The overall growth in Q1 to £5.318bn marked the 15th consecutive quarter of growth, though this was the slowest rate in almost four years, according to data published today (27 July) in the Advertising Association and WARC Expenditure Report.

Print continued to decline – direct mail spend fell by 1.5%, albeit this was 7.5% better than forecast.

National newsbrands’ combined ad revenues fell by 6.6% during Q1, despite digital climbing by 25.4% year-on-year, while regional newsbrands’ ad income dropped by 18.8% across print formats in the period. Digital was only down by 2.7%, meaning that combined revenues in this area fell by 16%.

Magazine brands recorded losses in income from print of 16.1% while out-of-home (OOH) spend contracted by 6.6% year-on-year in the first three months of 2017 despite a 27.6% rise in digital ad expenditure.

“Print spend among national and regional newsbrands fell further than forecast during the first quarter. The losses are largely coming from reduced spend on print display ads, which is due in part to internal restructuring as news publishers’ business moves online,” said James McDonald, senior data analyst at WARC.

“A quarter of national newsbrands’ advertising revenue came from digital formats during the first three months of the year, which was the first time this has happened.

“Conversely, income from print classified ads – housing, property, motors etc. – has actually remained stable for tabloid newspapers over the last four years, which I think is encouraging as it shows a core group of advertisers who find that the medium works for them.”

Of non-print formats, internet ad spend rose by 10.1% during Q1, mainly driven by mobile which experienced a 36.2% year-on-year increase, while radio spend dipped by 0.1%. Television spend dropped by 6.2% in Q1 but cinema spend bucked the trend by rising 27.6%.

The full year outlook for 2017 has been downgraded by 0.5% to 2% growth but is forecast to recover by 2018 at 2.6% growth, driven by the World Cup and a likely improvement in certainty around the terms of Brexit.

“The slowdown in the ad industry mirrored that of the wider UK economy at the start of the year. Analysis of 35 years of Expenditure Report data show a direct relationship between the two; indeed, changes in GDP account for approximately three quarters of the changes in ad spend if the dotcom crash year of 2001 is excluded,” said McDonald.

“Higher inflation and slow wage growth has put a squeeze on consumer spending, and in this environment brands seem to be exercising a degree of caution before committing their marketing budgets.”

Looking ahead to 2018, direct mail ad spend is forecast to fall by another 5%, national newsbrands’ spend is anticipated to fall by 6.9% – though digital is expected to rise by 2%, regional newsbrands are forecast to dip by 8.2% – with digital up by 1.4%, and magazine brands are set to fall by 3.8% – with digital forecast to grow by 4.6%.

Furthermore, OOH ad spend is expected to rise by 1.9% in 2018 and cinema is forecast to grow by 4.4%. Total UK ad spend is expected to increase by 2.6%.