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Marginal Growth for UK Ad Spend: agencies react to the latest AA/WARC Expenditure Report

Findings from the latest AA/WARC Expenditure report have emphasised the longstanding resilience of the UK economy through uncertain times. The research reveals that the UK’s advertising industry has seen a small-scale increase over the past quarter, with online channels proving particularly crucial within the market.

As we look to the year ahead, we spoke to industry experts to gain insights around the sense that there may be light at the end of the tunnel. These leaders from adland share their reactions to the report findings and give advice for marketers navigating the evolving media landscape.

Mulenga Agley, CEO and Founder of Growthcurve

The UK economy and Ad spend are in lockstep with their relatively flat performances and underwhelming growth predictions likely to continue to year-end – even despite the much-needed growth stimulation from the likes of the Women’s World Cup and Barbenheimer which will provide some relief.

Like the households up and down the country that are being more careful with discretionary spends, it’s more important than ever that brands also make every penny count.

Which is why it is also more important than ever that brands can have total flexibility on what they spend, where and how – dialling up or scaling back depending on results. As growth marketers, it’s no surprise to us that digitally native platforms continue to prosper at the expense of legacy media. And while it is an accepted mantra that brands that continue to invest in advertising during a downturn are more likely to post better returns when emerging from tough conditions – we would add the caveat that it is brands that invest WELL will be the ones seeing the returns

Richard Exon, Founder, Joint

There seems to be a glimmer of light for the advertising industry – with an estimated 2.3% growth to reach £35.6bn by year end. We have also seen the tech giants, Meta, Google and Amazon revealing a soar in ad revenue for their third-quarter results, citing investment in AI tools and automation as the biggest drivers.

The AA WARC report highlights key online formats, such as search (+5.3%) and online display (+5.8%) registering growth between April and June, which is unsurprising given an AI ad push among three of the biggest tech brands. Technology has been playing a role within this space for a long time, but now AI is poised to change how the ad industry operates online – making an impact from data gathering, media placement and content curation. However, AI is still in its infancy and as the digital landscape speeds up, to use effectively, advertisers must combine with the best creative human minds in the industry. We are also seeing big cultural moments again. Events like the Women’s World Cup and The Barbie, Oppenheimer movies drive ad spend in the face of economic uncertainty, while enabling brands to deliver authentic and valuable campaigns.

As businesses consider their ad spend allocation for 2024, now is the perfect time for brands and advertisers to assess the current landscape and plan strategically for the year ahead.

Is it in fact time for them to re-consider the online portions of national and regional newsbrands and magazines, which have an expected return to growth. Or play it a little safer across the digital and social channels.

Rik Moore, Managing Partner Strategy, The Kite Factory

The latest AA/WARC figures should give cause for cautious optimism.

Set against such a challenging economic backdrop, the marginal growth in Q2 2023, aligned with only a minor downgrade to the 2024 forecast of +3.9% growth is an undoubtedly positive story.

What the reports suggest as key to that is the strong performance of search and online display, alongside VoD.

Within that, the ‘four in five advertising pounds are now spent online’ is particularly eye-catching, for a couple of reasons.

This stat is coming off the back of the IAB’s recent valuation of the UK digital advertising industry’s economic footprint. In what they termed ‘The Digital Dividend’, they showed that the industry contributed a total of £129 billion in gross value added (GVA) to the UK economy in 2022 and supported 2 million jobs. For every £1 spent on digital advertising, £4.80 was delivered back to the economy in GVA.

This payback echoes the topic Dr Grace Kite, Les Binet and Tom Roach talked about at this year’s Cannes Festival, when they talked about us being in ‘The Third Age Of Effectiveness’. They made the point that, when online advertising first appeared, it promised instant measurement and returns; it has taken the industry 20 years to realise how it can do so much more, with a recovery in overall advertising effectiveness now driven by online activity.

So the fact four in five advertising pounds is being spent in channels that deliver back to the economy whilst driving advertising effectiveness and building brands, should be a source of optimism as we look forward to how we navigate continuing economic storm clouds in 2024.

This was posted in Bdaily's Members' News section by Business News .