As the ad investment in the first three months of 2019 slowed to 4.2% due to uncertainty around Brexit, the industry hopes for a business-friendly outcome as the online ad market showed positive growth
In the first quarter of this year, growth in the UK ad market slowed because this time is considered as an ‘uncertain period’ for British business. According to the Advertising Association and Warc’s quarterly expenditure report, UK ad spend was up by 4.2% YoY to £6 billion in the first three months of 2019, making it the 23rd consecutive quarter of growth. But this was 0.5% below the forecast growth and quite below the 5.9% increase seen last year during the same period.
In 2018, the growth in this period was predicted to rise to 6.2%, but new forecasts that spend to 4.6%, have brought growth to £24.6billion. Ad industry experts hope that the new administration delivers a business-friendly outcome to the relationship with the EU, and also ensure that the UK’s domestic ad market remains robust.
The first quarter saw online advertising growing the fastest; with online radio the standing out with an ad spend increase of 26.5% YoY. Other than radio, TV video-on-demand ad spend saw a growth rate of 17.5% and the digital out-of-home growth was 10.9%.
A report by Enders Analysis has forecasted that a no-deal Brexit might plunge the UK advertisement industry into its first recession in a decade. The overall ad spend is likely to decline by 3% or £1.4 billion. Newspapers and TV are cited as the ones with most likely to be impacted.
During this Brexit period, CXOs and CMOs are taking a cautious approach to their relationship with the ‘FAANG’ platforms – Facebook, Amazon, Apple, Netflix, and Google.
In online advertising too, mobile advertising has the highest share of digital ad spend, while video formats are becoming increasingly prevalent. Barclays has forecasted that digital advertising spend in the UK will push above £15 billion in 2019.
Among the traditional forms of advertisement, cinema saw a growth of 12.3% and outdoor growth was up 6.8%. TV fell into decline, with investment dropping by 2.5%. The ad spend growth of direct mail, magazine brands, national news brands, and radio, all dropped.
The continuity of online advertising in all its forms performing strongly is being looked by experts as a demonstration of how the UK is Europe’s leading online advertising marketplace.
Not just Europe, but Britain is racing ahead becoming one of the World’s largest online advertising powerhouses. While the country is behind only the US and China, UK advertisers are set to spend 62% of budgets online by 2020.
Interestingly, UK online advertising expenditure is relative to the size of the economy, which is the World’s highest at 0.63% of GDP. According to the Advertising Pays report by Credos and Enders Analysis, last year, online advertising contributed 57%, which is £13.4 billion of the UK’s total ad spend of £23.6 billion.
In line with the findings from the Advertising Association (AA) and Warc, Barclays report also states that marketers spend more on digital ads in the UK in the year 2019, compared to 2018, despite Brexit resulting economic uncertainty.
The high online ad spend has also led to the development of a robust tech sector employing thousands of people at over 300 UK-headquartered companies. The Advertising Pays report also states that online advertising boosts UK’s small and medium-sized businesses (SME). The ad spend of SMEs has risen from 30% in 2013 to 42% in 2017.