Native and online video push UK ad spend up 5.2% to £9.9bn despite Brexit fears

AA/Warc Ad Spend Report

Demand for native ad formats and online video accelerated the growth of ad spend in the first half of the year, when it rose 5.2% to hit £9.9bn, according to the latest Advertising Association/Warc expenditure report.

Internet ad spend was among the biggest drivers, having increased 16.9% to reach £4.7bn over the first half of the year. Within that, mobile grew 52.6% to £1.7bn.

It echoes similar findings from the Internet Advertising Bureau (IAB UK) earlier this month, which led its chief strategy officer Tim Elkington to declare it a landmark moment, as advertisers’ spending habits finally tallied with how people consume media.

The AA/Warc's previous expenditure report predicted that despite the economic uncertainty facing businesses, the UK’s ad industry would continue to see growth and it seems to be standing by such predictions for 2016.

The growth rate for the first half of 2016 was 0.4 percentage points ahead of its forecast, reaching a record £9.9bn in total, leading the report's authors to revise their prediction for ad spend for the end of 2016 up to 5.2% (from 4.2% earlier this year).

However, the upped spend cannot be untangled from Brexit. As The Drum has previously reported, advertisers are turning to such channels that deliver against relevant metrics as opposed to “main media” advertising, such as TV and radio.

In the first half of 2016, online video ad spend increased 66.4%, to £252m, while native advertising spend grew 29.9% to £451m. By contrast, TV spot expenditure grew 2.1% in H1 and as a consequence full-year expectations for TV spots have been downgraded to just 1.5% growth. Radio expenditure increased 0.5%

In addition, with prime minister Theresa May’s plan for a ‘hard Brexit’ expected to be implemented, the forecast for 2017 has been downgraded by half a point to 3.3%.

“Investment in UK advertising remains strong this year, and the trend towards digital and mobile continues – but the medium term is more complex,” Tim Lefroy, chief executive at the Advertising Association said.

“The government should avoid any regulatory uncertainty that might affect advertising's stimulus to the economy.”

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