Inflation leads to downgrading of advertising forecast
The UK advertising market will not reach earlier forecasted growth of 10.9% this year. A new forecast says it will grow 9/2% and reach GBP 35 billion by the end of this year, the Advertising Association/WARC Expenditure reports. Next year, the market is expected to grow but at a slower rate of 3.9%, to reach a total of GBP 36.2 billion.
Online adspend in 2023 is expected to just cross the three-quarter threshold to reach 75.2%.
The 2022 downgrade of 1.7 percentage points from July’s forecast is a result of inflation squeezing both companies’ input costs and customer wallets, the forecast says.
“Higher costs are carving into advertisers’ margins and household budgets alike, and trading conditions are at their worst since the Covid outbreak,” says James McDonald, Director of Data, Intelligence & Forecasting at WARC.
“It’s leading to “muted expectations” for the Christmas quarter”, he adds.
The report says it will be an extremely busy final quarter of 2022 as a winter FIFA World Cup leads into the vital Christmas season. Despite the sporting event, linear TV is expected to remain flat at £1.7bn, while video-on-demand is set to grow ahead of the broader market at 4.2%.
“Adspend is expected to rise, but not by a lot, even though a 4.5% year-on-year increase will, again, break a new record to take Q4 adspend to £9.5bn.”
The latest report findings show that:
- UK advertising spend rose 8.8% in Q2 2022, to a total of £8.6bn. This means spend during the first half of the year was up 14.4%, at £16.7bn
- OOH (out-of-home) and cinema continued their strong recovery during the quarter – and new IAB data show that online classified was up by almost a third. TV was the only medium to record a decline in investment during the quarter, though the VOD (video-on demand)component continued to grow
- The UK’s ad market is on course to grow by 9.2% in 2022 as a whole, to a value of £34.9bn
- Spend during the ‘golden quarter’ (Q4 2022) is set to be up by 4.5% on last year, to a total of £9.5bn
- The UK’s ad market is expected to grow by a further 3.9% next year, to a total of £36.2bn
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