Digital channels drive growth as UK adspend rises 9.7% in Q3
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UK adspend rose 9.7% in Q3 2024 to reach £10.6bn — the first time spend exceeded £10bn during the third quarter.
That is according to the latest Expenditure Report from the Advertising Association (AA) and Warc, which largely attributed the growth to search (+12.6%) and online display (+15.2%).
Digital formats in general predictably fared better than their traditional counterparts. For example, whereas OOH ad revenue grew 4.4% in Q3, digital OOH (DOOH) saw an increase of 7.7%. Similarly, while national and regional news brands experienced single-digit declines in revenue, their online counterparts grew modestly.
Nowhere was this division more apparent than with TV, where total ad revenue notably fell 2.6% year on year in Q3, despite broadcaster VOD revenue growth of 8.7%.
It amounts to a reversal of fortunes for TV after 9% growth in Q2, when it was aided by a strong summer of sport that featured the men’s Euro football tournament.
The channel with the biggest drop in adspend in Q3 was cinema, which saw a 26.1% drop in spend year on year. AA and Warc are predicting a stronger 2025 for the channel, though, with 4.7% growth.
Magazine brands (-16.9%) and online classifieds (-13.5%) were the two other channels identified by the latest Expenditure Report as contracting by double digits.
Still, on the strength of digital growth, AA and Warc also upgraded their full-year 2024 forecast by 0.6 percentage points, now expecting 11.2% growth for the year. Channels anticipated to see double-digit growth for the full year are online display (+18.9%), search (+12.7%), broadcaster VOD (+12.4%) and OOH (+10.3%).
“Online ad formats, benefiting from the widespread adoption of new AI tools, have propelled the UK ad market to exceptionally strong growth so far in 2024 and will continue to drive expansion into 2025,” said Warc director of data, intelligence and forecasting and Expenditure Report co-author James McDonald.
LHF uncertainty could weigh on 2025
Full-year figures for 2024 will be published in April.
Looking further ahead to 2025, AA and Warc currently expect the ad market to outperform the broader UK economy, estimating 6.9% total adspend growth to £43.5bn.
However, McDonald highlighted concerns around “economic uncertainty” at both the local and global level that could weigh on growth this year.
“As a new US president comes into office, attention will be focused on implications for the world economy,” he said. “In the UK, advertising businesses will look to the UK government’s growth strategy and how it will affect the industry.
“A deterioration in overall business confidence could lead some marketers to depress spend in the short term.”
In a speech on Wednesday, chancellor Rachel Reeves promised to go “further and faster” in stimulating the sluggish UK economy, vowing to build “Europe’s Silicon Valley” between Oxford and Cambridge, and announcing a number of other infrastructure commitments.
Other concerns are more immediate for advertisers. AA CEO Stephen Woodford pointed out, for instance, that uncertainty around less healthy foods (LHF) regulation in the UK could weigh on the year’s growth prospects.
This month, the Advertising Standards Authority and Committee of Advertising Practice announced a delay in guidance regarding the law, as a change in its legal interpretation could mean brand advertising could fall within the scope of restrictions.
“While there is much work to do to kickstart growth in the UK economy, we know investment in advertising produces a fantastic return,” said Woodford. “It is also important to reflect on how policy decisions can impact the planning of advertising campaigns, such as through the delayed resolution of the less healthy foods regulation.
“This is a clear example of where businesses require certainty to have the best chance to deliver growth.”
CAP to revise LHF guidance over lack of clarity on brand advertising