UK adspend hits record high in H1 2016, but 2017 is downgraded
UK advertising expenditure recorded 5.2% growth in the first half of 2016 despite economic uncertainty before the EU referendum.
The growth rate was 0.4 percentage points ahead of forecast, with adspend reaching a record total of £9.99bn in the first six months of the year, according to the Advertising Association/Warc.
In light of the new data, published on Tuesday (25 October), full year growth forecasts for 2016 have been revised up 1 percentage point. However, the forecast for 2017 has been downgraded by half a point to 3.3%, as the impacts of the EU referendum result begin to unfold.
Growth in internet adspend was particularly strong in H1 2016, increasing 16.9% to reach £4.77bn. Within this category, mobile spend grew 52.6% to £1.72bn – and for the first time mobile now accounts for over half of all online display adspend in the UK.
“Investment in UK advertising remains strong this year, and the trend towards digital and mobile continues – but the medium term is more complex,” said Tim Lefroy, chief executive at the Advertising Association.
“The Government should avoid any regulatory uncertainty that might affect advertising’s stimulus to the economy.”
The report also reveals that digital formats are continuing to thrive across all media, with online video adspend increasing by 66.4%, to £252m, while native advertising spend also grew 29.9% to £451m in H1.
Digital out-of-home increased 28.9% in H1 to reach £176m, taking out-of-home’s total spend to £511m.
Meanwhile, newsbrands saw revenue dip 7.3% year-on-year to a total of £270m in the second quarter.
Q2 print adspend fell 9.2% to £218m, though digital ad revenues returned to growth; up 1.4% to £52m. Total national newsbrand adspend is forecast to decrease 9.3% in 2016, and 10.4% in 2017.
TV spot expenditure grew 0.8% year-on-year in Q2 and 2.1% in H1 to a total of £2,387m. As a consequence of weaker than anticipated second quarter performance, full year expectations for TV spot have been downgraded to 1.5% growth. However, video on demand (VOD) adspend is expected to grow by 17.1%.
Radio advertising expenditure fell 2.2% YoY in Q2, but still increased 0.5% in H1 overall, to a total of £242m. Factoring in branded content, radio adspend is forecast to increase 1.6% in 2016 and 0.8% in 2017.
Out-of-home (OOH) adspend increased almost four points ahead of forecast to £273m in Q2; +9.6% YoY. This was driven by 30.5% growth in the digital out of home market. Digital OOH accounted for over a third of total OOH adspend during the first half of the year, at £176m. Growth for total OOH is predicted to continue at 4.8% in 2016 and 2.4% in 2017.
National newsbrands advertising revenue dipped 7.3% YoY to a total of £270m in Q2. Q2 print adspend fell 9.2% to £218m, though digital ad revenues returned to growth; up 1.4% to £52m. Total national newsbrand adspend is forecast to decrease 9.3% in 2016, and 10.4% in 2017.
Regional newsbrands adspend fell 12.7% YOY to £263m in Q2, the result of a 13.2% dip for print (to £214m) and a 10.4% fall for digital (to £49m) – compared to a very strong Q2 2015. Total ad revenue for regional titles is expected to contract by 10% in 2016 and 8.4% in 2017.
Magazine brands adspend decreased by 5.1% to £225m during Q2. In H1, ad revenue across all titles dipped 4.6% to £432m. This represents a 7.7% drop for print (to £300m) and a 3.3% rise for digital adspend (to £133m). Advertising revenue for all magazine brands is forecast to decrease 4.3% in 2016 and 5.5% in 2017.
Cinema adspend rose 13.7% YoY to £45m in Q2. This was 1.8pp ahead of forecast and puts cinema on course to reach a total of £248m for 2016 – up 3.5% on 2015’s record high. Further growth of 2.6% is anticipated in 2017.
Internet (including mobile) rose 16.6% to £2,398m during Q2 2016, representing 48% of all UK adspend during the quarter. Total internet adspend is forecast to grow 15.7% in 2016, and 9.5% in 2017. Mobile adspend grew 49.5% in Q2 to reach £892m.