UK adspend experiences two years growth at twice the rate of the economy

Despite a more cautious outlook, the period 2014-2015 will be the strongest consecutive growth years for UK adspend this century and reflects a sector significantly outperforming the wider economy, according to the Advertising Association/Warc report.

The report predicts adspend growth of 5.7% this year (down from 6.5%) with full year 2014 forecasts adjusted down from 6.4% to 5.8%.

Tim Lefroy, Chief Executive at the Advertising Association said: “Two years growth at twice the rate of the economy is hardly a recipe for pessimism but adspend isn’t immune to pressures on other sectors. The underlying story, however, is of a sector continuing to feed growth, jobs and opportunity.”

The latest data shows that UK adspend grew 4.2% in Q3 2014 to reach £4,307m. This represents a slowdown versus the 8.5% increase in Q2 2014 which benefited from the football World Cup, but similar growth to Q1 2014 and the second half of 2013. Full year figures for 2014 will be released in May, as actual data from media owners become available.

Here’s how the numbers break down by sector:

  • TV spot advertising rose 3.8% year-on-year, with adspend of £1,001m. This is slightly behind the AA/Warc’s October forecast (down -0.9 percentage points) but a solid performance compared to Q2 which benefitted from the football World Cup. Overall an increase of 6.0% is predicted for 2014, with adspend at £4,486m.
  • Radio (excluding branded content) enjoyed a strong third quarter, which followed an exceptional second quarter (growth of 17.7%). Analysis shows that the retail, industrial and government categories all increased spend the in the three months ending September 2014. Overall we expect an annual increase of 8.9%, radio’s best performance since 2000.
  • Out of home experienced strong growth in Q2 which came to an end in Q3, dropping from 6.4% in the three months to June, to 0.6% in the three months to September. AA/Warc predicts a rise of 2.1% for the year as a whole, buoyed by ongoing technological advances.
  • National newsbrands print ad revenues declined by 8.8% in Q3 2014 to £257m. Although this is worse than expected, digital adspend increased significantly more than expected to 21.4% or £54m. Altogether the sector recorded a drop of 4.7% for the quarter. AA/Warc predicts a decline of -4.3% for the year.
  • Regional newsbrands recorded a decline of 3.2% in adspend in Q3 2014 compared with the same time last year. This represents a 6.6% drop for print (to £269m) and a 24.6% increase for digital revenues (to £44m). Forecasts have been revised up to a 3.7% drop in 2014, equivalent to £1,252m.
  • Magazine brands adspend dropped 2.8% in Q3 to £266m, comprising a 5.8% drop for print (to £186m) and a 5.1% increase for digital (to £79m). Total adspend is predicted to decline 3.6% this year, downgraded by 0.3 percentage points from October 2014.
  • Cinema adspend saw its first drop of 2014 in Q3, experiencing a YOY drop of 10.1% to £42m. AA/Warc forecasts overall growth of 2.7% in 2014, bringing the value to £190m.
  • Internet adspend rose by an estimated 13.1% in Q3 2014, following growth of 17.2% in Q2. Total spend was valued at £1,753m. AA/Warc anticipates overall growth of 14.8% in 2014. Expectations for mobile growth in 2014 remain stable at 56% – a total of £1,594m.
  • Direct mail adspend recorded a YOY decline of 4.1%, to £428m in Q3 2014. AA/Warc expects expect direct mail to decline, registering a full year dip of 2.2% in 2014. This represents a slight downward revision of 1.2 percentage points since October 2014.

The Advertising Association/Warc Expenditure Report is the measure of where advertisers are spending their money in the UK. 

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