As Christmas products start to line the supermarket shelves and UK towns begin to announce which C-list celebrities are turning on their lights this year, advertisers are busy planning their festive marketing campaigns. And while new restrictions around showing unhealthy food and drink products will alter the appearance of ads this holiday season, the legislation is not expected to dampen advertising spend in this year’s Golden Quarter, according to the latest forecasts from the Advertising Association (AA) and WARC.
Today’s Expenditure Report projects UK ad spend to reach £12 billion during Q4 this year, an increase of 7.3 percent over the same quarter in 2024. Interestingly it is the media channels exempt from the less healthy food (LHF) restrictions that are predicted to drive that growth, particularly cinema (+3.7 percent) and out of home (+3.1 percent). While the legislation does not apply to cinema advertising, the Cinema Advertising Association (CAA) has introduced its own 40 percent cap on LHF ads per advertising reel – the same limit in place for alcohol advertising.
TV spend on the other hand is expected to drop by 5.2 percent YoY in Q4, though this falls in line with ongoing declines in TV spending rather than a result of the new restrictions. Last year for example, the AA and WARC forecast a 4.3 percent decrease in TV spend for the fourth quarter, before the LHF legislation was in place. This suggests the decline is more a result of shrinking linear TV budgets, as VOD spending is set to increase by 17.2 percent YoY to hit £430 million, suggesting streaming and BVOD services are set to remain key marketing channels this holiday season.
However it is online formats that are expected to capture the lion’s share of ad spend in Q4, even with the LHF restrictions applying to all paid online ads. Online formats are expected to account for 83 percent of all ad spend during the Golden Quarter, according to the forecast, with 40 percent of budgets going to search channels, including retail media.
“The latest AA/WARC forecasts show advertisers continuing to tap into consumers’ digital consumption habits, with online formats now accounting for four in every five pounds spent on advertising in the UK,” said James McDonald, Director of Data, Intelligence & Forecasting at WARC. “Growth in video on demand services and search – particularly on retail platforms – underscores a prioritisation of digital engagement and its influence on the path to purchase.”
Languid economy, stable trajectory
The Expenditure Report also reveals figures for Q2 2025, providing a full picture of ad spend for the first half of the year. Spending rose 9.1 percent YoY in Q2, hitting £11.3 billion. This means UK ad spend reached £22 billion in H1, an 8.9 percent increase on H1 2024. The report notes that Q2 saw strong gains for VOD (+23.2 percent) and cinema (+19.7 percent), driven by film releases such as A Minecraft Movie, Lilo & Stitch and Mission: Impossible – The Final Reckoning.
But again it was search and online display formats (including retail and social media) that attracted most spend in the first half of 2025, according to the report. Search and online display accounted for just over 81 percent of total ad spend in H1, rising to £17.9 billion. The AA and WARC cited ongoing investment in AI to drive efficiencies and improve performance across digital platforms.
Looking ahead, UK ad spend is projected to moderate slightly in the second half of 2025, totalling £46 billion for the full year, an increase of 8.2 percent on 2024. And while growth is expected to slow to 6.6 percent YoY in 2026, for a total £49.1 billion, the forecast suggests TV will return to growth of 5.8 percent YoY. Search and online display formats are also expected to grow by 9.2 and 6.7 percent, respectively.
Overall the report suggests “a stable trajectory for the UK’s ad market despite a languid economy”, according to WARC’s James McDonald, with business and consumer sentiment hampered by concerns around potential tax increases in November’s budget and above-average inflation.
“The Christmas advertising season is the key time for brands to inspire shoppers and win share in this critical retail period,” said AA CEO Stephen Woodford. “Our Advertising Pays 2025 report shows every £1 spent on advertising returns £4.11 in profit for medium to large businesses and £1.89 for micro-small businesses, underscoring the importance of advertising investment especially during the festive season. Despite ongoing economic uncertainty and caution in the run up to the November budget, the advertising market is still expected to see growth next year.”
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