TV ad spend shows ‘incredible resilience’ as quarterly spend surpasses £1bn

Television advertising is showing incredible resilience amid the rise of digital and mobile advertising, helping total ad spend to break the £20bn milestone in 2016.

TV at 60

According to data from the Advertising Association and Warc, total TV advertising spend for the UK was up 10.8% to exceed £1bn for the first time in the third quarter. This was partly driven by the Rugby World Cup. Further growth of 6.2% has been forecast for 2016.

While there have been talks of online advertising drawing money away from more traditional outlets, Warc’s research analyst James McDonald says television in particular has shown “incredible resilience”.

He told Marketing Week: “The third quarter results demonstrated the unique platform TV can offer advertisers during live events, in this case the Rugby World Cup, while the Euro 2016 championship this summer is also expected to have a positive impact of spot revenues, which we predict will contribute to some 6.9% growth year on year in Q2 2016.”

Growing importance of digital

Internet spend grew 13.2% and mobile increased 40.2% for the quarter – mobile spend accounted for 29% of the internet total, up from 23.5% in Q3 2014. And McDonald believes that digital will become increasingly important.

“Online advertising has played a major role in the swell of total ad expenditure. Our preliminary estimates for 2015 suggest that just over two-thirds of the ad money entering the market last year was for internet, and most of this for mobile. Internet’s contribution is expected to be still higher this year,” he says.

Ad spend growing faster than GDP

The UK’s total advertising spend has been growing ahead of the economy, with the total UK ad spend increasing 6.1% in 2015. Commenting on its growth, Tim Lefroy, chief executive at the AA says: “This is the ninth successive quarter in which advertising growth ahead of GDP has helped to fuel the wider economy.”

However, the rate of growth is expected to decline to 5.6% in 2016, demonstrating that ad spend is set to be affected by a number of developments.

McDonald explained: “The high level of consumer confidence seen during 2015 is expected to continue in the short term and, with both wages and employment trending upwards, consumer spending should continue to grow.

“The Chancellor recently warned, however, of a “dangerous cocktail” of threats to the UK economy from abroad, while at home the substantial rise in household debt over recent years means that consumer spending could be hit if interest rates start rising. Forecasts for UK GDP growth this year show a mild slowdown from 2015 and consequently we have exercised a similar degree of caution. Marketers should be no more worried than normal.”

The report also showed that cinema spend grew 21.7% year on year in Q3, and with the release of blockbusters such as James Bond and Star Wars in Q4 estimates for 2015 ad spend growth have been revised up to 9.4%.

National news brands did not perform well, with ad spend declining 8.7% year on year in Q3 to a total of £283m. Total national news brand spend is now estimated to have declined 9.3% in 2015, with a slower decline of 4.6% forecast for 2016.

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