London, 25th October 2016: The UK’s authoritative advertising statistics, released today by the Advertising Association/Warc, show that UK advertising expenditure posted 5.2% growth in H1 2016 despite economic uncertainty before the EU referendum. The growth rate was 0.4 percentage points ahead of forecast, with adspend reaching a record £9,999m in total for the first six months of the year.
Growth in internet adspend was particularly strong, increasing 16.9% to reach £4,777m in H1. Within this category, mobile spend grew 52.6% to £1,723m – and for the first time mobile now accounts for over half of all online display adspend in the UK.
Digital formats continue to thrive across all media, with online video adspend increasing by 66.4%, to £252m, while native advertising spend also grew 29.9% to £451m in H1. Digital out of home increased 28.9% in H1 to reach £176m, taking out of home’s total spend to £511m.
In light of the data, full year growth forecasts for 2016 have been revised up 1.0pp to 5.2%. However the forecast for 2017 has been downgraded by half a point to 3.3%, as the impacts of the EU referendum result begin to unfold.
Tim Lefroy, Chief Executive at the Advertising Association said:
“Investment in UK advertising remains strong this year, and the trend towards digital and mobile continues – but the medium term is more complex. The Government should avoid any regulatory uncertainty that might affect advertising’s stimulus to the economy.”
The Advertising Association/Warc Expenditure Report is the definitive measure of advertising activity in the UK. It is the only source that uses advertising expenditure gathered from across the entire media landscape, rather than relying solely on estimated or modelled data. With total market and individual media data available quarterly from 1982, it is the most reliable picture of the industry and is widely used by advertisers, agencies, media owners and analysts.
|Adspend 2015 (£m)||2015 vs 2014
|Forecast 2016||Forecast 2017|
|Adspend (£m)||%/PP change||%/PP change|
|of which spot advertising||4,760||6.7%||4,831||1.5%||(-1.2pp)||1.6%||(-0.7pp)|
|of which broadcaster VOD||175||20.7%||205||17.1%||(0.0pp)||17.1%||(+2.5pp)|
|Out of home||1,059||3.9%||1,109||4.8%||(+0.8pp)||2.4%||(+0.3pp)|
|of which digital||220||2.5%||222||1.0%||(-0.1pp)||0.7%||(-0.7pp)|
|of which digital||199||14.8%||202||1.3%||(-4.7pp)||5.4%||(-1.5pp)|
|of which digital||282||5.8%||292||3.6%||(+1.6pp)||3.4%||(+3.6pp)|
|of which mobile||2,627||61.1%||3,826||45.6%||(+6.3pp)||26.0%||(+2.6pp)|
|TOTAL UK ADSPEND||20,071||7.4%||21,109||5.2%||(+1.0pp)||3.3%||(-0.5pp)|
|Broadcaster VOD, digital revenues for newsbrands and magazine brands, radio station websites and mobile advertising spend are also included within the internet total of £8,606m, so care should be taken to avoid double counting. Radio includes branded content. From Q1 2015, the IAB has included spend for outstream/in-read video for the first time. This amounted to approximately £148m in 2015.|
|Percentage point change since August shown in brackets.|
|Source: AA/Warc Expenditure Report, October 2016.|
At-a-glance media summary
- TV spot expenditure grew 0.8% year-on-year in Q2, and 2.1% in H1 to a total of £2,387m. As a consequence of weaker than anticipated Q2 performance, full year expectations for TV spot have been downgraded to 1.5% growth. However, video on demand (VOD) adspend is expected to grow by 17.1%.
- Radio advertising expenditure fell 2.2% YOY in Q2, but still increased 0.5% in H1 overall, to a total of £242m. Factoring in branded content, radio adspend is forecast to increase 1.6% in 2016 and 0.8% in 2017.
- Out of home (OOH) adspend increased almost four points ahead of forecast to £273m in Q2; +9.6% YOY. This was driven by 30.5% growth in the digital out of home market. Digital out of home accounted for over a third of total OOH adspend during the first half of the year, at £176m. Growth for total OOH is predicted to continue at 4.8% in 2016 and 2.4% in 2017.
- National newsbrands advertising revenue dipped 7.3% YOY to a total of £270m in Q2. Q2 print adspend fell 9.2% to £218m, though digital ad revenues returned to growth; up 1.4% to £52m. Total national newsbrand adspend is forecast to decrease 9.3% in 2016, and 10.4% in 2017.
- Regional newsbrands adspend fell 12.7% YOY to £263m in Q2, the result of a 13.2% dip for print (to £214m) and a 10.4% fall for digital (to £49m) – compared to a very strong Q2 2015. Total ad revenue for regional titles is expected to contract by 10% in 2016 and 8.4% in 2017.
- Magazine brands adspend decreased by 5.1% to £225m during Q2. In H1, ad revenue across all titles dipped 4.6% to £432m. This represents a 7.7% drop for print (to £300m) and a 3.3% rise for digital adspend (to £133m). Advertising revenue for all magazine brands is forecast to decrease 4.3% in 2016 and 5.5% in 2017.
- Cinema adspend rose 13.7% YOY to £45m in Q2. This was 1.8pp ahead of forecast and puts cinema on course to reach a total of £248m for 2016 – up 3.5% on 2015’s record high. Further growth of 2.6% is anticipated in 2017.
- Internet (including mobile) rose 16.6% to £2,398m during Q2 2016, representing 48% of all UK adspend during the quarter. Total internet adspend is forecast to grow 15.7% in 2016, and 9.5% in 2017. Mobile adspend grew 49.5% in Q2 to reach £892m.
- Direct mail Direct mail adspend fell 13.3% in Q2. The vast majority of this decline was recorded among SMEs – i.e. non subsidiaries of the Royal Mail. We forecast that total direct mail adspend will be down 10.6% in 2016, with a dip of 7.3% forecast in 2017.
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About the Advertising Association/Warc Expenditure Report
The Advertising Association/Warc quarterly Expenditure Report is the definitive guide to advertising expenditure in the UK. Impartial and independent of any media channel or agency affiliation, it is the only source of historical quarterly adspend data and forecasts for the different media for the coming eight quarters. With data from 1982, this comprehensive and detailed review of advertising spend includes the AA/Warc’s own quarterly survey of all national newspapers, regional newspaper data collated in conjunction with the Newspaper Society and magazine statistics from Warc’s own panels. Data for other media channels are compiled in conjunction with UK industry trade bodies and organisations, notably the Internet Advertising Bureau, the Outdoor Media Centre, the Radio Advertising Bureau and the Royal Mail.
All data net of discounts and includes agency commission, but excludes production costs. The survey was launched in 1981 and has produced data on a quarterly basis ever since.
Methodology for Warc’s quarterly forecasts
Analysis of annual adspend data over the past 30 years shows that there is a link between annual changes in GDP and annual changes in adspend (after allowing for inflation, and excluding recruitment adspend). Over this period, GDP changes account for about two thirds of the change in adspend. Warc has developed its own forecasting model to generate forecasts for two years based on assumptions about future economic growth. The model provides an indication of likely overall spend levels – adjusted to allow for short-term factors (Olympics, World Cup etc).
The Expenditure Report (www.warc.com/expenditurereport) launched online in February 2010 and combines data from the discontinued print publications the Quarterly Survey of Advertising Expenditure and the Advertising Forecast. Alongside over 200 ready-made tables, subscribers can create their own customised tables for analysis of different media and time periods, as well as track the different media’s share of adspend. All reports can be exported from the online interface. An annual subscription costs £760 for AA members and £1,175 for non-members.
About the Advertising Association:
The Advertising Association promotes the role, rights and responsibilities of advertising and its impact on individuals, the economy and society. We are the only organisation that brings together agencies, brands and media to combine strengths and seek consensus on the issues that affect them. Through wide-reaching engagement and evidence-based debate we aim to build trust and maximise the value of advertising for all concerned.
Warc.com is an online service offering advertising best practice, evidence and insights from the world’s leading brands. Warc helps clients grow their businesses by using proven approaches to maximise advertising effectiveness.
Warc’s clients include the world’s largest advertising and media agencies, research companies, universities and advertisers. Warc also publishes leading journals including Admap, Market Leader, the Journal of Advertising Research and the International Journal of the Market Research Society.
In addition to its own content, Warc features advertising case studies and best practices from more than 50 respected industry sources, including: ARF, Effies, Cannes Lions, ESOMAR and IPA. Warc hosts three annual case study competitions: Warc Prize for Innovation, Warc Prize for Social Strategy and Warc Prize for Asian Strategy.
Founded in 1985, Warc is privately owned and has offices in the UK, U.S. and Singapore.