UK advertising continues to outperform Western Europe
For the fifth consecutive year, the UK advertising market is forecast to grow faster than any other market in Western Europe – growing eight times quicker than the rest of the region, according to ZenithOptimedia.
The UK Advertising Expenditure Forecasts, released today, reveals that the ad market is set to grow by 5.8% to £13.7 billion this year, supported largely by the UK’s continued economic growth and the Brazilian World Cup. Longer term growth will be driven by the rise of mobile technology and programmatic buying.
Economic recovery
In 2013 the UK economy grew by 1.8% in real terms – the fastest rate in six years – largely due to higher consumer spending and an improved housing market.
For the majority of the year, business investment and exports lagged behind but picked up in the final quarter, while manufacturing expanded strongly in early 2014.
While concerns about the sustainability of recovery remain, growth is expected to be higher this year than last.
The World Cup
The World Cup this summer is set to provide a “sizeable spike” in consumption across all media; however the effect is expected to be greatest on TV.
During the last World Cup, 83% of the population watched at least one game, and ZenithOptimedia expects audiences to be particularly high this year for two main reasons: firstly, because a number of matches will run in peak time as a result of time differences between the UK and Brazil, and secondly, because of Brazil’s reputation for football as a whole.
The report notes that the World Cup will supply large numbers of viewers who are hard to reach on TV – notably young men – making it particularly attractive to the drinks, auto and telecoms sectors.
ZenithOptimedia expects the event to add approximately £50 million to the total UK market, of which roughly £35 million will go to TV, resulting in a 5% increase in TV adspend in 2014 to £3.6 billion.
Mobile
Following a 71% increase in mobile internet adspend in 2013, the report predicts a further 68% growth this year to reach £1.3 billion, meaning that mobile spend will overtake cinema, radio, magazines and outdoor by the end of the year. ZenithOptimedia expects mobile spend to surpass newspapers in 2015.
Between 2013 and 2016, it is forecast that mobile internet will grow by £2,034 million to contribute 94% of the total growth of UK adspend over that period.
Asked by Newsline why the growth in mobile ad spend was so high, Jonathan Barnard, head of forecasting at ZenithOptimedia said smartphones have “greatly expanded” the space for media consumption.
“Users spend on average just under two hours on them per day, much of this time they would not previously have used to consume media,” he said. “This has created a huge amount of available inventory.
“It’s clear that some mobile ad formats work better than others, and there is work to be done improving the visibility of ads and their engagement with consumers. But the sheer volume of new inventory has driven rapid growth in mobile display adspend.
“However, the main driver of mobile growth has been mobile search, which we expect to capture 72 per cent of mobile spend this year. Here mobile has the advantage over desktop in offering convenience, immediacy and portability – mobile users can search wherever they are, whenever they want. Mobile search is growing so quickly we expect it to catch up with desktop search by 2016.”
Desktop
In contrast to mobile, ZenithOptimedia expects desktop internet adspend to grow only 4% in 2014. Desktop classified is essentially flat this year, as is search, and the report suggests that all new search expenditure will be on mobile – following the behaviour of consumers.
The main source of desktop growth is display, which is predicted to expand by 15% in 2014, with most of this growth coming from social media and programmatic buying.
“Programmatic buying gives advertisers an efficient way to obtain control, scale and low costs,” ZenithOptimedia said in a statement. “Today it represents 17% of total UK display adspend, and this share is expected to grow to 30% by 2016.”
This should particularly benefit video advertising this year, it is suggested, as real-time bidding for online video becomes widely available, allowing advertisers to target their video activity much more effectively.
Between them, mobile and desktop internet will attract 44% of all UK advertising expenditure this year, more than in any other country. By 2016 it is expected this proportion will rise to 50%.
Commenting on the results, Mark Howley, ZenithOptimedia UK’s group managing director, said: “The UK has the most developed internet advertising market in the world, and so is well placed to take advantage of the opportunities created by the mobile revolution.
“But the spectacle and drama of the televised World Cup should remind us of the continued power of traditional media.”
This article was updated on Friday 21 March to include the quote from Jonathan Bernard explaining the growth in mobile ad spend.