However, these are challenging times and the outlook for the year ahead has been donwgraded.
Here’s what our industry experts have to say about the latest readings…
Ben Scoggins, CEO, UK creative agency Organic
“The figures largely confirm what most of us have seen and felt in the wider economy – an optimistic start to 2022 that went sour in Q4, is subdued to 2023 and will essentially remain flat throughout.
“However, what is positive is that the downward spiral of fear and uncertainty appears to have abated.
“While this may not manifest itself as meaningful growth this year, confidence at C-Suite level is an important pre-requisite for a return to real growth in 2024.”
“Market activity is responding to external pressures and economic uncertainty, with many budgets taking a hit.
“While there is limited growth expected for the year ahead, forecasts for 2024 suggest a light at the end of the tunnel – but until we get there, brands trying to weather the storm need to be able to trust in their technologies, platforms, and partners.
“Every business leader will want to know the advertising strategies and tools they are using to reach their customers are as effective and efficient as possible, while at the same time not compromising on wider demands around personalisation, transparency, and privacy.
“The report also highlights the growth of spend on legacy media such as BVOD – demonstrating that marketers want to invest the budgets they have in quality and trustworthy content.”
Bhavin Balvantrai, Chief Market Analyst, Omnicom Media Group UK
UK advertising continues to show its resilience in the face of macro headwinds and directionally we are heading towards growth.
“Media is increasing in complexity, and agency expertise in navigating that complexity becomes even more crucial for brands when budgets need to work harder.
“The pressure on advertising budgets means that there is a renewed focus on measurement and accountability to ensure that campaigns are delivering the best outcomes.
“Those companies that are able to navigate the current complex data environment, matching, integrating and executing against: customer, retail, third party, on and offline data sources, are those best placed for future success.
Maor Sadra, Founder and CEO at INCRMNTAL
“Brands are returning to their advertising roots with significant investments in cinema, OOH and radio ads.
“In previous years, these channels were too often dismissed, due to the difficulty of measuring any ads without a click.
“Advancements in offline and multi-channel measurement have secured their place firmly back at the advertising table however.
“And brands appear to be revelling in the chance to capture audiences both at the times they are most engaged and in fresh and exciting ways that offer a new dimension to advertising, away from traditional screens, where generic campaigns often lead to ad-blindness.
“We’re also not surprised to see ad spend forecasts being downgraded. This is not only due to the ongoing cost-of-living crisis but advancements in incrementality measurement, which have allowed brands to cut budgets in areas where spend isn’t driving results, without impacting their marketing KPIs.
“The advertising ethos we expect to see throughout the rest of 2023 is to spend smarter, not harder and be more creative with budgets to truly captivate audiences on a different level.
Allan Blair, Head of Strategy EMEA, VaynerMedia
“Tighter budgets, revised forecasts, and talent shortages. It is easy to read the latest figures and be dismayed – but they do not reflect a few real issues in advertising – which, the longer we ignore, the more difficult things get.
“Yes, budgets are squeezed. But we fundamentally believe that agencies need to stop the art of selling creative ideas and acting like high priced consultancies before shipping them off to production studios or other departments within their business. That’s why work is so expensive.
“And it’s why bringing creative, strategy and media together can create enormous cost efficiencies. That’s our model and it’s helping us undercut holding companies all over the world.
“It also allows the work to stay closer to the brief, reducing constant back and forth between partners and, you guessed it, clocking up further hours at high rates.
“Plus, the more integrated your team, the less chance of misinterpretation or diluting the brief. Which not only leads to more expensive work but less effective work too.
“Finally, it’s time for our industry to accept there isn’t a lack of talent out there. If we want a more diverse industry, we need to start hiring people from all kinds of backgrounds, disciplines and other sectors, rather than panicking that Oxbridge educated folks don’t want a job in advertising.
“The creators at the forefront of culture, which is being built on social, are out there. They are the people we want to help us build modern brands.”
Alex Charkham, Chief Strategy Officer, Fuse
“The complicated economic climate is having an inevitable impact on the ad market – and that is clear to see in the latest WARC AA Report.
“A buoyant 2022 has made way for a more cautious – basically stagnant – 2023 but it predicts growth again in 2024.
“These rollercoaster economics prove how vital it is for brands to have a robust plan set in place, so that spend can be maintained and marketing and advertising strategies can remain consistent.
There are mixed fortunes depending on the media but we’ve seen sport and entertainment thrive.
“It’s hardly surprising that we’re continuing to see year-on-year growth and improvement in advertising post Covid-19 as brands are following the fans and consumers who are looking to get back to the level of pre-Covid in-person events.
“Investing in major events, such as sport, can be seen as a solution to overcoming fragmented media audiences, as brands can target huge audiences in one go.
“For example, sporting events generate high reach and significant media exposure for brands enabling them to signal presence and association with a mass consumer passion point.
“Events such as Wimbledon, Women’s World Cup and the Rugby World Cup will play a big part in consumer spending behaviours throughout 2023 and brands will want to maximise those opportunities.
Kevin O’Farrell, Associate Vice President, Analytic Partners
“WARC’s Q2 forecast seems to embrace the negativity of slow and minimal growth throughout the rest of 2023 due to economic pressure.
“While there are indeed strong external factors that are squeezing the marketing industry, it is not all doom and gloom. There is a return to normal on the horizon with an expected 3.9% growth of the UK ad industry into 2024.
“This optimism is certainly reflected in a renewed experimentation with formats and locations. There was strong growth in out-of-home media, continuing the year-on-year improvements post the effects of Covid-19, as well as Broadcaster Video on Demand (15.4%).
“This is a flourishing area of opportunities, especially for retail media, clearly identified by ITV who have attracted more than 12 FMCG advertisers to their pilot scheme which builds on Channel 4’s recent successful retail media trial.
“As Europe’s retail media market currently sits at a valuation of 8bn euros it is a worthy area for brands to focus their attention.
From our perspective, there is a lot of hope for the rest of 2023. With the forecast that high inflation and stagnation are expected to dissipate, and growth to increase to a more reasonable rate, brands should prepare to maximise their marketing budgets.
“We’ve found that there are excellent opportunities to take market share and brands that maintain or increase spend see higher ROIs and sustained growth once out the other side of economic turbulence.
“However, as we have seen over the last few years change can come about quickly so bearing this in mind, scenario planning – exploring several different potential future scenarios – is an excellent way to manage any sudden disruptions to the market.
David Balko, Chief Client Officer, Tribal Worldwide London
“The latest AA WARC report forecasts that the UK ad market will grow by 3.9% in 2024, demonstrating brand awareness around the strength of the medium.
“While the ongoing cost of living crisis is still impacting consumers’ spending behaviour, brands still need to invest in advertising to ensure they are building long-term relationships with consumers.
With sectors such as cinema and out-of-home set to continue to grow, brands need to be clever in how they are communicating with consumers.
“Successful communication during tricky times has proven to be fruitful for brands.
While the looming recession presents challenges, brands should ensure that they are providing powerful, joined-up brand experiences that extend beyond communications and into long-lasting brand-to-consumer relationships.
The unstable economic landscape proves to brands how essential it is to have a strategy and plan in place.
“There are still many opportunities for brands to succeed during difficult times and companies that ensure their brand investment cuts across all aspects of brand experience will come out on top.
Jamie Ray, Co Founder, Buttermilk
“The latest WARC AA report reveals cautious optimism for the UK ad market throughout 2023 and 2024.
“While in 2022 ad spend was up by 8.8%, we can expect growth to slow down throughout this year as revised forecasts have predicted minimal growth in 2023 (0.5%).
“The report reveals that services such as entertainment, media and travel are leading advertising growth. For the influencer marketing industry, travel and entertainment are key sectors of growth and interest.
“Brands should consider working with influencers to see a greater return in their investment than traditional advertising methods and reach an engaged, often wider, audience.
“In light of high inflation and an ongoing cost of living crisis, brands should be looking for clever ways of investing their money.
“Influencer marketing not only requires a lower investment than typical advertising methods, but it also represents a more cost-effective route to tackling the entire marketing funnel; creators are able to generate awareness, engagement & conversion via a singular piece of content.
“That content also has value in itself – it is a licensable branded asset that can be reused as part of your wider marketing plans.
“With this in mind, with budgets leaning out, influencers can become a one-stop shop for all of your marketing needs.