According to the latest Expenditure Report, growth rates are predicted to reach 6% in 2014 and 6.7% in 2015.
Tim Lefroy, Chief Executive at the Advertising Association said: “These latest adspend data are another nudge up for the economy, and a feather in the cap of UK global leadership in online and mobile, with consumers getting more value each day.”
According to the Advertising Association, the Advertising Association/Warc Expenditure Report is the definitive measure of advertising activity in the UK. It is the only source that uses advertising expenditure gathered from across the entire media landscape, rather than relying solely on estimated or modelled data. With total market and individual media data available quarterly from 1982, it is the most reliable picture of the industry and is widely used by advertisers, agencies, media owners and analysts.
TV and Radio to enjoy welcome boost in Q2 from the World Cup effect
Total UK advertising expenditure increased by 5.0% in Q1 2014 to reach £4,441m, ahead of the 4.5% growth predicted in April. Spot TV advertising saw a revenue increase of 6.0% in Q1 to reach £1,100m. This should accelerate to 10.5% growth in Q2 as TV enjoys a significant boost from the World Cup. The rate of increase should ease in the third quarter, reflecting the impact of budgets brought forward specifically for the tournament. Overall 2014 is expected to deliver a 6.5% increase compared with 2013.
Radio also posted a positive start to the year, rising by 5.7% in Q1 compared with the same period a year ago. Q2 is expected to show healthy growth (+7.6%), before it slows for the rest of the year. AA/Warc expects radio to register an annual increase of 4.4% in 2014, the sector’s best performance since 2003.
These results ensured total display saw a strong start to 2014, increasing by 3.1%. Across the year an increase of 4.7% is forecast, followed by a further increase of 5.8% next year.
Recruitment benefits from the improving economy
After recording 21 quarters of decline out of the last 25, spend on recruitment advertising is finally showing signs of recovery. Adspend grew in both the final quarter of 2013 (+3.7%) and the first quarter of 2014 (+2.6%). Growth is expected to continue through to 2015. Total recruitment spend is predicted to reach £521m this year.
Karen Fraser, Strategy Director at the AA said: “This latest set of data shows the importance of global events such as the World Cup to advertising spend in the UK. Following a positive start to the year in Q1, Q2 is set to be a strong quarter for the sector, buoyed by the tournament.”
At-a-glance media summary
* TV spot advertising grew 6.0% in Q1 2014, and is expected to benefit from increased adspend around the World Cup in Q2 (+10.5%). Overall TV should record 6.5% growth compared to 2013.
* Radio (excluding branded content) rose by 5.7% in Q1 2014 vs Q1 2013. We expect radio to register annual growth of 4.4% in 2014, the sector’s best performance since 2003.
* Out of home While 2014 has started with a year-year-on-year drop of 2.2% to £990m, we forecast overall growth of 2.7% for the year, a downgrade of 1.8pp from our April report.
* National newsbrands print ad revenues declined more than anticipated in Q1 2014, down 8.3% compared with 2013 to £286m. While digital adspend rose 19.0% for the same period to £47m, it was not sufficient to offset the print drop, with the sector as a whole recording a 5.2% dip. Forecasts have been downgraded for 2014 to –1.9%.
* Regional newsbrands continued to decline in Q1 2014, with adspend down 6.8% compared with the same period last year. This represents a 9.7% drop for print (to £263m) and an 18.6% increase for digital revenues (to £39m). We anticipate an overall decline of 7.3% in 2014 – in line with 2013.
* Magazine brands saw adspend dip 3.8% in Q1 2014, following a 6.5% decline for print (to £172m) and a 6.3% uptick for digital (to £53m). Total adspend is predicted to record a 2.1% decline in 2014.
* Cinema adspend registered slight year-on-year growth of 0.4% in Q1 2014, reaching a value of £36.3m. Growth is expected to accelerate throughout 2014, notably in Q3 (+10.6%) when buoyed by summer blockbusters. We anticipate overall growth of 6.4% this year.
* Internet ad spend grew 15.6% in 2013, to £6.3bn. With a growth rate of 95.2% in 2013, mobile is expected to continue to grow rapidly, by 75% in 2014 and 47% in 2015. Total internet adspend (including mobile) is expected to increase by 14% in 2014.
* Direct mail adspend dropped by 1.4% in Q1 2014. We expect marginal growth for the remaining quarters and an overall rise of 0.6% for the year as a whole. New data from the Royal Mail show addressed mail’s advertising revenue reached £1,882m in 2013, a year on year dip of 1.2% compared with 2012.
