Growth in UK adspend holds steady

UK adspend grew 3.7% to reach £21.4bn in 2016, the seventh consecutive year of market growth, according to the latest Advertising Association/WARC Expenditure Report.

Growth in UK adspend held steady in Q3 after the June referendum, before reaching £5.8bn in Q4 2016, a rise of 3.9% year-on-year and the highest grossing quarter on record. In real terms, after accounting for inflation, UK adspend topped its pre-recession peak for the first time during both the final quarter and for 2016 as a whole. Forecasts for the next two years indicate continued growth of 2.5% in 2017 and 3.3% in 2018.

Digital formats continued to drive growth in 2016, with internet adspend up by 13.4% to £10.3bn, with mobile accounting for 99% of that growth. Mobile spend reached £3.9bn, with 86% of the current value of the mobile advertising market generated in just the past five years.

Digital accounted for 38% of the £1.1bn out of home advertising market in 2016, double the share digital recorded in 2012, while revenues from online ads were up for national newsbrands (+4.9% to £230m) for the fifth year running.

TV adspend, boosted by 12.6% growth in video-on-demand revenue, recorded a new high of £5.3bn in 2016, with TV’s share of overall spend holding steady at 25% over the last decade. Annual growth in adspend was also recorded for cinema (+8% to £257m) and radio (+5.4% to £646m) in 2016.

“The UK’s ad industry is experiencing the most seismic shift since WARC began monitoring in 1982,” said James McDonald, senior data analyst at WARC.

“Last year exemplified this, as over 95% of the money entering the market came from digital formats. The trend will continue as ad tech improves and consumers spend more time with their internet-connected devices.”