AA/Warc adspend forecast: Industry analysis
UK ad spend grew 3.7% during the first six months of 2017 to £10.8bn – the largest H1 total since monitoring began in 1982, according to the latest data from the Advertising Association/Warc. Here, industry experts react to the results.
It’s really exciting to see the largest growth in advertising expenditure since 1982 and great to see some positive news in the haze of fairly negative press surrounding advertising this year, particularly digital.
As ever, we are seeing investment trends follow consumer behaviour with large increases in mobile spend – hopefully this is a sign of investment finally beginning to catch-up with time spent on mobile devices.
Many of the brands we work with have been steadily increasing their mobile investments either as an effective traffic driving mechanism or as a way to deliver more engaging brand experiences through the use of more creative executions.
The other key point to take from this update is the digitisation of all media, with digital OOH driving large increases in digital spend.
The lines between channels continue to be blurred and we are focusing on how trends around data, automation and personalisation in traditional media channels can be best utilised to understand audience behaviours and the ability to leverage the power of context to deliver more effective advertising solutions.
Despite cautious tones from the industry in 2017, this report shows that all mediums have seen growth in advertising expenditure.
It is an indicator that despite economic uncertainty in the UK, there remains a confidence in marketing from brands, especially in emerging digital mediums such as out-of-home and audio.
This also highlights that brands are looking to truly innovate from a marketing and creative standpoint by reaching their consumers in many different ways, and through a variety of mediums.
Based on the advertising spend forecasts outlined, the future of the UK media landscape appears positive and provides the platform for marketers to excel.
A 3.7% increase in UK ad spend and the highest H1 total since monitoring began is a really positive result in a very uncertain economic climate.
Keep in mind this result comes less than a week after analysts were pleasantly surprised by higher than expected UK economic growth of just 1.5% year-on-year.
This industry continues to beat expectations and outperform the national economy, which should be a point of pride for everyone working in it.
Moreover, the fact that mobile drove 97% of internet growth is further evidence that the UK ad industry is adapting and adopting to new technologies faster than most and is undoubtedly a major British success story.
This record set of results is a very positive marker for the industry, showing real confidence in UK advertising despite ongoing political instability.
Digital is clearly the engine room for growth across the board, and we can see an acceleration for some of the more traditional media via digital platforms.
Despite a drop in print revenues, newsbrands in particular have seen a growing digital spend, along with radio and out-of-home.
Mobile continues to consistently make an impact, with its huge growth of over 36% driving the overall internet spend increase.
The solid performance of UK advertising expenditure in the first half of 2017 is encouraging given the perceived uncertainties in the economic climate.
In particular the investment decisions by OOH media owners to continue to increase access to the medium through the installation of digital screens is proving a sound strategy.
Digital OOH grew faster in H1 2017 YOY comparisons than any media channel except mobile. This confidence in the medium meant a consolidated growth rate across all Out of Home of 0.6% for the half year which outperformed the negative changes experienced across TV, newsbrands and magazine brands.
Clients are clearly embracing the technology and audiences delivered by the OOH channel as a strong communication platform for both tactical and brand building messaging.
Mobile’s strong performance will no doubt continue in the next few years. Half of the UK’s internet time is now spent on smartphones and consumers are showing no signs of slowing.
At Fetch we recently conducted a mobile detox that actually increased levels of anxiety amongst employees, who felt disconnected from their families on WhatsApp and were unable to price check items on Amazon.
The detox revealed just how important our smartphones are to us on a personal level. And with mobile search now overtaking desktop, and smartphone shopping accounting for two-thirds of UK e-commerce by 2020, brands will be expected to ramp up ad spend towards reaching customers on the personal devices they are dependent on.
For Out-of-Home (OOH) this is another strong set of results that reflects the confidence in the sector among UK advertisers, amid signs of caution for the market as a whole.
Digital Out-of-Home (DOOH) is driving large increases in the sector’s ad spend, and this is down to the medium’s trusted ability to deliver on engagement strategies and create unique and powerful experiences based on context and location.
Digital innovation and new inventory is emerging on an almost monthly basis, bringing new and improved formats to the market and providing advertisers with smarter, more sophisticated opportunities to connect with audiences on the move. These include JCDecaux’s London Digital Network, Clear Channel’s digital roll out and the upcoming launch of Exterion Media’s DX3 among many others.
After many years of rapid growth, DOOH is increasingly being seen as an extension to digital display and is now considered a robust and unique media channel in its own right, bringing scale, geographic distribution and cutting-edge technology to the UK’s advertisers.