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Digital's Slice of UK Ad Spend Hits New High

Falling traditional media investment lowers overall ad spending outlook

July 31, 2017 | Media Buying

Digital advertising was responsible for more than 50% of the UK’s total media ad spending for the first time in 2017’s first quarter, helped by faltering ad spending for most other media.

Internet ad investment—excluding digital ad spending with TV, radio, newspaper and magazine brands—swelled 10.1% during Q1, driven mainly by mobile, which experienced a 36.2% year-on-year increase in ad outlays, according to figures released by the Advertising Association (AA) – UK and Warc.

By comparison, total media ad spending grew by just 1.3% year over year, its 15th consecutive quarter of growth, but its lowest increase since Q2 2013. Overall ad investment was worth just under £5.32 billion ($7.18 billion) for the period.

In addition to pure play online advertising, cinema was a standout in Q1, with ad spending up 27.6%. It was the only nondigital ad medium to grow during the period.

True to AA and Warc’s January forecast of 2017 ad spending trends, newspapers and magazines suffered most in Q1. Total spending devoted to regional news brands dipped 16.0%, fell 13.9% for magazine brands, and slid 6.6% for national news brands vs. the first quarter of 2016. Within those tallies, digital spending with national news brands rose 25.4% year over year, but declined for both regional newspaper and magazine brands.

Total TV ad spending dipped by 6.2%, including a 7.2% decrease in traditional spot advertising outlays. Total TV spend is now expected to decline by 1.9% this year, compared with a 1.6% gain predicted for TV by AA and Warc earlier this year.

TV’s decline in Q1 came despite expectations that it would serve as a brand safe harbor for advertising following revelations in February that ads from major UK brands were appearing in and around extremist content on user-generated content platforms like YouTube.

Compared with TV and print media, the quarter’s results were less straightforward for radio and out-of-home (OOH) advertising. Both media saw overall ad investment shrink modestly—down 0.1% and 0.6%, respectively. But digital ad spending on radio rose 8.1% and jumped 27.6% for OOH.

AA and Warc have lowered their expectation for UK total media ad spending in 2017 to a 2.0% increase, down from January’s 3.2% anticipated rise. Both figures are below the 4.4% boost in total ad spending in 2016 and the 8.1% jump recorded in 2015.

UK Total Media Ad Spending, by Media, 2016-2018 (millions of £ and % change)

“The latest data show that large retailers—particularly supermarkets—and major food brands reined in their TV spending by 25% during the first three months of 2017, instead committing to cutting prices on the shelves as household expenditure wanes,” said James McDonald, Warc’s senior data analyst. “Higher inflation and slow wage growth has put a squeeze on consumer spending, while business confidence has weakened following the unexpected and indecisive general election result in May. These underlying stresses have resulted in a downgrade to our full-year expectations for UK ad market growth, almost all of which will come from digital formats.”

In June, Zenith came to a similar conclusion, revising its forecast of UK ad spending for 2017 downward to 0.9% growth, citing a slowing economy, rising inflation and political uncertainty over midyear elections and Brexit negotiations.

eMarketer predicts total media ad spending in the UK will expand 5.5% in 2017 to £18.80 billion ($25.37 billion). Digital will be largely responsible for that gain, with investment expected to rise 11.0%—the only major media type in the UK forecast to see double-digit growth for the year.

Cliff Annicelli

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