Against a tough economic backdrop of high inflation, rising interest rates and tariff-related concerns, UK ad spend beat forecasts in Q1 2025, according to the latest Expenditure Report from the Advertising Association (AA) and WARC. Ad spend was up 8 percent YoY during the first three months of the year, 1.4 percent ahead of AA and WARC’s forecast issued in April, reaching £10.6 billion.
Slightly counterintuitively, the quarter was boosted by uncertainty around Donald Trump’s tariff hikes, as advertisers brought budgets forward at the start of the year in anticipation of the sweeping trade reforms. AA and WARC said this drove increased ad spend in search (+12.3 percent), including retail media, as well as online display (+10.1 percent), including social media (+14.7 percent).
“Both channels benefited from budgets being brought forward in the quarter, particularly as advertisers sought more short-term solutions during uncertainty caused by the period of negotiation of the US administration’s trade deals,” said the report. “While there is more certainty in the UK economy now a trade deal has been secured, global macroeconomic headwinds persist.”
Cinema up, TV down
Growth in Q1 was also driven by cinema (+19.2 percent), which benefited from marketing-heavy releases, such as Bridget Jones: Mad About The Boy and Captain America: Brave New World, alongside ongoing spending behind Mufasa: The Lion King and Wicked. Other media channels to see gains during the quarter included direct mail (+3.6 percent), out-of-home (+1.0 percent) and radio (+0.4 percent), with 16.4 percent growth for online radio offsetting declines for broadcast radio.
A similar trend continues to play out in TV, where VOD/streaming (the Expenditure Report now tracks Netflix, Disney+ and Prime Video alongside broadcaster-owned services) saw 5.4 percent growth in ad spend during Q1 – but this failed to offset declines in linear TV, and overall TV spend fell by 2.1 percent during the quarter. Meanwhile national newsbrands and magazine brands were down by 8.2 percent and 11.1 percent respectively, both hit by falling online ad spend.
“The latest survey data highlights buoyancy in certain corners of the UK ad market, with total investment growing just ahead of forecast despite a wavering economy and a sustained period of global trade turbulence,” said James McDonald, Director of Data, Intelligence & Forecasting at WARC. “Advertisers were seen to pull budgets forward and double down on agile formats within search, social, and retail media in response to the volatility sparked by new US tariffs.”
Supporting UK employment
There are bright spots in the full-year forecast for 2025, particularly when it comes to ad-supported streaming TV. Total UK ad spend is set to rise by 6.8 percent YoY this year, hitting £45.4 billion – another slight increase over the April forecast. Declines in TV ad spend are expected to be reduced to -0.9 percent, thanks to a 10.1 percent uplift in VOD spend. And full-year growth is also projected for search (+9.4 percent), online display (+9.2 percent), cinema (+9.0 percent), out-of-home (+3.1 percent) and radio (+1.2 percent).
Looking ahead to next year, UK ad spend is predicted to climb 5.6 percent YoY, to reach £48 billion in 2026. And TV is expected to return to growth (+4 percent), driven by 14.1 percent growth for VOD ad spend. The forecast also suggests that clarity around the incoming Less Healthy Food (LHF) regulation has given brand advertisers reassurance for next year, while AA’s research shows the UK advertising industry supports 1.7 million jobs, making up 5 percent of all UK employment.
“Further growth in the first quarter of 2025 is welcome, particularly following the launch of the UK Government’s new industrial strategy which recognises advertising as a priority sector,” said Stephen Woodford, Chief Executive of the Advertising Association. “Brands appear to be adapting to the current environment by reallocating budgets tactically, with the outlook for the year remaining broadly positive despite persistent headwinds.”
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