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Minimal growth and lower spending on advertising are forecast for the British sector in 2023 due to ongoing economic uncertainty, with the latest figures from the Advertising Association/WARC Expenditure Report forecasting a 0.5% increase on last year’s $43.13 billion (34.8 billion pounds) spend.
According to the latest industry report (released within a week of others from the IPA and IAB), advertisers are expected to be more cautious than previously forecast with 3.8% growth predicted for the year. That has been downgraded following a fall of 5.8% in spend during the final quarter of 2022.
Digital is the exception
That downgrade means an expectation that the market will reach $43.4 billion (35 billion pounds) this year, rising to $45 billion (36.3 billion pounds) in 2024, an increase of 3.9% should high inflation and economic stagnation subside.
This means the U.K. would remain the third largest advertising market with the third fastest growth rate of 2023 within the Top 10 Markets, behind only Brazil (9.7%) and Australia (9.4%). However, it will decline to produce the slowest growth rate this year, despite the ongoing strength of digital advertising.
Last year, according to the IAB’s report produced by PwC, digital ad spending increased by 11% to $32.4 billion (26.1 billion pounds), up 56% on Q1 2020. That includes a year-on-year increase in search by 13% to reach $16.25 billion (13.1 billion pounds), while display was up by 6% to $10.4 billion.
Video grew 9% while podcast spend grew 32% to reach $94.67 million (76.3 million pounds), more than three times the level of investment when IAB UK first started measuring the market in 2020.
It forecasts continuing growth for digital spend in 2023 as advertisers aim to harness retailers’ first-party data with retail media having become a key focus for advertisers seeking alternatives to the impending cull of the third-party cookie by Google next year.
We need to address the talent shortages faced by our industry …. working with government to increase flexibility in apprenticeships, and answering the demand for digital skills.
Annette King, chair, Advertising Association