Out-of-home set for increase

UK ad spend to reach £10.5bn during festive season

The forecast spend would mark a 7.8% increase from last year’s spend of £9.7bn
The forecast spend would mark a 7.8% increase from last year’s spend of £9.7bn

Advertisers are expected to spend a record £10.5bn during the festive season, according to new data released by the Advertising Association (AA) and WARC, with an uptick expected for out-of-home media.

The forecast spend would mark a 7.8% increase from last year’s spend of £9.7bn and AA/WARC said the investment highlights advertising’s vital role to support businesses, jobs, and the economy during the Christmas period.

The AA/WARC adspend figures show spend for the Q4 season will reach record levels, with online media channels expecting to see a boost including online display (which comprises social media spend) at 15.8%, online radio at 8.8%, and broadcaster video on demand (BVOD) at 7.8%.

In towns and high streets, out-of-home advertising is expected to see an 8.1% rise in spend and cinema is up 5.1%.

Matt Bourn, director of communications at Advertising Association, said: “The final quarter of the year is a critical one for businesses, large and small, to promote their wares in a battle for customer attention.

“The investment we see here in this Christmas advertising spend is an investment in growth which supports jobs up and down the country. As ever, we will see the very best of advertising with all the creative flair that the UK advertising industry can bring to help businesses secure fame and success.”

James McDonald, director of data, intelligence and forecasting at WARC, added: “Brands know that a well-crafted Christmas campaign can boost salience, anchor loyalty and drive impressive sales results to boot.

“It’s the time of year when media budgets swell, and creative teams pull out all the stops to deliver memorable messaging that resonates well beyond Boxing Day.

“While the Golden Quarter typically attracts elevated levels of advertiser investment for these reasons, the anticipated £760m rise in spend this year would be the largest increase on record if the post-pandemic recovery year of 2021 were excluded, with a total above £10.5bn yet another zenith for the UK’s market.”

Among the AA/WARC Q4 2024 forecast for ad spend, £428m is expected to be spent on out-of-home media, of which digital media is set to make up £292.7m.

The outlook is less rosy for other print categories, with direct mail spend set to drop by 4.2% year-on-year to £265.1m in Q4. National newsbrands spend is forecast to fall by 3.7% overall in Q4 to £216.6m – although online spend in this category is expected to see a 1.3% uplift to £102.4m.

Regional newsbrands spend is forecast to drop by 2% overall year-on-year to £113.2m – but online is set to grow 4.8% to £64.2m.

Spend on magazine brands is also forecast to fall overall – by 1.9% in Q4 to £130m, but online spend in this category is expected to climb by 2% to £74.7m.

Last week, the AA/WARC Expenditure Report revealed that UK advertising recorded a £10bn spend during the second quarter of 2024 (April to June), marking a 13.4% increase.

This was attributed to stronger-than-expected digital growth and the relatively weak comparable results for 2023. Overall in the first half of the year, adspend increased by 13.5% to £19.6bn.

AA/WARC accordingly upgraded its forecasts for 2024, and now expects spend to cross the £40bn barrier for the first time to reach £40.5bn – a year-on-year increase of 10.6%, with real terms growth for 2024 expected to be 7.9%.

UK advertising spend is currently expected to register annual growth ahead of European markets including France (8%), Spain (5.7%), Italy (5.4%), and Germany (4%) in current prices.

Among the results for Q2, regional newsbrands and magazines registered their first growth since the pandemic bounce back of Q2 2022, with increases in spend of 1.9% and 0.5% respectively.

Looking ahead to 2025, AA/WARC expects the UK’s ad market to reach £43.1bn spend next year, a rise of 6.5%. This is due to more favourable trading conditions and higher consumer spending.

In Q2, direct mail spend fell by 2.1% – with a fall of 3% forecast for 2025, while out-of-home climbed by 17% – driven by digital growth of 20.7%. Out-of-home is forecast for 7.2% overall growth in 2025.

National newsbrands spend fell by 3.5% year-on-year in Q2 – although online grew by 5% – and in 2025 a 2% overall fall is forecast.

Magazine brands spend was up by 0.5% in Q2 – driven by online growth of 6% – while for 2025 an overall fall of 0.6% is forecast.

Finally, regional newsbrands spend climbed by 1.9% in Q2 – with online growth of 4.7% – while overall spend is forecast to climb by 1.1% in 2025.