UK shows Brexit resilience in latest adspend forecast
UK advertising expenditure is forecast to post 4.2% growth in 2016 and 3.8% growth in 2017, according to the latest Advertising Association/Warc Expenditure Report data.
The forecasts follow a strong showing for the UK ad market in Q1 2016, with advertising expenditure rising 4.3% to reach £5,007m – the first time spend has passed £5bn in a first quarter.
Overall forecasts have been revised down slightly since April (-1.3 percentage points (pp) for 2016 and -1.7pp for 2017), driven by downgrades for newsbrands and direct mail, the UK’s third and fourth largest media channels.
Of all media, national and regional newsbrands and direct mail took the biggest hits, with nationals down -14.4%, regionals down -13.5% and direct mail down -13.3%.
However, while economic uncertainty surrounding the UK’s vote to leave the EU is a factor, internet spend forecasts have been revised up 0.8pp to 12.3% in 2016, with mobile advertising predicted to increase 39.3% in the same period.
“These numbers suggest that, despite uncertainty, our sector is resilient,” said Tim Lefroy, chief executive at the Advertising Association.
“Government can underpin that by taking every step possible to build advertiser confidence, promote the UK as a global advertising hub and ensure we remain open to the world’s best advertising talent.”
At-a-glance media summary
– Television spot advertising spend grew 3.3% year-on-year, totalling £1,247m in Q1 – the highest first quarter total on record. Overall, TV adspend is expected to increase 3.6% in 2016 and 3.1% in 2017.
– Radio adspend (excluding branded content) rose by 2.9% to £127m in Q1. Total radio adspend is forecast to rise 2.9% in 2016, and 1.7% in 2017.
– Out of home adspend grew 3.9% to £238m in Q1. Growth is predicted to continue at 4.0% in 2016 and 2.1% in 2017, driven by digital spend forecasts of +17.0% and +15.8% respectively. Digital out of home is expected to claim a 40% share of total spend in 2017, up from 31% in 2015. Digital out of home forecasts are a new series in this release.
– National newsbrands total adspend declined by 14.4% in Q1 to a total of £267m. Print adspend fell 16.9% y-on-y to £218m, as digital adspend declined for the second consecutive quarter, down 1.1% to £50m. Total national newsbrand spend is forecast to decline 10.1% in 2016 and 10.8% in 2017.
– Regional newsbrands adspend declined 11.3% in Q1 to £262m, driven by a 13.5% fall in Q1 print revenues to a total of £216m, although digital adspend did increase 0.6% to £46m. An overall decline of 9.7% is forecast in 2016, with a further 8.5% fall forecast next year.
– Magazine brands saw adspend dip 4% to £207m in Q1, in line with the AA/Warc’s April forecast. Print adspend fell 7.6% to £145m, though digital spend rose 5.5% to £62m. Total magazine brands adspend is forecast to decline 5.9% in 2016 and 7.0% in 2017.
– Cinema adspend dipped by 0.6% to £52m in Q1 2016, according to Nielsen data. AA/Warc forecasts overall growth of 1.3% in 2016 and a further 2.4% in 2017.
– Internet (including mobile) adspend is estimated to have grown 15.3% in Q1 to reach £2,341m – the 11th consecutive period of quarterly growth. Mobile is believed to have accounted for some 96% of total internet growth, as spend rose 55.9% y-on-y to an estimated £830m during Q1 2016. Full-year internet adspend growth is forecast to be 12.3% in 2016 and a further 10.1% in 2017, by when the market should be worth over £10bn.
– Direct mail adspend data from the Royal Mail show a 13.3% decline in Q1 to £424m – almost all of this decline was due to losses among SMEs – non-subsidiaries of the Royal Mail. A decline of 7.2% is forecast for 2016 as a whole, with the rate of decline easing to -5.0% in 2017.