UK adspend grew 1.3% year-on-year in the first quarter of 2017 to reach £5.32bn, according to the latest data from the Advertising Association and Warc.
It marks the fifteenth consecutive quarter of growth – but the slowest rate in almost four years as advertisers, responding to rising inflation, rein in activity.
The biggest casualty here is TV advertising which suffered a -6.2% decline, its first fall since 2009. However, TV ad expenditure is forecast to recover in 2018 with 2.5% growth.
Meanwhile, digital formats performed well, up 25.4% for national newsbrands, 8.1% for radio, 7.2% for broadcaster video-on-demand and 27.6% for out-of-home. Cinema recorded an “outstanding” quarter, growing 27.6% year-on-year in Q1.
Ad spend growth continues to be driven by Internet advertising which was up 10% year-on-year. This includes digital revenues for newsbrands, magazine brands, TV and radio broadcasters.
Within this category, spend on mobile formats was particularly strong during the first quarter, up more than 36%.
“As business sentiment suffers, it’s no surprise to see ad-spend come under pressure – but the market overall remains resilient,” said 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.”
As a consequence of uncertainty, the full year outlook for 2017 has been downgraded by -0.5pp to 2% growth, but is forecast to recover by 2018 at 2.6% growth, driven by the men’s football World Cup and anticipated clarity around the terms of Brexit.
James McDonald, a senior data Aanalyst at Warc, added: “The latest data show that large retailers – particularly supermarkets – and major food brands reined in their TV spending by 25% during the first three months of 2017, instead committing to cutting prices on the shelves as household expenditure wanes.
“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.”
