UK digital ad spend increases 5.8% hitting four-year high

According to a new report by the Advertising Association and Warc, UK advertising grew at its highest rate since 2010 last year, increasing 5.8% to £18.6bn. The report predicts digital ad spending to continue growing, predicting it to break the £20bn barrier in 2016.

Digital ad spend grew 5.8% increase in 2014, with digital now accounting for most investment, according to new research.

Key data from the report: 

• TV Spot advertising, benefiting from the football World Cup, increased 5.4% year on year to reach £4,463m in 2014. The growth rate will slow to 4.4% this year, however this is up on our January forecast by 0.3pp. With adspend penned to rise a further 4.6% in 2016, TV spot is set for its strongest consecutive growth in over a decade.

• Radio adspend (excluding branded content) recorded annual growth of 10.9% in 2014, its best performance since 2000. After an exceptional second quarter of growth (17.7%), adspend maintained double-digit growth in the second half of last year (10.3%). We expect radio to register an annual rise of 4.9% (a +0.9pp revision from January) in 2015, slowing to 3.9% next year.

• Out of home adspend rose 3.0% in 2014 to surpass the £1bn mark for the first time. Within the total, adspend on digital OOH rose strongly at 27.3% last year and now comprises around a quarter of the total. We have upwardly revised our forecast for 2015 growth to 4.1% (0.8pp), with further growth of 4.5% expected in 2016.

• National newsbrands recorded total adspend of £1,370m in 2014, a year-on-year drop of 4.7%. The rapid rise of digital ad revenues (+16.4% to £214m) could not offset the decline in print (down 7.7% to £1,156m). However, we expect the overall decrease in spend to slow in 2015 (-1.8%) and flatten in 2016 (-0.2%), driven by an average growth rate of 14.5% in digital adspend over the forecast period.

• Regional newsbrands witnessed a drop in total adspend of 3.6% last year to £1,253m, however this was half the rate of decline recorded in 2013 (-7.3%). Print revenues fell by 7.0% to £1,079m, although digital revenues rose by a solid 24.7% to reach £174m. We expect total ad revenue to continue to decline at a similar rate this year (-3.7%), slowing to a 2.4% fall in 2016.

• Magazine brands adspend fell 4.3% in 2014 to £993m, the first time the total has been below the £1bn mark since 1986. Within this, print dropped by 7.6% to £727m while digital revenues rose by 5.9% to £266m. Growth in digital adspend is predicted to cushion the decline in print over the forecast period, however, with the fall in total ad revenue slowing to 3.3% this year and only 0.7% in 2016.

• Cinema adspend, according to data from Nielsen, registered a year-on-year rise of 9.4% in 2014, reaching a value of £202m (its second-highest total). Looking ahead, we anticipate overall adspend growth of 4.8% this year – to £212m – followed by 2.2% growth next year, when spend should top its 2012 peak.

• Internet (including mobile) adspend – using the IAB definition, incorporating revenues from newsbrands, magazine brands, broadcaster VOD and radio stations – rose by an estimated 15.0% in 2014. Mobile was a strong driver of this growth and now accounts for just over 22% of spend on £1,623m (up from a 10% share in 2012). Further, we expect mobile to comprise just over a third of internet adspend by the end of the forecast period. Total internet advertising will rise in the region of 11.5-12.0% until 2016.

Ian Twinn, Director of Public Affairs at the representative body for advertisers ISBA welcomed the report:

“The new figures for ad spend are great news for business and consumers, this is at its highest rate since 2010, highlighting advertising as an economic powerhouse for the exchequer. The strengthening economy is reflected in growing spend on advertising across all media from traditional TV spots, regional news brands to digital and the fast growing mobile advertising which break the £20bn barrier by 2020….When business spends money on advertising it means consumers are buying and job opportunities are growing.”