After steady growth in 2022, the advertising industry has sustained a marked contraction across many of its key sectors, according to the latest Advertising Association (AA) and Warc industry report.
This contraction has, however, been offset by growth in major fields like search and online display, which make up over two-thirds (76%) of UK advertising spend.
Forecasts for the two categories jumped 4 percentage points each to predict 6.1% and 5.2% growth respectively in 2023 on the strength of their Q1 performance.
Cinema advertising was predicted the strongest year-on-year change, with growth expected to hit 21% in 2023; on-demand content from TV channels was likewise expected to grow 17% after a strong performance the previous year.
Print advertising fared worse, with direct mail income shrinking by 16.6% in the year to April 2023, and predicted to shrink 10.8% over the course of 2023.
Newsbrands and magazines also faced a contraction in their advertising incomes, with regionals receiving 14% less than they had in Q1 2022.
Nationals and magazines saw a less severe fall, but still registered a 6.4% and 7.1% drop each.
These falls are not regular across the whole sector, however, said James McDonald, director of data, intelligence and forecasting at Warc.
He told Printweek: "Within newsbrands the picture is mixed.
"Print revenue among quality titles (as defined by the industry) actually grew 1.3% during the first quarter of 2023 – all the more remarkable when you consider this compared to a quarter in 2022 when print revenue rose by a fifth.
"Results like this suggest that the worst days could be behind some of these publishers and that advertisers are still drawn to these titles and their readership.
"Spend among popular titles, however, has been down for the last three consecutive quarters, which is a trend that is set to continue over the forecast period.
"As the larger portion of total newsbrand print revenue, the fortunes of popular titles will have a heavier bearing on the outlook for the total industry, which is for a contraction of around 8-9% this year and next."
Stephen Woodford, the AA’s chief executive, said: “This latest forecast indicates a slight improvement in outlook in terms of growth of spend, with the improvements in online forecasts being notable.”
High inflation, he said however, might make for a real-terms contraction of 4.3% in advertising investment in 2023.
Woodford added: “The recent higher-than-expected fall in inflation will hopefully continue and with that we will see confidence begin to build later in the year and into 2024, when the ad market is expected to return to growth.”
McDonald added that predictions of a general economic recovery in 2024 had been factored into the report's forecasts.
"The risk of a recession still looms, but there are signs that stubbornly high inflation has now peaked and is starting to ease.
"After accounting for inflation, real consumer spend is still set to dip next year (-0.7%) but at a far softer rate than in 2023 (-4.0%).
"This, coupled with a forecast 1.0% rise in economic activity, suggests 2024 will be comparatively more favourable for practitioners but it's a low bar, and pressures will likely remain in certain corners of the ad industry."
