Hannah Biernat, senior manager for PwC, said the results reflected “a stabilization” in market growth in line with pre-pandemic levels. “Clients appear to be embracing connecting with audiences in emerging formats, as demonstrated by the growth in podcast investment and formats across connected devices. It will be exciting to see how the industry continues to innovate and diversify in formats and channels in the coming year.”
Marginal improvement to come
The IPA’s most recent IPA Bellwether report for the first quarter of the year is less positive, however, with a “small decline” of 0.9% expected in ad spend (it had previously forecast a decline of 0.3%) with “marginal improvement” for 2024 of 0.5% (again down from 1.2%) before expected growth of 1.6%, 2% and 2.2% in 2025, 2026 and 2027 respectively.
It did reveal that 8.2% of companies revised their marketing budgets upward in the first quarter of the year, although 12.9% said they were cutting budgets and two-thirds (66%) saw no change to spend.
According to James McDonald, director of data, intelligence and forecasting for WARC, data suggests the U.K.’s ad market actually entered a recession in the second half of 2022, with the downturn continuing during the first months of this year.
“Sharp and sustained falls in social media spend—the first time this has been recorded in the U.K.—are likely to have been instigated by reduced advertising activity among the SMEs who comprise a ‘long tail’ of ad volume on social platforms and whose margins are under incredible stress as inflation bites. One in every 202 U.K. companies entered liquidation in 2022—the highest rate in seven years—and it is unsurprising to see these pressures reflected to some degree within advertising trade,” he continued.
A plan for growth is missing
Annette King, chair of the Advertising Association, said the U.K. needs “a strong plan for growth” that capitalizes on the advertising industry’s skills to help businesses to innovate and compete.
“We need to address the talent shortages faced by our industry—for example, working with government to increase flexibility in apprenticeships, and answering the demand for digital skills and expertise, which will equip our workforce for the future,” King continued.
Worldwide, marketers have been preparing contingency plans, according to a survey by Gartner that found more than three-quarters (79%) of 400 marketing leaders were expecting to weather the storm of continued economic and geopolitical uncertainty.