The latest data from the Advertising Association and WARC Expenditure Report reveals a significant surge in UK advertising spending, reaching £9.6 billion in the third quarter of 2023, marking the first time Q3 spending has surpassed the £9 billion milestone. The growth, totaling 15.9%, is primarily attributed to a substantial increase in online advertising.

 

Projections now indicate a 6.4% expansion for the entire year of 2023, reaching a total of £37 billion, representing a substantial 3.8 percentage point upgrade from the October 2023 forecast. The final figures for FY 2023 are scheduled for release in late April 2024, and the revised projection for advertising spend in 2024 is £39 billion, showcasing a 5.9% year-on-year increase. This upward trend mirrors the recently released IPA Bellwether figures, emphasizing a decade-high upward revision in UK marketing budgets for 2024.

 

Examining the Q3 2023 results, despite challenging economic conditions, search and online display advertising, including social media, outperformed expectations. Search achieved its strongest performance in 18 months, rising by 23.7%, while online display recorded a 24.8% increase, its highest gain in the same period. In comparison, France experienced approximately 5% online growth during the quarter, while the UK grew 4.6 times faster at 22.3%. Notably, online retailers in the UK increased their ad spend by 156% during Q3 2023, intensifying competition for household budgets.

 

Other advertising channels also saw growth in Q3 2023, with cinema up by 21.2%, out-of-home by 12.9%, and broadcaster video on-demand (BVOD) spending increasing by 28.4%, partly influenced by on-demand viewing during the Women's FIFA World Cup.

 

Looking ahead to 2024, further growth in advertising spend across various channels is anticipated. Events such as the Men's Euros, a potential General Election, and continued coverage of the Olympics are expected to contribute positively to this trend. TV advertising is projected to return to positive figures, with a 1.4% year-on-year increase, primarily driven by BVOD (+14.6%). The forecast also predicts a return to growth for radio (+2.1%) and online channels of national newsbrands (+2.1%), regional newsbrands (+1.1%), and magazine media (+2.3%).

 

Stephen Woodford, CEO of the Advertising Association, expressed confidence in advertisers' commitment to brand investment despite economic challenges. He highlighted the industry's positive performance, outpacing the broader UK economy, with a forecasted spend of £39 billion in 2024. Woodford emphasized the industry's potential to address economic and social challenges by promoting innovation, stimulating competition, and supporting jobs.

 

James McDonald, Director of Data, Intelligence & Forecasting at WARC, acknowledged the challenging economic climate but celebrated the online ad sector's robust performance, growing five times faster than in key European markets. McDonald expressed brighter expectations for 2024, fueled by a strong end to the previous year and positive sentiments across the marketing and business sectors.