UK ad spend on BVOD services is expected to surpass £1 billion for the first time this year, according to the latest figures from the Advertising Association and WARC.
The Expenditure Report forecasts 13.7 percent YoY growth for BVOD spending, driven by a summer of sport comprising the Euros, Olympics and Paralympics. The research also suggests BVOD spending will grow by 11.8 percent YoY in 2025.
Meanwhile overall TV spend is expected to climb 3.9 percent YoY this year, then 0.7 percent YoY in 2025, highlighting the more pronounced impact of the 2024 sporting calendar for commercial broadcasters.
Ad spend across all channels is also set to grow by 7.7 percent this year, according to the forecast, to hit £39.4 billion. And looking ahead to 2025, UK ad spend is projected to rise by 5.5 percent, reaching £41.6 billion.
AI drives digital ad spend
The forecast follows a strong first quarter for UK ad spend; total spending rose 9.3 percent YoY to reach £9.2 billion, which the AA and WARC called “a new high for a first quarter period.” The growth was driven by online formats, which accounted for 79.7 percent of all UK spend in Q1 2024.
The report noted the role of AI and performance tools in driving spend with online platforms. Search (including retail media) and online display (including social media) saw particularly strong growth during the quarter, up 12.0 percent and 12.8 percent respectively.
“The race for AI adoption has intensified in the advertising industry, with major online platforms introducing their own solutions to market and subsequently reporting a positive contribution to their bottom line,” said James McDonald, Director of Data, Intelligence & Forecasting at WARC. “The true impact of these tools will emerge in time, though first quarter results were certainly lifted by higher ad loads and associated performance costs online.”
“Legacy media” perserveres
But the quarter also saw TV return to growth, increasing 1.2 percent YoY during the three-month period, with BVOD spending up 19.2 percent. Meanwhile there were gains for Out of Home (16.4 percent), radio (7.0 percent) and cinema (6.4 percent), highlighting what the AA and WARC called “the enduring strength of legacy display media.”
And the researchers expect this performance to have continued into the second quarter, with the Euros and General Election fuelling similar levels of growth. Total UK ad spend in Q2 is projected to rise by 9.2 percent YoY, to hit £9.7 billion. That means during the first half of 2024, UK ad spend is estimated to have climbed 9.3 percent YoY, for a total £18.9 billion.
“It is welcome news to see real-term growth and upgraded forecasts in the advertising market in Q1 this year, a positive sign that our industry is one of the driving factors in the UK’s economic recovery,” said Stephen Woodford, Chief Executive at the Advertising Association. “This is a timely reminder of its dynamism as the new Government seeks to create an environment for growth, through political stability and a new industrial strategy. Advertising is a UK-wide industry, with three in five advertising jobs based outside of London and it is central to the successful development of the digital economy across the whole country.”
