Analysis: Consumables to attract most adspend in 2015
Following the publication of the latest UK adspend forecasts this week, James McDonald, research analyst at Warc, examines the health of the UK’s largest advertising sector.
The consumables sector is set to account for the greatest category share of UK advertising spend in 2015, according to the latest data from the AA/Warc Expenditure Report, released this week.
The sector – comprising cosmetics and toiletries, food, drink, household FMCG, pharmaceuticals and tobacco – should take around 23% of total adspend, with ad revenues in excess of £2.4bn. This follows anticipated growth of 1.5% for the category in 2015, following a rise of 0.6% last year.
The category data included within the Expenditure Report is sourced from Nielsen, the market research firm. The 26 major product categories measured by Nielsen – Nielsen’s data collection methodology is detailed here – are grouped into seven major sectors by the Advertising Association and Warc, according to the table below.
Within consumables, food is the largest component category, with adspend around the £1bn mark, followed by cosmetics and toiletries, then drink.
Annual adspend for durables has grown the most since 2009 – by some £220m according to Nielsen – and the category is expected to be the second-largest in 2015 on a share of 18%. We forecast adspend of £1.9bn on durables in 2015, a rise of 1.4% from last year.
Ad revenues for motors, in excess of £600m, add the most value to this category. Both consumables and durables are the only sectors expected to post consecutive years of growth in adspend between 2014/15.
Advertising expenditure for services this year, including leisure and entertainment, media, and travel and transport, is forecast to rise 1.0% annually to approximately £1.8bn, giving the category the third-largest category.
Industrial products, from property to computers, are forecast to see a collective growth in adspend this year of 3.4% to around £1.4bn, which follows expectations of a steep decline of 11.5% in 2014. Ad revenues for telecoms account for the greatest share of the industrial category at around two-thirds of the total.
Financial services are also forecast to see a rise in adspend this year – at some 3.4% – but again this comes off the back of an expected decrease last year (-3.2%). We value the financial ad industry’s adspend at £1.3bn this year, around £140m higher than in 2009.
Such growth has seen it overtake retail in the last six years, a category which will have seen revenues decline by a forecast £150m over the same period. Adspend on retail products is still forecast to reach in excess of £1bn this year, though this marks a 1.4% fall in spending from 2014, the fifth consecutive year of annual decrease.
Finally, advertising spend by the government (including charity and departmental adspend) is forecast to amount to aproximately £590m this year, which trails the £602m expected for 2014.
Under the current rules, government departments cannot spend on advertising after 30th March before a general election, which goes some way to explaining the forecast annual decrease this year. The 2014 total is, interestingly, £130m less than in 2009, the unrestricted year preceding the last general election.
To find out more about subscribing to the AA/Warc Expenditure Report please visit the website or contact James McDonald for additional information.
MediaTel subscribers can also now gain access to adspend and revenue figures by medium and aggregated forecast trends by medium from AA/WARC, Carat, eMarketer, GroupM and ZenithOptimedia in the Media Landscape tool