GroupM: U.K. Ad Investments to Hit £18.8 Billion in 2017

LONDON: Despite the short-term effect of the EU referendum, U.K. advertising is set to see the eighth successive year of growth, up from 6.3 percent to 7.2 percent for 2016, according to GroupM.

The firm predicts a rise from 5.8 percent to 7.2 percent for 2017. This increase in spending takes the industry to an investment of £18.8 billion ($23.6 billion) in 2017.

GroupM’s outlook for traditional media advertising has dipped slightly, from being down by 1.1 percent to being down by 2.6 percent for 2016 and from an increase of 0.5 percent to a loss of 1.4 percent in 2017. The firm points out that the U.K. remains among the most digital-centric advertising markets in the world.

There are five advertising categories that stand out as being important for TV but relatively light on digital: cosmetics and personal care, food, retail, household equipment and DIY, and leisure equipment. These five together comprise a third of U.K. TV ad investment, or £1.5 billion ($1.9 billion).

“The effect of the future EU exit on the U.K. economy is unknown, but the short-term impact was negligible,” said Adam Smith, Futures Director at GroupM. “To our own surprise, we are revising U.K. advertising growth up from 6.3 percent to 7.2 percent for 2016, and from 5.8 percent to 7.2 percent for 2017.”

“The main driver that we have seen is paid search accelerating again. It benefits from rising automation and the immediacy needed for mobile and performance-minded advertising. We expect digital display advertising to continue growing by 18 percent in 2016 and 15 percent in 2017. The ambition of pure play digital vendors to conquer TV territory and categories will be hard-won, but today’s undisputed winner is pure-play digital.”

“We continue to support advertiser investments in digital campaigns by investing in the data and technology resources needed to inform and efficiently execute these campaigns. Of course, this is crucial as more media become digital, addressable and available in real time,” said Nick Theakstone, the CEO of GroupM United Kingdom. “However, it is also important that advertisers not abandon top of the marketing funnel activities for creating brand awareness, like TV, with over-investment in digital. We are advising careful consideration in balancing investments to ensure support of long-term brand growth.”