in OOH (+146.2 per cent) while cinema bounced back from zero spending in Q1 2021 and is forecast to register a 191.2 per cent increase across the whole year.
  • Overall increases at TV (+19.1 per cent), radio (+19.7 per cent) were driven by spending in the online sphere (VoD +25.9 per cent, online radio +24.8 per cent)
  • National (+15.9 per cent) and regional (+22.2 per cent) news brands saw respectable increases in spending, while magazine brands (+7.2 per cent) were rather slower; again, online spending was the main driver of growth.

“While nominal growth is forecast this year and next, higher costs will carve into advertisers’ margins. This equates to a real term rise of 1.8 per cent in ad investment this year – compared to a pre-Covid average of +2.6 per cent – with inflationary pressures likely to sustain into 2023,” commented James McDonald, Director of Data, Intelligence & Forecasting, WARC.

Categories: Advertising, Articles, Markets, Research

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