AA/Warc Q1 adspend report: industry analysis
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, particularly in TV.
However, adspend 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. Here, experts from around the UK media industry react to the findings.
Despite the Brexit doom-mongers still predicting a falling off the cliff moment for ad expenditure, the latest Warc report shows that despite client and agency nervousness, growth is still possible, and not just from the dynamic duo of Google and Facebook.
The report highlights the fact that digital ad expenditure is benefiting broadcaster and news brands, as well as the digital pure plays.
I personally love the quirky fact that cinema ad expenditure is increasing. Arguably the least interactive channel in the mix but a great media sold brilliantly by two strong teams.
The significant story here is the strong growth of mobile ad spend this year. This is not surprising as there is an expectation that by the end of 2017, 75% of online content consumption will be mobile, as forecast by media buying agency Zenith.
We should expect to see new and existing technologies expand and improve to deliver a more interactive mobile ad experience.
However, the industry is still waiting on this channel to show equally strong results in performance. We need to see a focus on higher performing mobile ad formats, including dynamically animated and adhesive ads that incorporate behaviour and location data. There also needs to be a better tracking and measurement of the entire customer journey to ensure attribution models correctly reflects performance .
Ultimately, all eyes will be on mobile advertising to now deliver and prove itself as a channel that provides real revenue and more importantly real users for marketers to have confidence in this growing channel.
Despite adspend at its slowest rate, it’s encouraging to see that digital spend is on the up. Digital advertising presents so many different opportunities it’s unsurprising to see budgets continue to be pushed in that area. To see that cinema was the only non-digital medium to grow in the quarter only emphasises the fact that digital is surpassing traditional mediums. But, with data available from so many sources there is scope to drive this into each and every advertising channel.
Data is more often than not used to inform campaigns across digital alone. But, with mediums such as TV on the decline, we have the chance to turn this around by opening up planning conversations. Each medium presents an opportunity for planners to utilise data insights. From interests to habits, any information about an audience is useful in generating the most targeted campaign possible to increase consumer engagement, drive awareness and ultimately deliver business transformation.
It’s positive to see that internet advertising has driven such a huge amount of market growth, gaining a 10.1% year-on-year increase.
Interestingly, digital ad income for traditional media formats including radio, national news brands, broadcasters and out-of-home formats also increased, mirroring the broad industry understanding that digital is a fundamental channel for connecting with audiences.
Mobile, more specifically, is also being prioritised as demonstrated by the 36.2% rise in mobile spend year-on-year. This is in light of the fact that global mobile device usage is expected to reach more than 5.5bn users by 2022 and is therefore undoubtedly a powerful way to connect with audiences. With advertising growing for the 15th consecutive quarter, it is likely that investment in internet advertising will continue to increase.
Clearly it’s hugely positive news for the industry that internet adspend grew by 10.1% year-on-year but what’s particularly interesting is that mobile spend is up 36.2% in the same period. While it’s no surprise that mobile is popular, that is a huge uplift.
Mobile is now an undoubted pillar of digital advertising – in a world where 71% of UK adults now own a smartphone, mobile ads should allow brands to connect to their audience with truly tailored ads that appeal to the viewer and ultimately lead to them buying from, or at least being more aware of, that brand.
However, mobile must be done right. Modern audiences are a fast-paced, on the go generation that want to consume content on easily digestible formats. The key when developing a mobile campaign is to constantly remember that the reason consumers love mobile content is because it’s easy to access and view.
Mobile ads can take advantage of that, but they must not hinder it – the audience experience is everything and if they see an ad “getting in the way” of content they are trying to view, all that mobile adspend will be completely wasted.