AA/Warc adspend report: industry analysis
The first quarter of 2019 saw UK adspend grow 4.2% YoY to reach £6bn for the period, according to the latest Advertising Association/Warc Expenditure Report. Here, experts from around the media industry dissect the findings.
On the face of it Q1 2019 adspend looks to be in rude health, with a 4.2% increase versus Q1 2018. This looks even better when you consider Easter falling even later in April this year, so a lot of the Easter budgets will have fallen in Q2.
However, there does appear to be a worrying trend where the digital estate of each media is underperforming versus forecast. This could well be because of over-forecasting. Digitisation of content and inventory takes time and in our industry, that is the one thing no one wants to hear. So a little less wishful thinking and a little more realism is needed.
Although below forecast, VOD continues to grow with 17.5% increase YOY. Broadcast VOD in particular has been innovating and making their product more accessible to a greater number of advertisers. Quality content will always resonate with the viewer – with increased data possibilities across the broadcasters, addressable TV is becoming a reality and will continue to drive this growth.
Yet another successive record quarter of growth highlights the significance of advertising on businesses’ bottom line. The figures highlight the importance of advertising in supporting the wider UK economy – contributing £120bn to UK GDP.
But with an uncertain economy driving an increased focus from advertisers on short term response, it’s unsurprising to see that growth is being driven by digital online advertising platforms such as search and display, known for delivering short term ROI. However, as the media landscape becomes more digital, the technical capabilities in targeting and addressability have become available in channels well-known for driving long term ‘brand’ uplift. So it’s encouraging to see that the ‘digital’ versions of ‘traditional’ channels such as online radio, TV VOD and Digital OOH are also seeing considerable increases in investment.
This, alongside bold campaigns such as Paddy Power’s ‘Save Our Shirt’ campaign – which saw massive online engagement – are great examples of the creative work the advertising industry is doing to drive the sector forward.
It’s fantastic to see that adspend in the UK is on a growth trajectory, with the report forecasting an upward rise of 5.3% in 2020. As traditional formats expand their digital capacity, it’s not surprising that online expenditure has achieved higher growth across the board.
Interestingly, search is highlighted as a key area – predicted to rise by 9.9% in 2020. Our Mindshare Future of Search report revealed that search is becoming increasingly sophisticated, particularly with the rise of smart speaker adoption and image recognition technologies.
As expenditure in this area is predicted to grow, the search landscape will become more diverse. Marketers will therefore need to think about a cohesive, cross-platform search strategy as part of their communication plans, that reflects the nuances of key search platforms for brands across different stages of the consumer journey.