UK ad spend growth forecast to suffer sharp dip amid Brexit and general election uncertainty

The report suggests political and economic uncertainty in the UK will stall growth

A slowing economy and political uncertainty ahead of a breakaway from the European Union are poised to hit ad spend growth in the UK, according to a new report.

Zenith's most recent Advertising Expenditure Forecast has predicted that there will be a 0.9% growth in UK ad spend in 2017 compared to a figure of 9.6% in 2016, citing both Brexit and the snap general election as influencing factors.

This drop in UK growth is poised to drag growth in Western and Central European ad spend, which Zenith is predicting will be down from 4.5% in 2016 to 2.2% in 2017, and an annual average of 2.6% in 2019.

Commenting on the predictions, Phil Stelter, managing director at digital network Syzygy, said they should be taken with a dose of caution.

"I feel we have to be careful when we talk about forecasts," he said, pointing to the most recent hard data from the Advertising Association and Warc, which showed that UK ad spend enjoyed its highest grossing quarter in Q4 2016.

"Clearly 2017 is set to be a turbulent year, with a slowing economy, Brexit and potential inflation, but the UK has consistently outperformed the rest of Western Europe and the growth in digital ad spend may well see us safe through any political storm," he added.

Overall, it's predicted that global ad expenditure will grow 4.2% in 2017, slightly down on the 4.8% growth in 2016 but still set to reach $559bn by the end of the year.

Back in March, Zenith predicted that, globally, online ad spend would surpass TV for the first time in 2017 despite the ongoing brand safety and transparency crisis which engulfed platforms like YouTube and Facebook in the first half of the year. Its most recent report stands by this prediction, with the company forecasting that internet ad spend will account for 37% of total expenditure by the end of this year.

Mark Jackson, managing director at MC&C said: "Despite the fact that online ad spend is set to overtake television advertising in 2017 – we cannot let this influence our attitude towards television advertising and its role in the media mix."

Jackson said he believes television outperforms on ROI, adding that when it comes to an incline in internet budgets there is no doubt that on demand TV plays its role. "It engages younger viewers in particular and helps build overall long-term brand fame," he continued.

By 2019, it's expected that internet advertising will account for 41.9% of global ad spend, while in the same year mobile – which WPP boss Sir Martin Sorrell has called a "multi billion dollar opportunity"– will account for 44.5% of online ad spend with budgets allocated to it sitting at $155bn.

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