Barbie's Big Screen Comeback Sparks Optimism for Cinema Ad Spend Despite Challenges Ahead

The UK advertising industry is poised to experience greater growth than previously anticipated, driven partially by a surge in cinema advertising following the success of Barbie and Oppenheimer.

According to the most recent growth projections from the Advertising Association (AA) and WARC, ad spending in the UK is expected to increase by 2.6% in 2023, reaching £35.7bn. This marks an improvement from the earlier forecast of a 0.5% growth in April, though it falls short of the initial 3.8% uplift predicted at the beginning of the year.

Cinema expenditures are expected to increase by 20.8% this year, with the help of several highly anticipated movies being released in this quarter, including Barbie, Oppenheimer, and Mission Impossible: Dead Reckoning Part One.

In other areas, certain online channels are projected to outpace the overall advertising market. Specifically, search is predicted to grow by 6.1%, while online display is expected to increase by 5.2%. According to the report, digital channels are projected to account for 76.7% of total expenses this year and are predicted to rise to 77.6% in 2024, up from 75.1% in 2022.

Despite a slight revision for the full year, there was lackluster growth in the first quarter. Advertising spend remained almost stagnant with a meager increase of 0.1% year-on-year. While certain channels experienced gains, such as search (up 5.1%), video-on-demand (up 18.7%), and out of home (up 5.1%), there were noticeable declines in newsbrands (down 6.4%), TV (-7.2%), magazines (-7.1%), and direct mail (-16.1%).

Interestingly, the outlook for direct mail contradicts the findings of the latest IPA Bellwether report. This report revealed that a net balance of 7.3% of surveyed marketers reported an increased investment in direct marketing for the second quarter. The IPA/S&P report defines direct as both email and physical mail, implying that the growth in direct is primarily driven by email and other digital direct channels.

The report from the AA and WARC pointed out some reasons for optimism, despite the mixed picture. According to AA/WARC, the upcoming women's football World Cup and the Para Athletics World Championships are expected to positively impact the advertising market, particularly benefiting TV and out-of-home advertising.

Stephen Woodford, CEO of the AA, commented on the "notable" forecasts for online, which are contributing to the slight improvement in projected returns.

He adds: "Given the persistent high inflation and its negative impact on consumer and business confidence, it is likely that the UK advertising investment will experience a contraction of around 4.3% in real terms by 2023. However, the recent unexpected decrease in inflation provides some hope, and as a result, we anticipate confidence to improve gradually throughout the year and into 2024, leading to a growth in the advertising market."

James McDonald, the director of data, intelligence, and forecasting at WARC, also acknowledged the challenging conditions but highlighted some indications of recovery. "The UK's advertising industry has faced strong headwinds from the stagnant economy and stubbornly high inflation over the past three years. Nonetheless, there are some positive signals suggesting a potential revival."

"With a welcome return to growth observed in crucial online sectors during the first quarter, our full-year projections have been upgraded. We now anticipate a 2.6% increase, reflecting improved trading conditions expected in the second half of the year. According to the AA and WARC Expenditure Report, UK ad spend is forecasted to grow by 4% year-on-year in 2024."